TaxTMI 
TaxTMI 
2017 (6) TMI 957
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....h due interest and comply with the order dated 07.01.2010 of the 5th respondent Tribunal and pass further orders. As the issue involved arises from the same order, the appeals and writ petition are taken up for disposal, all together. 2. The facts of the case are as follows :- M/s. Maars Software International Limited, having its registered office at Chennai, is engaged in the business of software exports and is also specialised in the area of Enterprises Resources Planning (ERP) implementation and has been offering services to both domestic and overseas customers. The company has been earning a substantial amount of foreign exchange for the country, by exporting software solutions to various countries for the over years. In the year 2001, Mumbai branch of the Enforcement Directorate started investigations against the company under Foreign Exchange Management Act, 1999 and summons were issued to Mr. T. Varadharajan, the then Managing Director of the company, who is the respondent in C.M.A No.1998 of 2010 and the 2nd petitioner in W.P.No.15793 of 2010 and statement was recorded. On the basis of the statement, the Assistant Director, Directorate of Enforcement, Mumbai/ 4th resp....
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....laced their materials and advanced their arguments before him. After hearing the submissions made by the parties and on considering the materials on record, the Special Director of Enforcement, Delhi passed an order dated 13.03.2008, holding that the appellant company is guilty of contravention of Section 8 of the Act, read with Regulation 3 of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations 2000 and also read with Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations 2000 and imposed the following penalties, payable by the company :- "32. I impose penalty of Rs. 4,00,00,000/- [Rupees Four Crores only] on M/s. Maars Software International Ltd., Chennai under Section 13 of the FEMA 1999. 33. I also impose penalty of Rs. 1,00,00,000/- [Rupees One Crore only] on Shri T.Varadharajan, Managing Director M/s.Maars Software International Ltd., Chennai under Section 13 of FEMA 1999. 34. The penalty imposed should be deposited in the office of the Deputy Director, Enforcement Directorate, Janmabhoomi Chambers, 1st floor, Walchand Hirachand Marg., Mumbai -400 001, in the f....
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....ript of accounts of its Charlotte Branch office, along with the party wise details of export proceeds outstanding during the period 2000 to 2002, as extracted above. However, the company failed to produce copies of export invoices cum softex (software export detail) forms, against the said amount from their overseas customers. Hence, show cause notice dated 11.06.2003 was issued to the company, for non-realisation of export proceeds Rs. 19,33,90,485/-, in contravention to Section 8 of the Act, read with Regulation 3 of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations 2000 and also read with Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations 2000 and further read with Section 42(1) of FEMA 2000. Further, it is submitted that queries were also raised by the department relating to joint venture/ wholly owned subsidiaries. To that effect, the company had replied that a wholly owned subsidiary company in USA was started in the year 1996 and one joint venture company in UK was started in 1999. The wholly owned subsidiary company in USA was fully operational till early year of 2001 and thereaf....
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....ulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations 2000 and imposed a penalty of Rs. 4,00,00,000/- against the company and Rs. 1,00,00,000/- against the Managing Director under Section 13 of the FEMA, 1999. 8. Learned counsel further submitted that the Appellate authority, namely, the Tribunal, erroneously allowed the appeals filed by the company against the penalty order, without considering the provisions of the FEMA Act and by overlooking Section 42 of Act. It is urged by the learned counsel for the department that Section 42 of the Act clearly states that the amount representing the full export value of goods or software exported shall be realised and repatriated to India, within six months from the date of export. The company has not complied with the provisions of Section 42 and hence the order passed by the Tribunal is liable to be set aside. 9. Per contra, learned senior counsel appearing for the company vehemently argued that the provisions under Section 8 of FEMA, 1999, could be invoked against the company only, where any foreign exchange is due or has accrued to the contravener and on failure to take all reasonable steps to real....
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....d in failure to do so, the department shall proceed, as per Section 8 of the Act, read with Regulation 3 of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations 2000 ? 12. The department by letter dated 16.04.2003 submitted transcript of accounts of its Charlotte Branch office, along with the party wise details of export proceeds outstanding during the period 2000 to 2002, totalling to a sum of Rs. 19,33,90,485/-, as hereunder :- a)M/s. Maars Software Intl. Ltd., U.K - Rs. 5,72,79,784/- b)M/s. Hitech Software Inc. USA - Rs. 10,31,11,442/- c)M/s. Mascon Global Inc. USA - Rs. 93,67,085/- d)M/s. MSIL, Dubai Branch - Rs. 1,78,42,481/- e)M/s. MSIL, Chicago - Rs. 57,89,693/- - Rs.19,33,90,485/- On the basis of the aforesaid letter, the company failed to produce copies of export invoices cum softex (software export detail) forms, against the said amount shown as outstanding. By letter dated 12.05.2003, the company had stated that most of their exports were executed on-site at the customers site. Further stating that the exports have not provided the copies of the export in....
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....letter dated 16.04.2003, clearly reveals that the company had furnished the partywise particulars for the outstanding dues, for the period 2000 2002. The company had stated that M/s. Maars Software International Ltd., UK is closed and having no operation and that the Reserve Bank of India who is the supreme authority as far as FEMA is concerned, in respect of granting permissions, waiver, write off etc., had already been informed that a sum of Rs. 5,72,79,584/- was not realizable. To the aforesaid statement of the company, the adjudicating authority pointed out that in response to the letter dated 28.07.2005 sent to the Reserve Bank of India by Mr. T.Varadharajan, the Managing Director of the company, the Reserve Bank vide its letter dated 18.07.2005 had sought the company as to whether they had approached the Central Office with the documents stated in the letter for closure. The adjudicating authority concluded stating that no where the Reserve Bank had stated that the outstanding export is written off and so the reply of the company was rejected. As seen from the orders of the Tribunal, there is no finding to the extent that the company has obtained any order under Section 42 of....