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TMI Blog2022 (4) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Even in the Public Notice No. 47/2015-20 dated 6th December 2017 containing a list of capital goods prohibited under the EPCG scheme, there was no reference to distribution of electricity - It was only in the impugned circular dated 4th January 2019 that for the first time reference was made to distribution of electricity and it was clarified that even distribution of electricity was debarred under the provisions of the EPCG scheme. It is apparent that transmission and distribution are separate activities for the purpose of the Electricity Act and they are distinctly understood by persons such as the writ applicants who are engaged in the business involving supply of electricity - It is well established by a series of judgements that the terms used in fiscal statute are to be interpreted as they would be interpreted by persons engaged in the relevant trade. It thus appears that even the Respondents at the relevant point of time believed that the EPCG licenses could be issued to the persons engaged in the distribution of electricity. Had the respondents raised objection to issuance of the EPCG licenses at the relevant point of time, then the entire issue would not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents to forthwith return/issue EPCG licenses and invalidation letters surrendered by the Petitioners on the basis of impugned circular dated 4.1.2019; D. Without prejudice to the above and in the alternative this Hon ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith return the bank guarantees furnished for the EPCG licenses which have already been surrendered by the Petitioners pursuant to impugned circular dated 4.1.2019; E. Pending notice, admission and final hearing of this petition, this Hon ble Court be pleased to suspend the retrospective operation and implementation of the impugned circular dated 4.1.2019 (annexed at Annexure A); F. Ex parte ad interim relief in terms of prayer E may kindly be granted; G. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray. FACTUAL BACKGROUND : 2 The Export Promotion Capital Goods scheme (for short the EPCG Scheme ) is inter-alia available under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution of electricity and that therefore, the writ applicants were eligible for the EPCG licenses despite Para 5.01(g) of the Foreign Trade Policy. Besides this, oral representations were also made from time to time. 8 The DFGT however issued the impugned policy circular dated 4th January 2019 clarifying that the transmission and distribution of electricity constituted the same process of supply of electricity from one point to another and that Sr. No. 12 of the Appendix 5F of Foreign Trade Policy 2015-20 did not permit the import of capital goods for generation, transmission and distribution of power. 9 Upon on receipt of such clarification the writ applicants surrendered all the EPCG licenses and requested for release of the bank guarantee on 9th January 2019. This was acknowledged by the Regional Authority, Ahmedabad on 15th January 2019. One TED refund received was also surrendered with interest and was acknowledged by the Regional Authority, Ahmedabad. The writ applicants thereafter requested for the release of bank guarantees. 10 The writ applicants however received a show cause notice dated 26th December 2019 from the DGFT (Ahmedabad) asking the writ applicants to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme even though Para 5.01(g) of the scheme only prohibited transmission of electricity is not legally tenable. (c) When technical terms are used in the statute, then such terms are to be interpreted as per the understanding of the people in the relevant industry. Hence, when transmission and distribution are separate activities for people engaged in its business, they need to be given separate meaning even while interpreting the provisions of the Foreign Trade Policy. Reliance was placed on the following judgements: (i) Collector of Central Excise, Kanpur vs. Krishna Carbon Paper Co. (1989) 1 SCC 150 (ii) Chemical and Fibres of India Ltd. vs. Union of India (1997) 2 SCC 664. (iii) Union of India vs. V. M. Salgaoncar and Bros. (P) Ltd. and Others (1998) 4 SCC 263. (d) Giving retrospective operation to a new condition in the EPCG scheme and thereby penalizing the writ applicants who bonafidely believed that only transmission of electricity was barred under the scheme is arbitrary and illegal. (e) The writ applicants had made full disclosure of the fact that they were going to use the capital goods procured under the EPCG scheme for distribution of electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication so as to have retrospective effect or whether it introduces a new substantive condition in the EPCG scheme which can, if at all, operate only prospectively? 19 It is not in dispute that the para 5.01(g) of the EPCG scheme which was introduced w.e.f. 18th April 2013 only used the term transmission in the prohibited list of activities. Thereafter, by a specific amendment dated 29th January 2016, the generation of electricity was also brought within the ambit of negative list of activities. Even then there was no reference to the distribution of electricity. Even in the Public Notice No. 47/2015-20 dated 6th December 2017 containing a list of capital goods prohibited under the EPCG scheme, there was no reference to distribution of electricity. 20 It was only in the impugned circular dated 4th January 2019 that for the first time reference was made to distribution of electricity and it was clarified that even distribution of electricity was debarred under the provisions of the EPCG scheme. 21 We are of the view that the impugned circular cannot be considered as a clarification but it imposes a new restriction in the EPCG scheme by specifying distribution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise, Kanpur vs. Krishna Carbon Paper Co. (1989) 1 SCC 150 wherein it was held and observed as under: 9. It is well settled, as mentioned before, that where no definition is provided in the statue itself, as in this case, for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe. The correct guide, it appears in such a case, is the context and the trade meaning. In this connection reference may be made to the observations of this Court in CST v. S.N. Brothers, Kanpur [(1973) 3 SCC 496 : 1973 SCC (Tax) 254 : AIR 1973 SC 78] , at p. 80 Para 5 (SCC pp. 500-01, paras 4 and 5). 10. The trade meaning is one which is prevalent in that particular trade where the goods is known or traded. If special type of goods is subject-matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. Where, however, there is no evidence either way then the definition given and the meaning following (sic flowing) from particular statute at particular time would be the decisive test. 11. In the famous Canadian case in King v. Planters Nut and Chocolate Co. Ltd. [1951 CLR Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t suppose our merchants to be naturalists, or geologists, or botanists. See the observations of Bhagwati, J. as the learned Chief Justice then was, in Porritts Spencer (Asia) Ltd. v. State of Haryana [(1979) 1 SCC 82 : 1979 SCC (Tax) 38] . But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular statute and then if in respect of that particular items, as artificial definition is given in the sense that a special meaning is attached to particular words in the statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goods dealt with by that type of goods in that type of market, should be searched. In the instant case, we have all kinds of papers including papers subjected to coating, impregnating etc. If there is a market meaning or trade meaning of that kind of a paper that should be adhered to. In this case, there is no direct evidence how these peculiar goods are dealt with in the particular market dealing with those goods. But there is evidence how these are to be understood in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1958 and on the basis of how the phrase was understood in the maritime enterprises. 27 Applying such principle to the facts of the present case, transmission and distribution being separately understood in the trade concerning electricity and they having been separately defined and dealt with under the Electricity Act, the impugned circular clarifying that transmission and distribution are one and the same cannot be held as valid and legal. Transmission and distribution are separate activities. If the Respondents chose to include even distribution in the list of prohibited activities for the purpose of EPCG scheme they could have always done so prospectively by amending Para 5.01(g) of the scheme. It is not even the case of the writ applicants that the respondents cannot prospectively enlist the distribution activity in the prohibited category under the EPCG scheme. However the attempt made by the respondents to give retrospective effect to the prohibition of distribution activity by using the nomenclature clarification is liable to be quashed and set aside. 28 The issue can be looked at from another angle. It was clearly mentioned in the applications for the EPCG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5 of the Act does not empower the Government to make amendments with retrospective effect, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. No doubt, the Government has, otherwise, power to amend, modify or withdraw a particular scheme which gives benefits to a particular category of persons under the said scheme. At the same time, if some vested right has accrued in favour of the beneficiaries who achieved the target stipulated in the scheme and thereby became eligible for grant of duty credit entitlement, that cannot be snatched from such persons/exporters by making the amendment retrospectively. In the present case, we find that Section 5 of the Act does not give any specific power to the Central Government to make the rules with retrospective effect. The Central Government is authorised to make rules/schemes under the said provision as a delegatee, which means that the EXIM Policy/Scheme framed under the said provision is by way of delegated legislation. There has to be specific power to make the amendments with retrospective effect, which are lacking in the instant case. Moreover, even if there is such a power, it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution. Thus, in the case of Shew Bhagwan Goenka v. CTO [1973] 32 STC 368, the Calcutta High Court considered the West Bengal Taxation Laws (Amendment) Act of 1969, in so far as it gave retrospective operation to a new definition of business incorporated retrospectively by virtue of the amendment. The court observed that the object of the amendment was not to remove or rectify any defect in phraseology or lacuna or to validate proceedings which had taken place on the basis of the earlier enactment, the object was to enlarge the scope and ambit of the expression business by including within it transactions which without the amendment could not be brought within the meaning of the word business as understood in the commercial world and as interpreted by courts of law. The effect of such retrospective operation of the amendment would be to impose an unexpected liability in respect of transactions which, when they took place, were not subject to any charge or liability under the Act. The retrospective amendment, the court said, imposed an unreasonable restriction upon a person's fundamental right guaranteed under Article 19(1)(f) and (g) of the Constitution and was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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