Case: National Co. Ltd. Calcutta Vs. Deputy Director Of Tax Credit (Exports)Calcutta &amp; Ors

Government may, by notification in the Official Gazette, add to, amend, vary or rescind, any scheme made under this section." 3. It was in exercise of the power conferred on the Central Government under section 280ZE read with section 280ZC that the Central Government made the Tax Credit Certificate (Exports) Scheme, 1965. The first notification dated 6th June, 1966, amended paragraph 3 of the scheme by providing that no tax credit certificate shall be granted in respect of exports where the sale proceeds were received after 5th June, 1966. This provision was relaxed by the second notification dated 8th August, 1966, by providing that in case of exports made on or before 5th June, 1966, tax credit certificate shall be granted according to the provisions of the scheme even if the sale proceeds were received after that date, but in respect of exports made after 5th June, 1966, the rate specified in column 3 of Table A shall be nil and no tax credit certificate shall be granted in respect of such exports. 4. The argument urged on behalf of the appellant was that it was not competent to the Central Government to provide in the scheme framed under section 280ZE read with section 280ZC that no tax credit certificate shall be granted in respect of exports of any goods or merchandise. The only power which, according to the appellant, the Central Government had under these two sections was to frame a scheme specifying some goods or merchandise the export of which would entitle an exporter to tax credit certificate. The appellant conceded that the Central Government was not bound to specify any particular category of goods or merchandise in the scheme framed by it but the limited contention was that some goods or merchandise must be specified in the scheme and since in the present case the scheme as amended provided that tax credit certificates shall not be granted in respect of exports of any goods or merchandise, the two notifications making this amendment in the scheme were ultra vires the power of the Central Government under sections 280ZE and 280ZC. This contention, though it found favour with the single judge of the Calcutta High Court who heard the writ petition in the first instance, is in our opinion wholly without force and cannot be sustained. A mere look at the scheme of the provisions of sections 280ZC and 280ZE is sufficient to expose the invalidity of this contentionSub-section (1) of section 280ZC undoubtedly provides that a person who exports any goods or merchandise out of India after 28th February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947, and the rules made thereunder, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding 15 per cent. of the amount of such sale proceeds. But this right conferred on an exporter is subject to the other provisions of section 280ZC and these other provisions include sub-sections (2) and (3). Sub-section (2) provides in so many terms that the goods or merchandise in respect of which a tax credit certificate shall be granted under sub-section (1) and the rate at which the amount of such certificate shall be calculated, shall be such as may be specified in the scheme. It is, thus, left to the scheme to be framed by the Central Government to specify the goods or merchandise in respect of which an exporter shall be entitled to tax credit certificate as also the rate at which the amount of such certificate shall be calculated. It is not in respect of every category of goods or merchandise that an exporter can claim to be entitled to tax credit certificate but it is only in respect of such goods or merchandise as are specified in the scheme. The policy an the principle which would guide the Central Government in selecting the goods or merchandise for this purpose are set out in sub-section (3) which provides that in specifying the goods or merchandise as also the rates, the Central Government shall have regard to the various factors set out in that sub-section. These are the factors which would influence the choice of the Central Government in selecting the goods or merchandise for the purpose of grant of tax credit certificate and also in determining the rates at which tax credit certificate should be given. Section 280ZE, sub-section (1), confers power on the Central Government to frame one or more schemes in relation to tax credit certificate to be granted under section 280ZC and under sub-section (2), such scheme or schemes may provide, inter alia, for the goods or merchandise and the rate or rates for the purposes of section 280ZC. We fail to see how any obligation can be spelt out from these provisions requiring the Central Government to frame a scheme specifying the goods or merchandise in respect of which tax credit certificate shall be granted. It would indeed be absurd to suggest that the Central Government is under an obligation to make a scheme and the requirement of the statute would be satisfied so long as the Central Government specifies some goods or merchandise in the scheme. There is no reason why the Central Government should not be entitled to say that having regard to the factors set out in sub-section (3) of section 280ZC, it does not think it desirable that tax credit certificate should be granted in respect of any goods or merchandise for the time being. Sub-section (3) of section 280ZC confers power on the Central Government in so many terms to rescind a scheme made by it and that also supports the view that the Central Government may, keeping in view the factors set out in sub-section (3) of section 280ZC, decline to make a scheme or provide in the scheme that there shall be no goods or merchandise in respect of which tax credit certificate shall be granted. 5.

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

Explanation:
1[ds]This contention, though it found favour with the single judge of the Calcutta High Court who heard the writ petition in the first instance, is in our opinion wholly without force and cannot be sustained. A mere look at the scheme of the provisions of sections 280ZC and 280ZE is sufficient to expose the invalidity of this contentionSub-section (1) of section 280ZC undoubtedly provides that a person who exports any goods or merchandise out of India after 28th February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947, and the rules made thereunder, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding 15 per cent. of the amount of such sale proceeds. But this right conferred on an exporter is subject to the other provisions of section 280ZC and these other provisions include sub-sections (2) and (3). Sub-section (2) provides in so many terms that the goods or merchandise in respect of which a tax credit certificate shall be granted under sub-section (1) and the rate at which the amount of such certificate shall be calculated, shall be such as may be specified in the scheme. It is, thus, left to the scheme to be framed by the Central Government to specify the goods or merchandise in respect of which an exporter shall be entitled to tax credit certificate as also the rate at which the amount of such certificate shall be calculated. It is not in respect of every category of goods or merchandise that an exporter can claim to be entitled to tax credit certificate but it is only in respect of such goods or merchandise as are specified in the scheme. The policy an the principle which would guide the Central Government in selecting the goods or merchandise for this purpose are set out in sub-section (3) which provides that in specifying the goods or merchandise as also the rates, the Central Government shall have regard to the various factors set out in that sub-section. These are the factors which would influence the choice of the Central Government in selecting the goods or merchandise for the purpose of grant of tax credit certificate and also in determining the rates at which tax credit certificate should be given. Section 280ZE, sub-section (1), confers power on the Central Government to frame one or more schemes in relation to tax credit certificate to be granted under section 280ZC and under sub-section (2), such scheme or schemes may provide, inter alia, for the goods or merchandise and the rate or rates for the purposes of section 280ZC. We fail to see how any obligation can be spelt out from these provisions requiring the Central Government to frame a scheme specifying the goods or merchandise in respect of which tax credit certificate shall be granted. It would indeed be absurd to suggest that the Central Government is under an obligation to make a scheme and the requirement of the statute would be satisfied so long as the Central Government specifies some goods or merchandise in the scheme. There is no reason why the Central Government should not be entitled to say that having regard to the factors set out in sub-section (3) of section 280ZC, it does not think it desirable that tax credit certificate should be granted in respect of any goods or merchandise for the time being. Sub-section (3) of section 280ZC confers power on the Central Government in so many terms to rescind a scheme made by it and that also supports the view that the Central Government may, keeping in view the factors set out in sub-section (3) of section 280ZC, decline to make a scheme or provide in the scheme that there shall be no goods or merchandise in respect of which tax credit certificate shall be granted.