The Bench dismissed a public interest litigation challenging the applicability of COTPA labelling mandates and export exemptions to duty-free shops at international airports, holding such locations are beyond customs frontiers and sales constitute exports.
Petition dismissed; Rule discharged; no order as to cost.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Crimpil3-19
IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION
CRIM. PUBLIC INTEREST LITIGATION St. NO. 3 OF 2019
Sandeep Patil. ..Petitioner. Versus Union of India & Another. ..Respondents.
Mr. Anup Patil for the Petitioner.
Mr. Vikram Nankani, Senior Advocate with Abhay Jadeja, Mr. Varun Satiya I/b Crawford Bayley & Co., for Respondent No. 2. Mrs. P. H. Kantharia for Respondent No. 1-Union of India. Mrs. P. P. Shinde, APP for the Respondent – State.
Coram : RANJIT MORE & SMT. BHARATI H. DANGRE, JJ. Date : February 6, 2019 .
P. C. :
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and 47 of the Constitution of India and not ultra vires of the Constitution of India. The Petitioner is also seeking directions for initiating appropriate criminal / penal action under section 20 the COTPA against Respondent No.2. The Petitioner is seeking further direction to forthwith prohibit sale and distribution of cigarettes and other tobacco product manufactured by Indian manufacturers and suppliers at the duty free shops operated by Respondent No.2 until such time the health warnings as specified under the COTP Labelling Amendments Rules, 2014 are implemented.
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of the Respondents are in violation of Article 21 of the Constitution of India as such actions directly enure for the benefit of an industry which has been found to manufacture products directly and substantially prejudicing the right to life of the entire citizenry, both present and future. Relying upon Article 47 of the Constitution of India, the Petitioner contends that it is obligatory for the State to take steps including prohibition, to curb use of intoxicants in order to improve health. The Petitioner emphasizes that as a matter of fact safeguarding the public health has been defined as a primary duty of the State. To substantiate his contention, the learned counsel for the Petitioner relied upon the decision of Madhya Pradesh High Court in Vasu Clothing Private Limited v. Union of Indi a 1 . The Petitioner submitted that decision of this Court in A-1 Cuisines Pvt Limited v. Union of Indi a 2 and decision of the Apex Court in M/s. Ashoka Hotel (Indian Tourism Development Corporation Limited v. Assistant Commissioner of Commercial Taxe s 3 are per incuriam and erroneous for not considering the territorial extent of India as per the Constitution of India. The Petitioner alleged that section 1(2) of COTPA is ambiguous. He submitted that sales by duty free shops, whether at arrival or departure terminals, are erroneously construed as “exports”,
1 Judgment dated 17.12.2018 in Writ Petition No. 17999 of 2018.
2 Judgment dated 28th November 2018 in Writ Petition [Nagpur bench] No. 8034 of 2018. 3 (2012) 3 SCC 204
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thereby erroneously extending the benefit of impugned section 32 of the COTPA.
COTPA :-
section 2(d) - “export” with its grammatical variations and cognate expressions, means taking out of India to a place outside India”
Customs Act, 1962 :-
Section 2(18) - “export” with its grammatical variations and cognate expressions, means taking out of India to a place outside India.
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IGST Act, 2017 :-
Section 2(5) - “export of goods” with its grammatical variations and cognate expressions, means taking out of India to a place outside India.
“6.00 Introduction and objective
Units undertaking to export their entire production of goods and services (except permissible sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme....
Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation.
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EOU/ EHTP / STP/ BTP are permitted to
(i) export goods for holding / participating in exhibitions abroad with permission of DC.
(ii) personal carriage of gold / silver / platinum jewellery, precious, semi – precious stones, beads and articles.
(iii) Export goods for display / sale in permitted shps set up abroad.
(iv) Display / sell in permitted shops set up abroad, or in showrooms of their distributors/agents.
(v) Set up showrooms/ retail outlets at International airports.
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exhausted. It is also an admitted fact that the appellant had executed bonds and the goods, which had been brought from foreign countries, had been kept in bonded warehouses by the appellant. When the goods are kept in the bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country and as stated by the learned senior counsel appearing for the appellant, the appellant was selling the goods from the duty free shops owned by it at Bengaluru International Airport before the said goods had crossed the customs frontiers. Thus, before the goods were imported in the country, they had been sold at the duty free shops of the appellant.
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. The above observations of the Apex Court make it abundantly clear that duty free shops at International airports are deemed to be outside India or beyond the geographical area-territory of India and therefore for all purposes they are treated to be outside India.
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other taxes, the area of duty free shops shall be deemed to be the area beyond the customs frontiers of India and the transaction would be said to have taken place outside India.
Commissioner of Custom s 4 the Apex Court took cognizance of the fact that business undertaken at the departure duty free shop is in the nature of export. In fact pursuant to this order, the stocks of tobacco products held by Respondent No. 2 at duty free shops came to be released by the Department of Customs after being satisfied that the business undertaken from the duty free shops at departure is export. In pursuance of this order of the Apex Court, this High Court in the matter of DFS India Pvt. Ltd and another v. the Commissioner of
4 Order dated 12th March 2010 in SLP (C) No. 2436 of 2010
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Custom s 5 also granted final relief in favour of Respondent No. 2. If the legislative intent which is also supported by various precedents noted above, is not to extent the restriction under the COTPA to shops situated beyond India and not to apply the restrictions on passengers importing tobacco products, that is not trade or commerce. Even in GST regime, duty free shops at international airports are considered non taxable area and their sales whether at arrival or departure lounge are considered as export.
thus :
“16. We are of the view that it was not open to the High Court to hold that the judgment delivered by this Court in C.A.No.4343 of 1988 was per incuriam.
17. If the view taken by the High Court is accepted, in our opinion, there would be total chaos in this country because in that case there would be no finality to any
5 Writ Petition No. 2578 of 2009.
6 (2015) 2 SCC 727.
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order passed by this Court. When a higher Court has rendered a particular decision the said decision must be followed by a subordinate or lower Court unless it is distinguished or overruled or set aside. The High Court had considered several provisions which, in its opinion, had not been considered or argued before this Court when C.A.No.4343 of 1988 was decided. If the litigants or lawyers are permitted to argue that something what was correct, but was not argued earlier before the higher Court and on that ground if the courts below are permitted to take a different view in a matter, possibly the entire law in relation to the precedents and ratio decidendi will have to be re-written and, in our opinion, that cannot be done. Moreover, by not following the law laid down by this Court, the High Court or the subordinate Courts would also be violating the provisions of Article 141 of the Constitution of India.”
[SMT. BHARATI H. DANGRE, J.] [RANJIT MORE, J.]
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3 issues framed by the court
Whether Section 32 of COTPA providing for export exemption applies to duty-free shops at international airports operated by the State.
Whether sales at duty-free shops situated beyond customs frontiers are considered exports under the COTPA and Consonant with Article 14 and 21.
Whether the petition challenging the applicability of COTPA labelling rules to duty-free shops has any legal merit.
Colour shows how this judgement treated each authority
Vasu Clothing Private Limited v. Union of IndiaDistinguished¶15
A-1 Cuisines Pvt Limited v. Union of IndiaExplained¶19
M/s. Ashoka Hotel (Indian Tourism Development Corporation Limited v. Assistant Commissioner of Commercial Tax)Explained¶15
DFS India Private Limited vs. Commissioner of CustomsExplained¶73
South Central Railway Employees Co-op. Credit Society Employees Union v. B. YashodhabaiExplained¶80
5 provisions across 2 enactments
Sandeep Patil
Union of India
Respondent No. 2
RANJIT MORE
BHARATI H. DANGRE
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
