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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the appellants who were in charge of the companies during the relevant period were liable for contraventions relating to non-realisation of export proceeds and non-submission of import evidence. (ii) Whether the appellants who were not shown to be in charge of the day-to-day affairs during the relevant period could be fastened with liability under the company-liability provision.
Issue (i): Whether the appellants who were in charge of the companies during the relevant period were liable for contraventions relating to non-realisation of export proceeds and non-submission of import evidence.
Analysis: The record showed persistent non-realisation of export proceeds and failure to establish sufficient steps for recovery. The Tribunal found that the requests for set-off/write-off did not amount to an approval by the Reserve Bank of India and did not absolve the companies or those controlling them from compliance. It further held that the chairman and the director who stepped into the shoes of the earlier managing director during the relevant period were connected with the conduct of business and that the contraventions stood established against them.
Conclusion: The liability and penalties were upheld against the appellants found to be in charge during the relevant period, and their appeals were dismissed.
Issue (ii): Whether the appellants who were not shown to be in charge of the day-to-day affairs during the relevant period could be fastened with liability under the company-liability provision.
Analysis: The Tribunal found no material showing that the later-appointed executive and the overseas director were in charge of, or responsible for, the conduct of the companies' business during the period when the contraventions occurred. On that basis, the requirements for fastening personal liability under the company-liability provision were not met in their case.
Conclusion: The penalties against those appellants were quashed and set aside, and their appeals were allowed.
Final Conclusion: The adjudication was sustained only against the appellants shown to have been responsible for the companies during the relevant period, while the others escaped personal liability for want of the necessary managerial nexus.
Ratio Decidendi: Personal liability for company contraventions under the company-liability provision attaches only to those who were in charge of and responsible for the conduct of business at the time of the contravention, and it cannot be imposed merely because a person held a directorship or executive title without such responsibility being shown.
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