Messrs Aalidhra Textool Engineers PVT LTD vs. Union Of INDIA

Facts

The petitioners, Messrs Aalidhra Textool Engineers Pvt Ltd and others, are manufacturers of textile machinery who export their products. They were issued two Merchandise Exports from India Scheme (MEIS) Duty Credit Scrips, one dated May 15, 2019, for Rs. 26,99,644, and another dated July 16, 2019, for Rs. 38,65,512. These scrips were valid for 24 months. Due to the COVID-19 pandemic and the national lockdown imposed from March 24, 2020, the petitioners could not utilize the majority of the scrips within their validity period, leaving Rs. 59,10,545 unutilized. They applied to the Policy Relaxation Committee (respondent no. 2) for an extension of the validity period, which was rejected on November 29, 2021. The petitioners challenged this rejection before the High Court.

Held

The Court held that the Policy Relaxation Committee (respondent no. 2) erred in rejecting the petitioners' applications for extension of the validity period of the MEIS Duty Credit Scrips. The Court found that the Committee had ignored the Supreme Court's decision in Suo Motu Writ Petition (Civil) No. 3/2020, which extended the period of limitation for judicial and quasi-judicial proceedings until February 28, 2022. The Court emphasized that the Supreme Court's orders, passed under Article 142 read with Article 141 of the Constitution, are binding on all authorities. Since the petitioners were unable to utilize the scrips due to circumstances beyond their control (COVID-19 pandemic) and the respondents were bound by the Apex Court's orders to exclude the period of limitation falling within the extended period, the rejection of the applications without considering these factors was improper. The Court quashed the impugned decision and directed the respondents to extend the validity period of the scrips until they are fully utilized by the petitioners.

Key Issues

1. Whether the Policy Relaxation Committee (respondent no. 2) erred in rejecting the petitioners' applications for extension of the validity period of MEIS Duty Credit Scrips, despite the disruption caused by the COVID-19 pandemic and the Supreme Court's orders extending limitation periods? (Question of law) The petitioners argued that the rejection was arbitrary and unjustified, as they could not utilize the scrips due to circumstances beyond their control, namely the COVID-19 pandemic and the resultant lockdown. They contended that the Supreme Court's suo motu order in Writ Petition (Civil) No. 3/2020, extending limitation periods until February 28, 2022, should have been considered. They also cited notifications from the Ministry of Commerce and Industry extending timeframes for other incentive schemes and decisions of various High Courts regarding GST refund claims. They asserted that the unutilized amount represented genuine export benefits lost due to the pandemic. The respondents argued that the Policy Relaxation Committee considered the petitioners' case on merits and found no genuine hardship or merit in their submissions, thus it was not a matter of right for the petitioners to claim an extension. They maintained that the Committee has discretion to grant relaxation only in cases of genuine hardship impacting trade, and their decision not to extend the validity period was a policy decision that should not be interfered with.