Case Details: Braddock Infotech Pvt. Ltd. Versus Joint Director General of Foreign Trade, Ernakulam (2025) 27 Centax 343 (Ker.)
Judiciary and Counsel Details
- Gopinath P., J.
- S/Shri John Varghese & V. Thulaseedharan Pillai, Advs., for the Petitioner.
- Shri Achuth Krishnan R., CGC, Adv., for the Respondent.
Facts of the Case
The assessee, a Private Limited Company engaged in placement and supply services of personnel, was granted duty credit scrips under the Service Exports from India Scheme (SEIS) as per Chapter 3 of the Foreign Trade Policy (2015-2020). Following an audit review, the competent authority reassessed the assessee’s eligibility and determined that the services provided did not qualify as ‘placement and supply services of personnel’ under the scheme. Consequently, the assessee was directed to refund the duty credit scrip amount, which was duly complied with. However, the department further demanded interest under Section 28AA of the Customs Act, 1962, on the refunded amount. Contending that Section 28AA of the Customs Act, 1962, is not applicable in the absence of specific statutory backing under the Foreign Trade (Development and Regulation) Act, 1992, the assessee filed a writ petition before the Hon’ble Kerala High Court, challenging the demand for interest.
High Court Held
The Hon’ble Kerala High Court held that Section 28AA of the Customs Act, 1962, cannot be invoked to levy interest on refunds made due to ineligibility under the Service Exports from India Scheme (SEIS), as there is no statutory provision in the Foreign Trade (Development and Regulation) Act, 1992, incorporating Section 28AA for such purposes. The Court observed that while Chapter 3 of the Foreign Trade Policy (2015-2020) prescribes interest liability on refunds, a policy framework cannot independently authorize the imposition of interest unless supported by plenary legislation. Accordingly, the Court set aside the demand for interest, ruling in favour of the assessee.
List of Cases Cited
- Bimal Chandra Banerjee v. State of M.P. — (1970) 2 SCC 467 — Referred [Para 3]
- J.K. Synthetics Ltd. v. Commercial Tax Officer — (1994) 4 SCC 276 — Relied on [Paras 3, 5]
- V.V.S. Sugars v. Government of Andhra Pradesh — (1999) 4 SCC 192 — Relied on [Paras 3, 5]
List of Departmental Clarification Cited
- DGFT Public Notice No. 3/2015-20, dated 1-4-2015 [Para 1]
