Gujarat High Court Quashes Notification Withdrawing Transport and Marketing Assistance Scheme

The Gujarat High Court on 5 February set aside a 2022 Commerce Ministry Notification that withdrew the Transport and Marketing Assistance (TMA) Scheme for certain agricultural products with retrospective effect.

A Bench of Justice A.S. Supehia and Justice Pranav Trivedi directed exporters' claims accrued before the cancellation of the Scheme must be processed expeditiously. It held:

“All the benefits accruing till the issuance of Notification dated 25.03.2022 shall be extended to the petitioners, including raising claims for the period prior to the issuance of impugned Notification, for which the petitioners were prevented from filing applications.”

Launched in March 2019, the TMA Scheme was introduced to provide assistance for the international component of freight and marketing of agricultural products. It aimed to mitigate the disadvantages of higher transportation costs due to trans-shipments and to promote brand recognition of Indian agricultural products in specified overseas markets.

A new chapter on the Scheme was incorporated in the Foreign Trade Policy, 2015‑2020. For specified agricultural produce, including marine and plantation products, registered exporters under TMA could claim reimbursement for freight (up to specified limits) and marketing support.

However, the Ministry of Commerce and Industry decided to abolish the TMA Scheme and withdrew the export benefits for agricultural products effective 9 September 2021.

Petitioners, whose reimbursement claims were denied, filed writ petitions challenging the retrospective cancellation. The Union contended that a subsidy scheme cannot be enforced as a matter of right and may be withdrawn at any time.

The High Court noted that, although the Government was empowered to discontinue a scheme, Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 rendered the TMA Scheme statutory in nature.

The Bench held that amendments to the Agriculture Export Policy led to accrued benefits from the introduction of TMA until its withdrawal via the Commerce Ministry Notification dated 25 March 2022.

Reaffirming that policy changes cannot operate retrospectively, the Court relied on Supreme Court precedents such as Asian Food Industries, Viraj Impex, and Kanak Exports, emphasising that cancellation of export benefits is enforceable only prospectively.

While permitting exporters to claim reimbursement for the past period within 12 weeks, the Court observed:

“Thus, the Supreme Court, by examining the provisions of Section 5 of the Act, has held that Section 5 of the Act neither permits/empowers the Government to make amendments with retrospective effect, nor it allows to close the Scheme retrospectively, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. Hence, the impugned Notification dated 25.03.2022 abolition/foreclosing the Scheme introduced vide Notification dated 09.09.2021 retrospectively is hereby quashed and set aside.”

Tracing the policy changes, the High Court reiterated that vested rights accrued to exporters who had already made shipments and incurred costs cannot be cancelled retrospectively.

Accordingly, the Court directed the Union to extend all benefits to the petitioners up to 25 March 2022 and allowed the writ petitions.

For Petitioner: Senior Advocates Dhaval C. Dave, Mihir Joshi with Advocates Udit N Vyas, Mrugen Purohit, Aditya Parikh

For Respondent: Senior Standing Counsels Ankit Shah, Harsheel Shukla