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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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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: Whether filing a suit in India for recovery of the balance export price and obtaining a decree constituted taking "all reasonable steps" to receive or recover payment for the goods under Section 18(3) of the Foreign Exchange Regulation Act, 1973, so as to rebut the statutory presumption of contravention.
Analysis: Section 18(3) creates a rebuttable presumption that an exporter has not taken all reasonable steps to recover payment where export proceeds remain unpaid beyond the prescribed period. The burden lies on the exporter to show, on the facts of the case, that fair, practicable and sensible steps were taken to recover the dues. Filing a civil suit in India was held to be a lawful and competent step, since the export transaction originated in India and the Indian court had jurisdiction to entertain the recovery action. The inability to execute the decree in India due to absence of assets, and the impracticability or cost-ineffectiveness of pursuing execution abroad, were accepted as plausible explanations. On these facts, the steps taken by the exporter were sufficient to displace the statutory presumption.
Conclusion: The filing of the suit and obtaining of the decree were held to be reasonable steps within Section 18(3), and the statutory presumption stood rebutted.
Final Conclusion: The impugned show cause notice, adjudication order, and appellate order were set aside, and the appeals that survived were allowed.
Ratio Decidendi: Under Section 18(3) of the Foreign Exchange Regulation Act, 1973, whether an exporter has taken all reasonable steps to recover unpaid export proceeds is a fact-sensitive inquiry, and filing a suit in a competent Indian court may suffice to rebut the statutory presumption where further recovery steps are not shown to be reasonably practicable.
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