In our earlier update, we apprised you regarding recent Notification capping benefit under Merchandise Exports from India Scheme (‘MEIS’) to Rs.2 crore per Import-Export Code (‘IEC’) for exports made between September to December 2020. This benefit can further reduce if total government cumulative outlay exceeds Rs.5,000 crores only.

The curtailment of benefit has led to significant loss to exporters. Industry bodies have filed various representations before the Government to reconsider this issue but to no avail. Shri Piyush Goyal, Minister for Commerce and Industry, has recently made it clear that the Government will not roll back this decision as 98% exporters are not impacted by this restriction.

The Government’s action is essentially backing out of promise made by the Government vide various Press Releases and Trade Notices issued in past few months. The Government categorically assured that MEIS benefit will continue till December 2020. This act of Government is contrary to Doctrine of Legitimate Expectation as the benefit has been denied abruptly. Further, this action has an element of retrospectivity for being applicable to export orders received prior to September 2020 for which supplies would be made during September to December 2020. Lastly, this amendment violates Right to equality granted by Constitution of India as it discriminates large exporters vis-à-vis others.

Therefore, the instant Notification is amenable to challenge before Constitutional Courts. Taxpayers can explore filing writ petition challenging the same.

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