Delegated Legislation cannot violate Statute: Bombay HC allows Benefits SEI Scheme to Exporter without IEC [Read Order]

The division bench of Bombay High Court presided by Justice S. V. Gangapurwala and Justice Vinay Joshi has held that delegated legislation cannot violate the statute and allows benefits Services Export from India Scheme (SEIS) to exporters without Import Export Code (IEC).

The petitioner, Smarte Solutions Pvt. Ltd, is engaged in providing high-quality data services. The petitioner’s services i.e., market research services are eligible for SEIS benefits, as introduced under the Foreign Trade Policy 2015-20 (FTP). The petitioner-Company tried in filing a SEIS application since the petitioner was unable to make an online application, it has tendered it manually. The Authorities of DGFT refused to entertain the same. Therefore, the petitioner has dispatched the application along with relevant documents through Post.

The petitioner had approached the Policy Relaxation Committee of DGFT it disposed of the application stating that the petitioner-Company should have held a valid IEC number at the time of the rendition of export services. The petitioner has filed a review application; however, it was similarly disposed of. Being aggrieved, the petitioner-Company has invoked the writ jurisdiction.

The counsel for the petitioner submitted that the petitioner’s eligibility for availing benefit under SEIS was rejected merely on technicalities. One of the conditions to avail of the benefit under the SEIS is that the service provider should have an active IEC number at the time of rendering services for which SEIS befits have been claimed. The petitioner had obtained an IEC number before applying for the benefit of the scheme. It was further submitted that the requirement of obtaining an IEC number at the time of rendering services was not a statutory requirement.

The counsel for the petitioner further submitted that the FTP is notified by the Central Government in the exercise of the powers conferred under Section 5 of the FTDR Act, therefore, policy notified under the FTDR Act should be in conformity with the provisions of the said Act. The delegated legislation cannot be contrary to the original statute. The delegated powers are for making rules for carrying out the purpose of the Act without adding or substituting any right or obligation.

The High Court observed that the proviso does not lay down that the IEC number is essential at the time of rending services of said specified kind. The requirement of an IEC number is only for taking benefits under the scheme. Therefore, it is abundantly clear that the eligibility criteria of Clause 3.08(f) of the FTP have imposed additional restrictions on having an IEC number at the time of rendering services which was not the intent or purport of the statute.

The division bench has held that “we hereby allow the petition and direct the respondents to consider the petitioner’s application without insisting for an active IEC number at the time of rendering services”.

Ms. Meetika Baghul and Ms. Shehnaz V. Bharucha appeared on behalf of the petitioner and respondent respectively.

To Read the full text of the Order CLICK HERE

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