Engineering Services in Telecom Sector or Management Consulting Services in Telecom Sector eligible for benefit under SEIS: Delhi HC grants Relief to Ericsson and Huawei [Read Order]

Engineering Services in Telecom Sector or Management Consulting Services - Telecom Sector - SEIS - Delhi HC - Ericsson - Huawei - Taxscan

The Delhi High Court while granting the relief to the two techno giants, Ericsson and Huawei ruled that Engineering Services in Telecom Sector or Management Consulting Services in Telecom Sector eligible for benefit under Service Exports from India Scheme (SEIS).

The petitioner, Ericsson India Global Services and Huawei Telecommunication Company challenged the instructions dated May 22, 2019, advising that all services, whether Engineering Services (Network Engineering Services, Management and Operation of Network Services (Managed Services) in Telecom Sector or Management Consulting Services) in Telecom Sector, are ineligible for the benefit under the Service Exports from India Scheme announced by the Foreign Trade Policy 2015-20.

Mr.Tarun Gulati, the senior counsel for the petitioners submitted that the Impugned Instructions dated May 22, 2019 are contrary to the FTP inasmuch as they seek to create an additional category of ineligible services for availing the benefit of SEIS.

Mr. Gulati urged that the phrase “Service Providers in Telecom Sector” relates to the service providers who are in the telecom sector and not those who provide services to the telecom sector.

He submits that these are telecom services by themselves and therefore, it is only these telecom services that would be excluded and become ineligible from availing the benefit under the then SFIS and now the SEIS Scheme. He submits that there is no reason for interpreting the exclusion in the FTP 2015-20 in any other manner as, if that were the intention, the respondent would have clearly spelt out the same in the FTP.

The Single Judge Bench of Justice Navin Chawla held that exclusion of ‘Service Providers in Telecom Sector’ from the benefit of SEIS is of a service provider providing telecom services. The Impugned Instructions dated 22.05.2019, therefore, sought to impose fresh restrictions on the eligibility of the service providers entitled to the benefit under SEIS, which amounted to amendment in the policy, and is, therefore, ultra vires the Foreign Trade Policy.

The court while quashing the Impugned Instructions and Order directed the respondents to consider the claims of the petitioner(s) under the SEIS afresh and in accordance with FTP 2015-20.

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