Case Law Details
Torrent Power Ltd Vs Union of India (Gujarat High Court)
“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.
The issue can be looked at from another angle. It was clearly mentioned in the applications for the EPCG license made by the writ applicants that the capital goods will be used for distribution of electricity. Thus the EPCG licenses were issued to the writ applicants in full light of the fact that the capital goods were to be used in distribution of electricity. Thus the allegation of misdeclaration against the writ applicants does not merit acceptance. In fact, as pointed out by the learned Senior Counsel on behalf of the writ applicants, there was a specific discussion in the case of one M/s Vadhman Chemicals in the EPCG committee meeting held on 19th September 2014 that since transformer was required for distribution of power and not transmission of electricity, the issuance of EPCG license for the import of distribution transformer was permissible. The EPCG licenses were also issued to the writ applicants despite disclosure by the writ applicants that the capital goods were required for distribution of electricity. 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 arisen. Having granted the EPCG licenses to the writ applicants on the basis of their disclosure that the capital goods will be used in distribution of electricity, the writ applicants cannot now be put to prejudice for the past transactions by issuing retrospective circular. Such retrospective circular, apart from being legally fallacious as held herein before, is also manifestly arbitrary and violative of Articles 14 and 19(1) (g) resply of the Constitution in so far as it operates retrospectively.
We are further fortified in our conclusion by the judgement of the Apex Court in the case of Director General of Foreign Trade vs. Kanak Exports and Another (2016) 2 SCC 226 wherein in the context of Export Import Policy 2002-07 it was held that the policy could not have been retrospectively amended by the Government without there being any express power in this regard and that in any case the retrospective amendment of policy cannot take away vested rights of the exporters.
in the case of Khemka (supra), the Supreme Court held that a penalty not being merely an adjunct to or consequential to an assessment, could not be levied in the absence of an express provision under Section 9 of the Central Sales Tax Act. Section 9 was retrospectively amended. This was challenged in Shiv Dutt Rai Fateh Chand vs. Union of India [1984 AIR 1195 : 1983 SCR (3) 198]. Shiv Dutt Rai’s case (supra) dealt with a penalty under the Central Sales Tax Act. The Supreme Court upheld the retrospective operation of the newly added Sub-section (2A) of Section 9 and held that it did not contravene the provisions of Article 19(1)(f) and (g) of the Constitution. The Supreme Court said that it has to be presumed that all the tax had been collected by the dealers from their customers. There was also no dispute that the law requires the dealer to pay the tax within a specified time, the dealers had also knowledge of the provisions relating to penalty in the General Sales Tax law of the respective States. It was only owing to the defect in the Act pointed out by the Supreme Court in Khemka’s case that penalties became not payable. In the Situation, if the Parliament calls upon the dealers to pay the penalties in accordance with the law as amended with retrospective effect, it cannot be said that there has been any unreasonable restriction imposed on the rights guaranteed under Article 19(1)(f) and (g) of the Constitution even though the period of retrospectivity is nearly 19 years. It also pointed out that the Amending Act provided for exclusion of the period between the date on which the judgment in Khemka’s case , was delivered up to the date of the commencement of the Amending Act in computing the period of limitation for questioning any order levying penalty. Looking to all the circumstances, it said that the Section 9(2A) cannot be said to be violative of Article 19(1)(f) and (g) of the Constitution.
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