Mumbai: Citing a 73-year-old judgment, the Bombay high court said there is a need for a uniform policy by the Centre in tax matters to prevent ‘judicial chaos’. The Centre needs to address the issue in a “National Litigation Policy, so that uniform policy in respect of such issues is followed in proceedings before different high courts in relation to central legislations and more particularly in tax matters,” said a division bench of Justices Girish Kulkarni and Aarti Sathe on Monday, while granting refund and benefits to sugar exporters under a 2021 Remission of Duties and Taxes on Export Products (RoDTEP) scheme that essentially gave Customs’ sops to incentivise exports.In 1953, then Bombay HC Chief Justice M C Chagla had authored a judgment which called for a uniform tax policy on the interpretation of the section of a Central statute. The enunciation by then CJ Chagla “certainly needs to guide the department in the present times, more particularly considering the scores of matters being filed on the same issue before different high courts,” said the bench.Justice Kulkarni, authoring Monday’s judgment, said sometimes the situation gets worse as the I-T department takes a contrary stand before different HCs, causing “different interpretations and orders leading to judicial chaos”. He added: “…once the issue has attained finality…via an authoritative pronouncement by a high court, similar issues ought not to be agitated by the department before other high courts.”Four sugar exporters had petitioned the HC in 2024 to challenge the action of the Customs department in refusing refund and export rebate under RoDTEP scheme for exports of white refined sugar for different periods. The Centre applied a 2022 notification to set out restrictions. The grievance of exporters was that they were “arbitrarily deprived of the benefits of the duty credit under RoDTEP on the exports made” under the Foreign Trade Policy.Senior counsel Darius Shroff and advocates Abhishek Rastogi and Janay Jain, for the petitioners, said a policy and its benefits were denied by a misreading and arbitrary application of later notification to claim sugar exports were totally restricted from any benefits.But advocates Shehnaz Bharucha and J B Mishra, for the Centre and Director General of Foreign Trade, said in September 2021 itself sugar was declared ineligible for duty credit. But the HC noted that Bharucha was not in a position to dispute that by a May 22 notification, sugar export was allowed with specific permission from the directorate of sugar, department of food and public distribution.“No doubt that export of sugar, considering domestic need, ought to be regulated. However, the regulation is in terms of the notifications which certainly permit export of appropriate quota as may be approved by the directorate of sugar. If this is held to be an accepted position by the department, then the benefits of the scheme cannot be denied to the petitioners, who have acted upon the scheme and have undertaken exports which certainly are conducive to the national interest and integral to the foreign trade policy,” said the HC. The bench also accepted Jain’s submission that there was in existence an order of the Gujarat HC on the subject which attained finality with the Supreme Court having dismissed challenges and once the central department has accepted the Gujarat HC ruling then the principles laid down by former CJ Chagla must kick in. The HC held the companies entitled to the benefit of rebate in the sugar exports they did under the Customs notification.
