Government cannot retrospectively withdraw export incentive schemes or take away rights accrued under Promissory Estoppel.

In brief

The question

1. Whether the Government can retrospectively withdraw or foreclose an incentive scheme, thereby depriving exporters of benefits for exports already conducted based on existing notifications?

The court held

The Court allowed the petition and quashed the Notification dated 25/03/2022 to the extent that it operated retrospectively.

It also directed

The Court held that the withdrawal of the scheme shall only be effective from the date of the Notification (25/03/2022) and not from 01/04/2021. The Respondents were directed to process the Petitioner's claims and release eligible benefits for the period prior to 25/03/2022 within four months

01Facts

The Petitioner, a registered exporter of agricultural products, sought benefits under the "Transport and Marketing Assistance (TMA) for Specified Agriculture Products Scheme" introduced in 2019

p. 2

By Notification dated 09/09/2021, the Government extended and revised the scheme for exports effected from 01/04/2021 to 31/03/2022

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Relying on this, the Petitioner exported goods at concessional prices

p. 4

However, on 25/03/2022, the Respondent issued a Notification abruptly withdrawing and foreclosing the scheme retrospectively, effectively ending it as of 31/03/2021

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The Petitioner challenged this retrospective withdrawal as arbitrary and a violation of the doctrine of promissory estoppel

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02Issues

i.1. Whether the Government can retrospectively withdraw or foreclose an incentive scheme, thereby depriving exporters of benefits for exports already conducted based on existing notifications?

p. 6 / para. 9

ii.2. Whether the impugned Notification dated 25/03/2022 is legally sustainable in light of the Principle of Doctrine of Promissory Estoppel?

p. 5 / para. 7

03Law Applied

Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, noting that it does not empower the Government to make amendments with retrospective effect or close schemes in a manner that takes away accrued rights

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Doctrine of Promissory Estoppel, citing the Supreme Court precedents in Viraj Impex Pvt Ltd v. Union of India Anr. (2026 INSC 80) and Director General of Foreign Trade v. Kanak Exports ((2016) 2 SCC 226), which establish that while the Government can amend policy, it cannot do so retrospectively to the detriment of those who acted upon the original representation

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04Reasoning

The Court observed that the Petitioner had adjusted its export pricing and margins based on the assurance of the TMA refund provided in the Notification dated 09/09/2021

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The Court reasoned that Section 5 of the Foreign Trade Act does not grant the executive the authority to revoke benefits retrospectively.

p. 6

Since the Petitioner had already fulfilled its obligations (exporting the goods) under the scheme's criteria before the withdrawal notice was issued, a vested right was created. Following the Division Bench's reasoning in Special Civil Application No. 17285 of 2025, the Court found that the retrospective foreclosure was arbitrary and lacked legislative sanction

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