Sandeep Patil vs. Union Of INDIA And Anr

Held

The Court held that the challenge to Sections 1(2), 7(3), and 32 of COTPA concerning duty-free shops at international airports lacks merit. The Court found that the definition of 'export' under COTPA is identical to that in the Customs Act, 1962, and the IGST Act, 2017, meaning 'taking out of India to a place outside India.' The Court relied on the Supreme Court's decision in M/s. Ashoka Hotel (Indian Tourism Development Corporation Limited v. Assistant Commissioner of Commercial Taxes) and this Court's decision in A-1 Cuisines Pvt Limited v. Union of India, which established that duty-free shops at international airports are deemed to be outside India or beyond the customs frontiers. Consequently, transactions at these shops are considered to have taken place outside India. The Court also noted that the Foreign Trade Policy of India 2015-2020 permits export-oriented units to set up retail outlets like duty-free shops at international airports, treating sales from these shops as exports. The Court dismissed the Petitioner's argument that the Supreme Court judgments were per incuriam, citing the principle that High Courts cannot declare Supreme Court judgments as such. Therefore, the exemption provided under Section 32 of COTPA for the export of tobacco products was rightly conferred on duty-free shops, and the petition was dismissed.

Facts

The Petitioner filed a Public Interest Litigation seeking to strike down or read down Sections 1(2), 7(3), and 32 of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA). The challenge was specifically concerning duty-free shops operated by Respondent No. 2 at Chhatrapati Shivaji Maharaj International Airport, Mumbai. The Petitioner contended that the sale and distribution of tobacco products in these shops violated mandatory labelling requirements under COTPA and its rules. The Petitioner also sought directions for criminal action against Respondent No. 2 and prohibition of sales until health warnings were implemented. The Petitioner argued that these sales were not exports and thus should be subject to COTPA provisions, citing violations of Articles 14, 21, and 47 of the Constitution. Respondent No. 2 argued that duty-free shops at international airports are considered outside India for customs purposes and that the issue was settled by Supreme Court precedents.

Key Issues

1. Whether Sections 1(2), 7(3), and 32 of the COTPA are ultra vires the Constitution of India, specifically Articles 14, 21, and 47, insofar as they apply to duty-free shops at international airports (Petitioner's contention). The Petitioner argued that sales at duty-free shops are not exports and should be governed by COTPA, violating public health and the right to life. The Petitioner also alleged ambiguity in Section 1(2) of COTPA and that sales were erroneously construed as exports to extend the benefit of Section 32. 2. Whether the duty-free shops operated by Respondent No. 2 are subject to the provisions of COTPA, including its labelling and advertisement regulations (Petitioner's contention). The Petitioner argued that these shops procure tobacco products from domestic and international suppliers and sell them without complying with COTPA and its labelling rules. Respondent No. 2 contended that duty-free shops at international airports are considered situated outside India, beyond the customs frontiers, and that the Supreme Court in M/s. Ashoka (supra) and this Court in A-1 Cuisines (supra) have settled this position. Therefore, COTPA provisions do not apply.