VAZCO HAJ GROUP V. UNION OF INDIA

WP(C)/18259/2018

AI Insights

The case revolves around the eligibility of the Vazco Haj Group, a private tour operator, for registration and allocation of quota for Haj 2018 as per the policy set by the Ministry of Minority Affairs. The petitioner argued that they met the capital requirements stipulated in the policy. However, the Ministry disqualified them based on their financial statements, which indicated insufficient capital. The court examined the submissions, including the financial documents and the Ministry's rationale for disqualification, and found no grounds to interfere with the Ministry's decision.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 740822 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-06-2018
• Assessment Year: misc
• Other Referred Cases: Jeddah Travels and Jeddah Hajj Group v. Union of India - [2014 KHC 5241], Al Ismail Haj Tour v. Union of India - [2016 KHC 6459], W .P .(C).No.20523/2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: N NAGRESH; C G PREETHA
• Assessee Lawyers: G SHRIKUMAR; NAVOD PATTALI
• Keywords: Capital Employed; Disqualification; Private Tour Operator; Haj 2018; Application Scrutiny
• Section: 143(3)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 8TH DAY OF JUNE 2018 / 18TH JYAISHTA, 1940 WP(C).No. 18259 of 2018 PETITIONER(S): VAZCO HAJ GROUP ROOM NO.4/231-F, SECOND FLOOR, ALANKAR BUILDING, BEYPORE P.O., KOZHIKODE - 673015, REPRESENTED BY ITS PROPRIETOR MR.VAZEERUDHEEN M.V. BY ADVS.SRI.G.SHRIKUMAR (SR.) SRI.NAVOD PRASANNAN PATTALI RESPONDENT(S): 1. UNION OF INDIA REPRESENTED BY ITS SECRETARY, MINISTRY OF MINORITY AFFAIRS, 11TH FLOOR, PANDIT DEENDAYAL ANTYODAYA BHAWAN, CGO COMPLEX, LODHI ROAD, NEW DELHI-110003. 2. UNDER SECRETARY MINISTRY OF MINORITY AFFAIRS (HAJ), 3RD FLOOR, ISIL, V.K. KRISHNA MENON BHAWAN, 9 BHAGWAN DAS ROAD, NEW DELHI-110 001. R1,R2 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL R1,R2 BY ADV. SMT.C.G.PREETHA, CGC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 18259 of 2018 (F) APPENDIX PETITIONER(S)' EXHIBITS: EXHIBIT P1: TRUE COPY OF THE POLICY FOR PRIVATE TOUR OPERATIONS FOR HAJ 2018 DATED 9.12.2017 ISSUED BY THE IST RESPONDENT. EXHIBIT P2: TRUE COPY OF THE SCREEN SHOT OF THE OBSERVATION LIST ISSUED BY THE IST RESPONDENT DATED NIL. EXHIBIT P3: TRUE COPY OF THE CLARIFICATIONS SUBMITTED BY THE PETITIONER TO THE IST RESPONDENT DATED NIL. EXHIBIT P4: TRUE COPY OF THE EMAIL ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER DATED 1.6.2018. EXHIBIT P4(A): TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER DATED 31.5.2018. EXHIBIT P5: TRUE COPY OF THE REPLY ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT DATED 2.6.2018 ALONG WITH ANNEXURES. EXHIBIT P6: TRUE COPY OF THE CERTIFICATE DATED 2.6.2018 ISSUED BY M/S. WARRIER AND WARRIER, CHARTERED ACCOUNTANTS FIRM. EXHIBIT P7: TRUE COPY OF THE ORDER DATED 8.5.2014 OF THE HON'BLE SUPREME COURT IN WRIT PETITION (CIVIL) NOS.377,397,395 AND 401 OF 2014. EXHIBIT P8: TRUE COPY OF THE JUDGEMENT DATED 7.5.2018 OF THE HON'BLE SUPREME COURT IN WRIT PETITION (CIVIL) NO.631 OF 2016. EXHIBIT P9: TRUE COPY OF THE NOTIFICATION DATED 20.6.2017 ISSUED BY THE IST RESPONDENT. EXHIBIT P10: TRUE COPY OF THE EMAIL DATED 31.5.2018 ISSUED BY THE 2ND RESPONDENT. RESPONDENTS EXHIBITS: ANNEXURE I: TRUE COPY OF THE CIRCULAR DATED 09.12.2017. ANNEXURE II: TRUE COPY OF THE RELEVANT PAGES OF THE LIST OF THE PTOS WHO HAVE BEEN ALLOTTED WITH QUOTA AND PUBLISHED ON THE WEBSITE. ANNEXURE III: TRUE COPY OF THE TIME SCHEDULE IN RESPECT TO HAJ POLICY 2018. //TRUE COPY// P.S. TO JUDGE prp/ A.K.JAYASANKARAN NAMBIAR, J. ------------------------------- W .P .(C).NO.18259 OF 2018 (F) ----------------------------------- Dated this the 8th day of June, 2018 J U D G M E N T The petitioner is a proprietorship firm which qualifies to be a Category-I Private Tour Operator [PTO] for the purposes of Ext.P1 Notification of the Government of India in the Ministry of Minority Affairs (Haj Division) laying down the policy for allocation of seats for PTOs for Haj 2018. Category - I PTOs are those who are registered with the MEA/MoMA and who have facilitated Hajjis at least for 7 Hajj operations or more. For the said Category of PTOs, 70% of the seats allocated to PTOs, in the Annual Bilateral Agreement with Saudi Arabia, were earmarked for the purposes of proportionate allocation (to the extent possible on equal allocation basis) by draw of lots. In the terms and conditions for registration of PTOs, specified in Ext.P1 document, there is a condition imposed with regard to the minimum capital requirement of a PTO, which reads as follows: “vi. Minimum Capital Employed of Rs.15 lakh in any one of the last two financial years, duly supported by the latest Balance Sheet – audited by the Statutory Auditors and Audit Report.” W.P.(C).No.18259/2018 2 2. The Ministry has also notified the schedule of activities for PTOs for Haj - 2018 with tentative time lines as follows: Ministry of Minority Affairs (Haj Division) …. SCHEDULE OF ACTIVITIES FOR PRIVATE TOUR OPERATORS FOR HAJ 2018 WITH TENTATIVE TIME LINES. (Core Haj period – 19.08.2018 – 24.08.2018.) Sl. No. Date Event / Action Plan 1 1st week of December, 2017 Issue of Circular inviting application for Registration and allocation of Quota to PTOs 2 Last week of December, 2018 Selection of independent Chartered Accountant Firm for scrutiny of applications of PTOs for Haj 2018 and signing of Agreement. 3 2nd week of January, 2018 Last date of Submission of Applications by the PTOs 4 3rd week of January, 2018 Starting of Scrutiny of Applications by the independent Chartered Accountant Firms 5 15.03.2018 Last date of scrutiny of files by the CA firm and submission of draft report 6 20.03.2018 Review of draft report by the Committee of the Ministry and 7 23.04.2018 Submission f observations of the CA Firms 8 24-25.03.2018 Communication to PTOs seeking clarification on the observations of the CA Firm 9 05.04.2018 Last date of submission of clarification by the PTOs on the observations of CA Firm 10 30.04.2018 Submission of Draft Final Report by the CA firm after scrutiny 11 10.05.2018 Consideration of the Report of the CA Firm by the Review and Monitoring Committee of the Ministry W.P.(C).No.18259/2018 3 12 20.05.2018 Submission of final Report by the CA Firms 13 25.05.2018 Review in the Ministry and finalisation of list of eligible PTOs under Category I & II and approval of Competent Authority in the Ministry of Minority Affairs. 14 31.05.2018 Intimation of reasoned order to disqualified PTOs 15 04.06.2018 Draw of Lots (quraah), if any/Allocation of quota in the presence of PTOs/PTO Associations and Publication of list of qualified PTOs on the website who get quota The above schedule has been prepared keeping in view the guidelines of Saudi Government for completion of all process and entering of data in the e path system by 15th June, 2018 corresponding to end of Ramadan 1439H. 3. It is the case of the petitioner that while he had submitted his application in accordance with the time line stipulated by the Ministry of Minority Affairs, and the application was complete in all respects, and accompanied by all the requisite documents, he was served with Ext.P2 communication which indicated that the Ministry required clarification on certain aspects of his application. In particular, the petitioner points to the second objection which deals with the capital employed by the petitioner for the purposes of his business as a tour operator. As already noted, the requirement to be met by the petitioner was that he had to have a Minimum Capital Employed of Rs.15 lakhs in any one of the last two financial years, and this fact was to be certified by the auditors concerned. The Ministry entertained W.P.(C).No.18259/2018 4 doubts as regards whether this condition had been satisfied by the petitioner. In reply to the query posed by the Ministry, the petitioner submitted Ext.P3 explanation, and with reference to the Capital Employed, it was stated as follows: Clarification On the verification of Financial Statements, the amount of Rs.17,59,540.00 shown in the balance sheet relates to payment of Income Tax for the Assessment Year 2012-13. The Income Tax Department issued an assessment order on 12.03.2015 vide section 143(3) of the Income Tax Act, 1961 for the A.Y 2012-13 in which Department reasssessed Income from Hajj Business to Rs.28,90,000/-, other sources to Rs.16,31,120/- and demanded to pay Rs.17,59,540.00 in Financial Year 2015-16. Copy of challan and IT computation form given by Income Tax Department attached herewith for your verification. It may be kindly noted that the amounts of fixed assets, deposits and advances shown under asset side are for business purpose and there are no assets for non-business purpose. Further, it may be noted that the Deposit & Advances of Rs.2,22,919/- includes telephone deposit, office security deposit, advance membership fee to Haj Association, Muthawaf DD (which got refunded in the next year) and TDS which are inevitable/incurred during the normal course of business of the PTO and the same is effectively utilized in the normal course of business of the PTO. The enclosed explanation letter from our Chartered Accountant supports the above fact. Further it may be noted that the minimum capital as required under the clause VI of the annexure A of the PTO is net off the Total assets and outside liabilities. For the relevant year the net capital of the PTO after considering the above works out to Rs.23,19,993/- which is above the minimum requirement as laid down in the PTO Haj Policy. W.P.(C).No.18259/2018 5 4. Thereafter, nothing was heard from the Ministry till 1.6.2018, when, by Ext.P4(a) communication dated 31.5.2018, the petitioner was informed that, for the reasons stated in the said communication, he was not found eligible for registration and allocation of quota for Haj 2018. A perusal of the reasons in Ext.P4(a) would indicate that it was the view of the Ministry that, the capital employed by the petitioner, after adjustment of his liabilities/drawings, was only in an extent of Rs.5,60,453/- which was substantially lower than Rs.15,00,000/- that was required in terms of the policy. While it is the case of the petitioner that the computation of the capital of the petitioner, by the Ministry, is flawed, it is alternatively submitted that the petitioner had sufficient capital, above that required by the policy, for the financial year 2016-17 and, had an opportunity been extended to him to provide the documents to substantiate the availability of capital for the said year, he could have produced the same before the authorities. It is further contended by the learned senior counsel appearing for the petitioner that, the procedure followed by the respondents, in the matter of selection of the PTOs for the purposes of allocation of quota, was inherently unfair, in that, a person who was found disqualified, was not afforded an opportunity to offer his W.P.(C).No.18259/2018 6 comments against the proposal for disqualification, before proceeding to disqualify him. 5. A statement and an additional statement have been filed by the Additional Solicitor General of India, who appears on behalf of respondents 1 and 2. Therein, the details of the policy, the time lines prescribed for the selection process and the findings of the Ministry as regards the application of the petitioner are dealt with, and the decision taken by the Ministry, as noticed in Ext.P4(a) is sought to be justified on the averments stated in the said statement. 6. I have heard the learned senior counsel appearing for the petitioner as also the learned Additional Solicitor General of India appearing for the respondents. 7. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, and particularly taking note of the submissions of the learned senior counsel appearing for the petitioner, placing reliance on the judgments of the Supreme Court in Jeddah Travels and Jeddah Hajj Group v. Union of India - [2014 KHC 5241], Al Ismail Haj Tour v. Union of India - [2016 W.P.(C).No.18259/2018 7 KHC 6459] and the decision of this Court in the unreported judgment dated 23.6.017 in W .P .(C).No.20523/2017, I find that although it is the case of the petitioner that the balance sheet submitted by him, in response to the call for documents to support the application for allocation of seats, clearly indicated that the capital available with him for the year 2015-16 was more than Rs.15,00,000/-, thereby satisfying the requirements of Ext.P1 policy, the observations in Ext.P4(a) communication issued by the Ministry, informing the petitioner of his disqualification, clearly deserve acceptance since it is based on the general accepted principles of accounting which recognise that, in the case of a proprietorship, income tax of the proprietor is treated as drawings, and, therefore, a deduction of the income tax paid for the said year would have to be effected, from the figure provided in the balance sheet towards capital employed, so as to arrive at the net capital available for employment. The finding of the Ministry in Ext.P4(a) that the petitioner did not have sufficient capital in the said year, cannot therefore be faulted on merits. The question then arises for consideration as to whether, if the said finding of the Ministry is sustained, the petitioner ought to have been afforded an opportunity of clarifying the said aspect before a W.P.(C).No.18259/2018 8 final decision regarding his disqualification was taken by the Ministry. I note in this connection, from the procedure and time lines published in the website of the Ministry, well prior to the initiation of the process for selecting PTOs, that the procedure that was to be followed by the Ministry, including the manner in which the scrutiny of applications was to take place, had been published well in advance, and the said time schedules and procedures were not challenged by the petitioner before submission of his application, in accordance with the said procedure. Under the circumstances, it must be assumed that the petitioner had consented to the adoption of the said procedure by the Ministry, and not having challenging the said procedure before submitting his application, the petitioner cannot now, after emerging unsuccessful in the process, be heard to contend that the procedure was inherently flawed. I also note from the published time schedule that, an opportunity was accorded to the PTO's to submit clarifications to the doubts expressed by the Ministry in respect of their applications, based on the observations of the Chartered Accountant Firm employed by the Ministry to scrutinise the applications. Had the petitioner chosen to do so, he could have submitted the document showing eligibility, including the financial statements for the year 2016-17, which showed a capital in excess of W.P.(C).No.18259/2018 9 the requirements (as against the statement for the year 2015-16 that was originally submitted by him), to support his application, before the Ministry. The petitioner, for reasons best known to him, chose not to do so, and it is therefore that his fate was left to be decided based on the balance sheet and financial statement submitted for the year 2015-16 alone. The time schedule prescribed for the scrutiny of applications was with a view to ensure the completion of the entire process of selection of PTO's in such manner that the details of successful PTO's, and the allotments made to them, could be communicated to the Saudi Authorities and the Consulate General of India, Jeddah before 15.6.2018. While I do not find any grounds to interfere with the decision of the Ministry disqualifying the petitioner, it is also likely that the successful PTO's would, by now, have acted on the allocations made to them. Interfering with the said allocation, at this distance of time, would not therefore be in the interests of justice. The writ petition fails, and is accordingly dismissed. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE prp/11/6/18 "