STATE OF KARNATAKA Vs. DEPUTY CONTROLLER

JUDGEMENT

(1.) These four writ petitions are disposed of by the following common order as the grievances of the petitioners therein are identical and they have sought the same relief. The petitioner in Writ Petitioner in Writ Petition No. 7166 of 1989 is Chowgule and Co. Ltd. Mormugao Harbour, Goa. The petitioner in Writ Petition No. 7273 of 1989 is Sociedade de Formento Industrial Ltd. Margao, Goa. The petitioner in Writ Petition No. 10636 of 1989 is V.S. Dempo and Co. Ltd. Campal, Panji, Goa.

(2.) All the petitioners are mine-owners, mining, among other things, manganese and iron ores and they are also exporters of the ores to foreign countries mostly to Japan and Korea, it is alleged in the first of the petitions (I propose to go by the facts stated in that petition) that it entered into an agreement with the foreign buyers on credit price for iron and manganese ore and the foreign buyers sent their ships either owned by them or chartered by them and the petitioners loaded their ore stacked at the berth at the port side by mechanical means into the vessel which carried the ore and sometimes it used barges and loaded the ships on the sea when convenient, depending on the size of the ship which was to be loaded, in any event, all the contracts entered into with the foreign buyer were on the basis of "free-on-board". All such contracts provided a clause for detention of a ship in the port for unforeseen reasons and, in that behalf, the exporters, i.e., the petitioners, had to bear the demurrage charges and pay the same to the owner of the ship or the charterer. The practice all along had been to pay such demurrage and subsequently work out details having regard to the requirement of complying with certain formalities; the payments were made after obtaining the necessary permission from the Reserve Bank of India through regular bank channels.

(3.) It is alleged that, sometime in February, 1988, the first respondent, Deputy Controller, Reserve Bank of India, Exchange Control Department, Panji, Goa, issued circular letters to all exporters requiring them to obtain Income-tax clearance for remittances of demurrage payments, one such specimen of the circular letter is produced a annexure-B to the petition. The substance of that letter is that, on the advice (opinion) of the Central Board of Direct Taxes, the overseas owners vessels chartered by Indian parties attract Income-tax and, therefore, the exporters should ensure that applications for remittances towards demurrage payable on chartered vessels should be duly supported by Income-tax clearance certificates.