RELIANCE INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The 1st petitioner is a Public Limited Company. It carries on business of manufacture of petrochemicals. The 1st petitioner sought for permission to raise External Commercial Borrowings ( in short "ECBs") amounting to US $ 300 million to finance thein projects wherefor they filed an application before the 2nd Respondent on 15th March 1993. On that application "in-principle" approval was issued by a letter dated 5th June 1995. The first and second approvals were issued for a sum US $ 150 million each bearinq Nos,6 (50)/93-ECB and 6 (358)/95-ECB by the 2nd respondent in terms of their letter dated 19th July 1995 and 22nd Auqust 1995 respectively. Pursuant to and in furtherance thereof the 1st petitioner entered into a syndicated loan agreement with foreign lenders to the tune of US $ 150 million. It raised balance against US $ 150 million though a Bond Issue. However, durinq the period the matter was pending the 1st petitioner expended an aqgregate sum of approximately US $ 325 million towards project costs from its rupee resources. However, in relation to the said approvals the 1st petitioner applied for exemption from withholding tax. Pursuant to or in furtherance thereof such exemption had been granted in terms of Section 10(15)(iv)(f) of the Income-tax Act (hereinafter referred to as the 'said Act'). On or about 3rd November 1995 the 1st petitioner again applied before the 2nd respondent for raising ECBs for a further sum of US $ 600 million which had subsequently been increased to US $ 642 million. The 1st petitioner thereafter made an application for exemption under Section 10 (15)(iv)(f) of the said Act. On or about 15th February 1996 pursuant to or in furtherance thereof such exemption had been granted in relation to the first and second approvals. The said amount, allegedly had already been spent. The amounts, accord!no to the petitioner, of the loan/Bond Issue under the said two approvals were drawn out and deposited in bank accounts abroad in terms of the guidelines issued by the Reserve Bank of India, wherefor quarterly returns were also filed from time to time. Third approval had been granted by the Central Government on 28th May 1996. Clause 5 thereof is in the following terms :

(2.) Further approval for raising of further ECBs of US $ 100 million by issue of Bonds was granted on 30th July 1996 by a letter bearing No.6(578)95-ECB-Sanotion No.61. Claused (4) of the said approval is as under :

(3.) while granting such approval it was laid down;