The Bombay High Court has rejected a government body’s method of calculating incentives offered to operators under the foreign trade policy.
A division bench comprising Justice D.Y. Chandrachud and Justice A.V. Mohta said the method was overpowering the country’s foreign trade policy, while ruling in favour of Vodafone Essar that had contested it in court.
Vodafone Essar had filed a writ petition in the Bombay High Court in December 2010, challenging a policy circular issued by the director general of foreign trade in July 2010.
The director general had issued a circular that sought to define new eligibility criteria for availing incentives from a plan, the served from India scheme, and new measures of quantifying the scheme’s benefits to be granted. The circular also sought to re-open all scheme-related cases for the telecom sector, re-compute entitlements for past periods and make recoveries.
Effectively, operators got a complicated formula for calculating their turnover from exports, which instigated Vodafone Essar to file the writ petition. The operator said that the trade body’s circular hampered or did not permit it to avail incentives offered under the country’s foreign trade policy.
As per the scheme, telecom companies were to get a 10 per cent incentive in the form or a scrip or licence for paying custom duties on imports, or services offered by operators to customers using international roaming in India.
