Hyderabad: Telangana high court has quashed a 2018 Directorate General of Foreign Trade (DGFT) circular that retrospectively restricted export benefits under Service Exports from India Scheme (SEIS), granting relief to Adani Gangavaram Port Limited (AGPL). The court set aside the cancellation orders and directed a refund of 2.95 crore with interest.Delivering the verdict recently, Justice Nagesh Bheemapaka observed that once a central policy circular was declared ultra vires (beyond authority) by a constitutional court, it suffers a fatal legal defect that applies across the country. The judge also pointed out that the interpretation of law was not how the authorities deem it to be, and they cannot feign ignorance or pretend to be naïve about the operation of legal proceedings.AGPL, a port operator engaged in maritime logistics, was originally granted SEIS benefits for the 2015-16 and 2016-17 financial years. The dispute began after DGFT issued a circular in 2018 limiting SEIS eligibility to “actual service providers” like tug operators, thereby excluding port operators who utilised third-party arrangements for partial marine operations.The petitioner, formerly known as Adani Gangavaram Port Pvt Limited, operated from Vizag, Andhra Pradesh, and had its corporate office at Jubilee Hills, Hyderabad. It approached Telangana high court challenging DGFT order.AGPL argued that the circular illegally redefined eligibility criteria through an executive clarification rather than a formal statutory notification. It further contended that the circular had already been quashed by the Bombay and Karnataka high courts, rendering it void nationwide.The company contended it had paid approximately 2.95 crore in 2021, including interest to DGFT, solely to avoid coercive action and ensure business continuity during the investigation.DGFT argued AGPL’s petition was not maintainable because it had bypassed statutory appellate remedies. It maintained the circular was merely clarificatory, ensuring benefits reached those who actually earned foreign exchange rather than “aggregators” or intermediaries. It also claimed the order cancelling the benefits was legally served despite being returned undelivered by the post office.Taking a serious note of DGFT’s action against the petitioner in violation of court order, the court noted that DGFT lacked the legislative competence to introduce substantive conditions not found in the original Foreign Trade Policy. It clarified that port operators providing integrated services were primary providers, not mere aggregators, even when subcontracting ancillary tasks like tug operations.The bench further noted that merely dispatching a notice that returned as “undelivered” did not constitute valid service when withdrawing substantial vested benefits. Concluding that DGFT’s stance would perpetuate illegality, the court set aside the cancellation orders and directed authorities to refund the 2.95 crore with interest and disposed the petition.
