TIOL-DDT 2682
10 09 2015
Thursday

YUM Restaurants India Private Limited are famous for running the popular food chains, Pizza Hut, KFC and Taco Bell in India, but that couldn't be the reason for them to figure in DDT.

Under the Foreign Trade Policy of 2004-09, there was a scheme called SERVED FROM INDIA SCHEME (SFIS), the objective of which was to accelerate growth in export of services so as to create a powerful and unique 'Served From India' brand, instantly recognized and respected world over. All Service Providers were eligible for a duty credit scrip.

The 2009-14 Policy continued this scheme with the same objective, but the entitlements were made for Indian Service Providers instead of All Service Providers.

Yum Restaurants India Private Limited has provided wide range of management services to Yum Asia Franchise Pte. Ltd., Singapore in respect of franchisees located in Nepal, Bangladesh, Sri Lanka, Mauritius etc. They applied for the SFIS scrip and was denied the same by the DGFT on the ground that the name of company represents brand not essentially identified as Indian brand.

A single Judge of the Delhi High Court set aside this order of the DGFT and allowed the benefit. This is the famous Yum Restaurants case reported by us in 2015-TIOL-225-HC-DEL-CUS.

While this was holding fort, recently a Bombay High Court judgement upset the Yum judgement.

The Bombay High Court ruled that the intention is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand' instantly recognized and respected world over.' That cannot be achieved by permitting those who are not creating a powerful and unique 'Served   From   India' brand instantly recognized and respected world over. The entity establishing a foreign brand of service and prior to entry in India therefore, will not qualify and cannot be held eligible for FSIS benefit. The brand of such an entity is already created, existing and established. It may not be unique much less served from India exclusively. That does not get instantly recognized and respected world over as Indian brand.

The High Court observed,

With greatest respect to the learned Single Judge of the Delhi High Court he has construed the policy narrowly. The complete picture of the policy, its objects and purpose was not placed before him. With great respect, we disagree with the learned Single Judge. The learned Single Judge failed to note that parties like the Petitioner do not have a vested right in seeking or claiming incentives and benefits under what we call as Duty Credit Scrips. It is only when they fulfill the criteria and the provisions of the nature carved out that they would be entitled to the benefits.

Now the situation is those exporters from Delhi are eligible for the SFIS Scrip, while those from Maharashtra are not and for the rest of the Country, the respective High Courts must decide, while export is from INDIA. This case is obviously heading for the Supreme Court.

Position under Foreign Trade Policy 2015-2020: Maybe the Government conceded to YUM and changed the whole scheme in the new policy. Now it is called Service Exports from India Scheme (SEIS) and the objective is to encourage export of notified Services from India. The eligibility is for Service Providers of notified services, located in India.

Will Yum Restaurants India Private Limited come under the new objective and eligibility? Will the DGFT respect the Government?

We bring you this Bombay High Court order today. Please see Breaking News + Also see video headnote of Yum Restaurant

Babus' Disrespect for High Court Orders Deprecated

IN the above order, though the High Court ruled against the exporter, it was not happy with the behaviour of the Commerce Secretary.

Actually the Bombay High Court had earlier (even before the YUM decision of Delhi High Court came) directed the Commerce Secretary to take a decision in terms of law as expeditiously as possible. (2014-TIOL-2400-HC-MUM-CUS)

By the time the Commerce Secretary took his decision and passed an order against the exporters, the Delhi High Court order had been pronounced and he was BOUND by it. But he so ignored both the Delhi High Court judgement and the Bombay High Court directions that he did not even mention these orders in his DECISION.

The Bombay High Court observed,

While it is true that the Secretary should have been aware that there was an order passed by this Court with great expectation and hope. That expectation and hope is that Government Department and members of the Executive will be fully conscious of their role. Framing a Policy may be the prerogative of those elected by a specific process, however interpretation of all policies rests with the Executive. The members of the bureaucracy are therefore answerable to the people of India. They cannot evolve parameters to interpret the policies contrary to public interest. When in employment and interpreting a policy, Rules or regulations, they ought to be aware that any decision by a Court of law has a binding effect on the Central Government. That a view taken by a Court of law especially by a High Court of a State may not bind other High Courts and in the least the Hon'ble Supreme Court but, its binding nature is something which cannot be questioned by the Central Government. More so, when the Union of India was a party respondent to the Writ Petitions filed by M/s Yum Restaurants, M/s Nokia's Solutions and Networks (P)Ltd and M/s EI Dupont (India) P.Ltd. The judgment of the learned Single Judge delivered on 27th January 2015 was in force and ought to have been referred by the Central Government in the present petitioner's case. Its binding effect cannot be diluted or whittled down by the Central Government just because the parties before it are operating from Maharashtra and the Central Government was deciding the matter pursuant to the directions of the Bombay High Court. Pertinently, the Delhi High Court view is not set aside till date .

The High Court passed the mildest possible strictures observing,

We disapprove and deprecate the manner in which the Secretary passed the order impugned in this writ petition. It was his duty to make a reference to the judgment and decisions cited before him particularly when he was sitting at Delhi and passing the impugned order on behalf of the Central Government at Delhi. The judgment of the Delhi High Court definitely therefore, deserved to be looked at with respect and due regard and considered in depth. We would expect this much from the Secretary in the Department of Ministry of Commerce and Industry. A copy of this order be forwarded to him and these observations being brought to his notice, we hope hereafter such mistakes and errors will not be committed by him .

Even while upholding his order, the High Court was forced to comment adversely on the attitude of the Commerce Secretary.

Yet another instance to show that our babus have only contempt for the judiciary and because of the sagely kindness of the wise judges, they almost always get away with this contempt and every time it happens, what goes up is their contempt for judiciary and not respect.

Income Tax - No Extension of Date for Filing Returns Due on 30th September

INCOME-tax returns for Assessment Year 2015-16 for certain categories of assessees viz companies, and firms, individuals engaged in proprietary business/profession etc whose accounts are required to be audited, are to be filed by 30th September, 2015. The audit report is also required to be filed by the said date.

The CBDT in a Press Release states that the last date for filing of returns due by 30th September 2015 will not be extended. Taxpayers are advised to file their returns well in time to avoid last minute rush.

Most probably they will extend the date.

DG Safeguards Recommends 20% Safeguard Duty on HR Coils

AN application has been filed before the DG, Safeguards on 27th July, 2015 under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 by M/S Steel Authority of India Limited; M/S Essar Steel India Limited, and M/S JSW Steel Limited for imposition of Safeguard Duty on imports of "Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more", into India to protect the domestic producers against serious injury/threat of serious injury caused by the increased imports of the product into India. The domestic industry has also requested for imposition of provisional safeguard duty in view of steep deterioration in performance of the domestic industry as a result of increased imports of the product.

The applicant has pointed out that Steel manufacturers in a number of countries including China PR, Russia, Ukraine have developed huge capacities to cater to demand of steel by developed countries and rest of the world. Most of the developed countries that were traditionally the biggest importers of steel such as United States and the European Union have reduced their dependence on imported steel. This development adversely affected exports of steel from China PR, Russia, Ukraine etc. to developed countries. Manufacturers in these countries had to think of ways to dispose off their production. India happened to be the natural choice for these manufacturers for multiple reasons.

World crude steel capacity at 2351 million tons as on 31 December 2014 has reached a level far in excess of global demand by almost 30% resulting in growing urge to export the surplus steel to countries like India that have good demand.

India, with relatively better demand prospects (domestic demand up by 3.1%) and high domestic prices, has remained an attraction for these steel surplus economies to channelize their excess capacities.

The DG, Safeguards has concluded that that increased imports of the product into India have caused and threatened to cause serious injury to the domestic industry/ producers. There exist critical circumstances, where any delay in application for provisional Safeguard measures would cause damage which it would be difficult to repair, necessitating immediate application of provisional Safeguard duty for period of 200 days, pending final determination of serious injury and threat of serious injury. Considering the average cost of sales of the product by the domestic producers (confidential), a reasonable return on cost of sales excluding interest, the present level of import duties and present average import prices,provisional Safeguard Duty at the rate of 20% (Twenty percent) ad valorem for 200 days which is considered to be the minimum required to protect the interest of domestic industry, is recommended to be imposed on imports of the product.

DG, Safeguards Notification., Dated: September 09, 2015

It's Raining Revenue in CBEC

INDIRECT Taxes Revenue collections have increased by a record 37% in the first five months of the year. Central Excise collections have crossed the one lakh crore mark, with Customs at 85,000 crores and Service Tax at 75,000 crores.

Is India shining, after all?

Customs Supdt demands 10 lakhs bribe - caught by CBI

IT'S not the Government's revenue alone that's going up! A Customs Superintendent at Bangalore airport asked for a bribe of Rs. 10 lakhs from an exporter of silk scarfs, but finally was kind enough to settle for Rs. 2.5 lakhs. Only, the CBI spoiled the show by nabbing him red-handed as he was accepting the bribe. Right now, he is under police custody with the CBI, which may be followed by a judicial custody.

Until Tomorrow with more DDT

Have a nice day.

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