2023 (5) TMI 610 - HC - FEMA

Court upholds NGO's FCRA annual return for 2019-2020, despite delay and penalty. Petition disposed of.

The Court acknowledged the delay in opening the FCRA bank account by the NGO Petitioner and the penalty paid. Despite rejecting the refund request, the ... Mandatory designated FCRA account - FCRA bank account requirement - filing of Form FC-4 - penalty for non-compliance with FCRA account requirement - infructuousness of relief - finality of deposit of penaltyInfructuousness of relief - mandatory designated FCRA account - filing of Form FC-4 - Whether the writ petition seeking direction to permit filing of Form FC-4 for F.Y. 2019-2020 without penalty is rendered infructuous by subsequent compliance - HELD THAT: - The Court noted that the petitioner has since opened the designated FCRA bank account at the SBI Sansad Marg branch and has uploaded the FC-4 annual return for F.Y. 2019-2020. Given these subsequent acts of compliance, the primary relief sought - a direction to permit filing/upload of the FC-4 for F.Y. 2019-2020 - has been overtaken by events and is no longer live. The petitioner's present compliance with the statutory requirement for a designated FCRA account and the filing obligation removes the necessity for the original mandamus sought in the petition. [Paras 11]The relief seeking directions to allow filing/upload of Form FC-4 for F.Y. 2019-2020 is rendered infructuous.Penalty for non-compliance with FCRA account requirement - finality of deposit of penalty - Whether the petitioner is entitled to a refund of the penalty deposited for belated opening of the designated FCRA account - HELD THAT: - The Court found that there was an unexplained delay in opening the designated SBI FCRA account beyond the extended deadline and that the petitioner had deposited the penalty with the Ministry. In view of the delay and the deposit of the penalty, the petitioner's prayer for refund was not sustainable. The Court therefore rejected the claim for refund of the penalty. [Paras 15]Prayer for refund of the penalty is rejected.Filing of Form FC-4 - finality of deposit of penalty - Whether the FC-4 annual return uploaded after deposit of penalty will be treated as valid without further penalty - HELD THAT: - Although the petitioner was required to open the designated FCRA account earlier and a penalty was payable for delay, the Court recorded that the petitioner has now opened the SBI account, deposited the penalty and uploaded the FC-4 return for F.Y. 2019-2020. The Court directed that the uploaded FC-4 return shall be accepted as valid and that no further penalties shall be levied in respect of that filing. [Paras 9, 16]The uploaded FC-4 annual return for F.Y. 2019-2020 shall be taken as valid without any further payment of penalties.Final Conclusion: Petition disposed as infructuous in light of subsequent opening of the designated SBI FCRA account, deposit of the penalty and upload of the FC-4 return; refund of the penalty rejected, and the uploaded return accepted as valid without further penalties. Issues involved:The issues involved in the judgment are related to the renewal of Foreign Contribution Regulation Act (FCRA) registration, difficulties faced by the Petitioner in uploading FCRA annual return, the requirement of opening an 'FCRA bank account' with the State Bank of India (SBI), and the penalty imposed for delay in opening the bank account.Renewal of FCRA Registration:The Petitioner, an NGO, obtained FCRA registration in 2011 and applied for renewal in 2016. The Foreign Contribution (Regulation) Amendment Act, 2020 mandated the opening of an 'FCRA Account' with SBI in New Delhi. The Petitioner faced challenges in uploading the FCRA annual return for 2019-2020 due to delayed opening of the designated bank account.Difficulties in Uploading FCRA Annual Return:The Petitioner requested the Court to allow filing and uploading of Form FC-4 for the financial year 2019-2020 beyond the scheduled date without penalty. The Court noted the delay in opening the FCRA bank account and directed the Petitioner to deposit the penalty amount, which was done on 28th October 2022. The annual return was subsequently uploaded.Requirement of FCRA Bank Account with SBI:The Court observed that the Petitioner opened the FCRA bank account in SBI only on 4th October 2021, missing the initial and extended deadlines. However, as the account was now opened and the penalty paid, the relief sought in the petition became infructuous. The Court differentiated this case from previous judgments where similar issues were addressed.Penalty Imposed for Delay:The Court acknowledged the delay in opening the FCRA bank account and the penalty paid by the Petitioner. While the Court rejected the prayer for a refund, it deemed the uploaded FCRA annual return for 2019-2020 as valid without further penalties. The petition, along with pending applications, was disposed of accordingly.