LexUNION OF INDIA AND ORS. versus COSMO FILMS LIMITED
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A B C D E F G H 185 [2023] 7 S.C.R. 185 185 UNION OF INDIA AND ORS. v. COSMO FILMS LIMITED (Civil Appeal No. 290 of 2023) APRIL 28, 2023 [S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.] Foreign Trade (Development & Regulation) Act, 1992 – Foreign Trade Policy of 2015-2020 (FTP) – Handbook of Procedures 2015-2020 (HBP) – Notification No.18/2015-Customs exempted payment of basic customs duty, additional duty (countervailing duty, special additional duty), safeguard duty and anti-dumping duty on inputs imported against a valid Advance Authorization (AA) – GST regime was introduced w.e.f 01.07.2017 – However, no corresponding amendment was made to the aforesaid Notification w.r.t IGST and compensation cess – Notification No.79/2017- Customs amended the aforesaid Notification by granting IGST and compensation cess exemption, subject to the conditions that the export obligation shall be fulfilled by physical exports only and shall also be subject to ‘pre-import condition’ – Notification No. 33/2015-2020 was also issued, amending various provisions of the FTP, whereby this ‘pre-import condition’ was incorporated in paragraph 4.14 – High Court set aside the mandatory fulfilment of the ‘pre-import condition’ incorporated in the FTP and HBP by the aforesaid two Notifications – As per the High Court, such fulfilment in order to claim exemption of IGST and GST compensation cess on input imported into India for the production of export goods, on the strength of an AA was arbitrary and unreasonable – Sustainability of – Held: Not sustainable – Exporters were made aware of the changes brought about due to the introduction of GST, through a trade notice – However, this trade notice escaped the attention of the High Court – Further, the concept of ‘pre-import condition’ was not alien – Appendix-4J (mentioned in paragraph 4.13 (ii) of the FTP) listed several articles as articles for which the ‘pre-import condition’ was applicable, prior to the GST regime – Furthermore, by paragraph 4.13 of the FTP, the DGFT could impose ‘pre-import conditions’ on articles other than those specified – Retention of the power to impose ‘pre-import conditions’ on articles A B C D E F G H 186 SUPREME COURT REPORTS [2023] 7 S.C.R. other than those specified in Appendix-4J, meant that the DGFT could exercise it, in relation to any goods – High Court did not discuss this aspect and proceeded on the assumption that only specified goods were subject to the pre-import condition – Any category of supply, other than actual exports to other country and supply to SEZ cannot be considered as physical exports – In case the entire exports were not physical exports, the AAs were automatically ineligible for exemption – The introduction of the GST regime resulted in a substantial and fundamental overhaul of the indirect tax structure – There is no constitutional compulsion that whilst framing new law or policies, particularly when an entirely different set of fiscal norms are created, overhauling the taxation structure, concessions hitherto granted should necessarily be continued in the same fashion as they were in the past – Inevitably, this process is bound to lead to some disruption – In this case, the disruption is in the form of exporters needing to import inputs, pay the two duties, and claim refunds – Yet, this inconvenience is insufficient to trump the legislative choice of creating an altogether new fiscal legislation, and insisting that a section of assessees order their affairs, to be in accord with the new law – Therefore, the exclusion of benefit of imports in anticipation of AAs, and requiring payment of duties, u/s.3 (7) and (9) of 1975 Act, with the ‘pre-import condition’, cannot be characterized as arbitrary or unreasonable – Impugned notifications cannot be faulted for arbitrariness or under classification – Impugned judgment of the High Court set aside – Customs Tariff Act, 1975 – ss.3 (7), (9). Foreign Trade (Development & Regulation) Act, 1992 – s.5 – Foreign Trade Policy of 2015-2020 (FTP) vis-à-vis Handbook of Procedures 2015-2020 (HBP) – Held: FTPs are statutory and are framed by the Union, exercising its powers u/s.5 of the FTRA – Whereas, the HBP does not have the status of rules or regulations – It merely contains guidelines. Tax/Taxation – Validity or constitutionality of fiscal laws/ economic measures – Hardship/inconvenience, if relevant – Held: Court is not concerned with the wisdom or unwisdom, the justice or injustice of the law as Parliamen
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