Case: THE SECRETARY, MOC, NEW DELHI-1  Vs. M/S VINOD AND COMPANY

2(o) has defined the expression service to mean a service of any description. The issue essentially is whether in formulating the Exim policy and in providing a regulatory regime, the government performs a service of any description. 20. Since in the present case the relevant Exim policy is for the period from April 1988 to March 1991, it would be instructive to extract the purpose and object of the policy as contained in the foreword to the document; The Import and Export Policy plays a crucial role in the economy as a whole and in particular the industrial and export sectors. The main objectives of the new Policy are - (i) to stimulate industrial growth by providing easy access to essential imported capital goods, raw materials and components to industry and to sustain the movement towards modernisation, technological upgradation and make the industry progressively competitive internationally. (ii) to promote efficient import substitution and self- reliance; (iii) to give a fresh impetus to export promotion by improving the quality of incentives and their administration; and (iv) to simplify and ratioinalise Police and Procedures. These objectives are sought to be achieved keeping in view the constraints of both domestic and external resources. 21. Chapter XIX provided for the Duty Exemption Scheme under which paragraph 239 provided for a special REP facility in the following terms:- Special REP Facility 239. (1) The licence holder under this scheme would be eligible to an REP licence after he has fulfilled the export obligation and the DEEC has been discharged. The value of the REP licence would be equal to 10 per cent of the value addition achieved (f.o.b. value of exports minus c.i.f. value of imports). The value of the REP licence so calculated would be further limited to the REP entitlement on the total f.o.b. value of exports, as per Appendix 17 or as per para 166(2) (For Residual Products) of this policy, as the case may be. The REP licence so issued will be valid for the import of the items as allowed against the relevant export product in Appendix 17 or para 166(2) of this Policy, at the time of issue of the licence. 22. The objects of the policy are essentially to stimulate industrial growth by providing easy access to imported capital goods, raw materials and components, to substitute imports and promote self-reliance and to provide an impetus to exports by improving the quality of incentives. The Exim policy is an incident of the fiscal policy of the State and of its overall control over foreign trade. As an incident of its policy, the State may provide a regime of incentives. The provision of those incentives does not render the State a service provider or the person who avails of the incentives as a potential user of any service. The State, in exercise of its authority to utilise and collect revenue, puts in place diverse regulatory regimes under the law. The regime may provide for modalities for compliance, penalties for breach and incentives to achieve the purpose of the policy. The grant of these incentives does not constitute the State as a service provider. 23. Before a three judge Bench of this Court in Vikas Sales Corporation (supra), the issue for consideration was whether the transfer of an REP licence or Exim scrip to another constitutes a sale of goods within the meaning of state sales tax legislation. Explaining the objectives of the import policy, the Court held: 4. …..The objective behind the licences was to provide to the registered exporters the facility of importing the essential inputs required for the manufacture of the products exported. The essential idea was to encourage exports and for that purpose import licences called REP Licences were issued equal to the prescribed percentage of the value of exports. These licences were made freely transferable. It was provided that the transfer such licences did not require any endorsement or permission from the licencing authority. It was clarified that such would be: governed by the ordinary law. It only required a letter from the transferor recording and evidencing the transfer. On that basis, the transferee; became the due and lawful holder of the licence and could either import the goods permitted thereunder or sell it to another in turn. 24. In Bihar School Examination Board (supra) which was decided by a Bench of two judges, the issue was whether the Board of Examinations governed by state law is amenable to the jurisdiction of the District Forum under the Consumer Protection Act, 1986. Answering the question in the negative, this Court held: 12. When the Examination Board conducts an examination in discharge of its statutory function, it does not offer its services to any candidate. Nor does a student who participates in the examination conducted by the Board, hire or avail of any service from the Board for a consideration. On the other hand, a candidate who participates in the examination conducted by the Board, is a person who has undergone a course of study and who requests the Board to test him as to whether he has imbibed sufficient knowledge to be fit to be declared as having successfully completed the said course of education; and if so, determine his position or rank or competence vis-a-vis other examinees. The process is not, therefore, availment of a service by a student, but participation in a general examination conducted by the Board to ascertain whether he is eligible and fit to be considered as having successfully completed the secondary education course. The examination fee paid by the student is not the consideration for availment of any service, but the charge paid for the privilege of participation in the examination. 25. In the circumstances, it was held that the Board is not a service provider and a student who takes an examination is not a consumer. 26. We are of the view that by analogy, the same principle must govern the present case for the reasons that we have indicated.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]22. The objects of the policy are essentially to stimulate industrial growth by providing easy access to imported capital goods, raw materials and components, to substitute imports and promote self-reliance and to provide an impetus to exports by improving the quality of incentives. The Exim policy is an incident of the fiscal policy of the State and of its overall control over foreign trade. As an incident of its policy, the State may provide a regime of incentives. The provision of those incentives does not render the State a service provider or the person who avails of the incentives as a potential user of any service. The State, in exercise of its authority to utilise and collect revenue, puts in place diverse regulatory regimes under the law. The regime may provide for modalities for compliance, penalties for breach and incentives to achieve the purpose of the policy. The grant of these incentives does not constitute the State as a service provider24. In Bihar School Examination Board (supra) which was decided by a Bench of two judges, the issue was whether the Board of Examinations governed by state law is amenable to the jurisdiction of the District Forum under the Consumer Protection Act, 1986. Answering the question in the negative, this Court held:12. When the Examination Board conducts an examination in discharge of its statutory function, it does not offer its services to any candidate. Nor does a student who participates in the examination conducted by the Board, hire or avail of any service from the Board for a consideration. On the other hand, a candidate who participates in the examination conducted by the Board, is a person who has undergone a course of study and who requests the Board to test him as to whether he has imbibed sufficient knowledge to be fit to be declared as having successfully completed the said course of education; and if so, determine his position or rank or competence vis-a-vis other examinees. The process is not, therefore, availment of a service by a student, but participation in a general examination conducted by the Board to ascertain whether he is eligible and fit to be considered as having successfully completed the secondary education course. The examination fee paid by the student is not the consideration for availment of any service, but the charge paid for the privilege of participation in the examination25. In the circumstances, it was held that the Board is not a service provider and a student who takes an examination is not a consumer26. We are of the view that by analogy, the same principle must govern the present case for the reasons that we have indicated.