TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 826
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....rwise under video/audio recording and also permit the legal counsel of the petitioner be present during such investigations or interrogations, in order to prevent any form or harassment to the representatives of the petitioner. 2. Petitioner claims that it operates as a re-seller and distributor of mobile phones and related products in India. Petitioner purchases locally manufactured smart phones for resale from third party Indian manufacturers and apart from the above, petitioner imports spare parts, accessories, mobile phones, televisions and certain other internet items and lifestyle products from its group entities. Petitioner claims that it regularly files its income tax returns and it has been assessed up to the assessment year 2017-18. Petitioner states that Qualcomm Inc., and Qualcomm technologies Inc., are the world's leading wireless technology innovators including code division multiple access [CDMA] technology and manufactures semiconductors and provides software for wireless communications, especially in mobile devices. Petitioner claims that it is beneficiary of Qualcomm's proprietary and licensed intellectual property, particularly standard essential patents....
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....Sri. Sajjan Poovaiah for petitioner and learned Additional Solicitor General Sri. M.B. Nargund along with learned Central Government Standing Counsel Sri. Madhukar Deshpande for respondents on preliminary objection with regard to maintainability of writ petition. 7. Learned Additional Solicitor General Sri. M.B. Naragund for respondents on the preliminary issue of maintainability of writ petition submits that writ petition at this stage challenging the order passed under Section 37A[1] of the FEMA would not be maintainable since the petitioner is provided with alternate remedy under Section 37A of FEMA itself and further he submits that there is no order from the Competent Authority passed under Section 37A[3] of the FEMA and as such it is a premature writ petition. Learned Additional Solicitor General would submit that the writ petition at this stage would not be maintainable for one more reason that the writ petition involves disputed questions of facts. 8. Learned Additional Solicitor General inviting attention of this Court to Section 37A of FEMA submits that under sub-Section[1], the Authorized Officer on receipt of any information or otherwise has reason to believe that any....
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....ection 4 of FEMA, petitioner cannot contend or raise the question of jurisdiction to initiate proceedings under Section 37A of FEMA. 12. Learned Additional Solicitor General in support of his contention with regard to maintainability placed reliance on the judgments of Hon'ble Apex Court in Thansingh Nathmal and Others Vs. Superintendent of Taxes [AIR 1964 SC 1419]; Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Others [ (2010) 4 SCC 772]; and decision of the High Court of Madras in the case of Pradeep D. Kothari Vs. The Assistant Director, Directorate of Enforcement and Others [MANU/TN/0949/2018]. Thus, learned Additional Solicitor General would submit that FEMA is a complete code in itself. It provides an opportunity at the time of adjudication as well as provides remedy of appeal to the Appellate Tribunal, and thereafter appeal to the High Court within 60 days of the order of the appellate authority. It is his submission that in the case on hand, the account of petitioner is seized but no amount is withdrawn from the petitioner's account, as such petitioner cannot be called as an aggrieved person at this stage. Further, it is submitted that Au....
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....is held out side India in contravention of Section 4 of FEMA is totally baseless and opposed to the material on record. It is submitted that Qualcomm is the owner of Standard Essential Patent Technology, without the said technology, no mobile device sold by the petitioner will have access to the mobile network interoperability. Transfer of foreign exchange by the petitioner in the form of royalty cannot be considered as transfer of foreign exchange out of India in contravention of Section 4 of FEMA. 15. Learned senior counsel Sri. Sajjan Poovaiah further submits that Section 37A of FEMA was inserted by Act No. 20 of 2015 under Notification dated 08.09.2015 empowering initiation of proceedings by Authorized Officer for contravention of Section 4 of FEMA. The impugned seizure is based on bald and vague allegations, without considering or appreciating the acceptance of payment of royalty by the Income Tax Authorities. The Authorized Officer is required to record his reasons based on some material evidence and it cannot be on irrelevant material. He submits that the word used "suspected" in Section 37A must be based on the relevant material and unless there is sufficient material evid....
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....ffective and efficacious. Even if alternate remedy is available, when impugned order is passed without jurisdiction or competency or is passed in total violation of principles of natural justice writ petition could be entertained. The Hon'ble Apex Court in City and Industrial Development Corporation Vs. Dosu Aardeshir Bhiwandiwala and Others [(2009) 1 SCC 168, has held that the Court while exercising its jurisdiction under Article 226 of Constitution of India is duty bound to consider whether [a] adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved; [b] the petition reveals all material facts; [c] petitioner has any alternate or efficacious remedy for the resolution of dispute; [d] person invoking jurisdiction is guilty of unexplained delay and laches; [e] ex facie barred by any laws of limitation; [f] grant of relief is against public policy or barred by any valid law; and host of other factors. 19. In the case on hand, petitioner is before this Court questioning the order passed by Authorized Officer under sub-Section[1] of Section 37A of FEMA. Sub-section[1] of Section 37A of FEMA empowers the Aut....
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....zed Officer on the material available and on the statements recorded by him during investigation would proceed to pass order, if he has reason to believe that any foreign exchange situated outside India is suspected to have been held in contravention of Section 4 of FEMA, by recording reason, order seizure of the value equivalent, situated within India of such foreign exchange. Seizure order under sub-Section (1) is in the nature of provisional order. In other words, Bank account of the petitioner is attached, but no money of the petitioner is withdrawn or forfeited. But, the petitioner would not be in a position to touch the seized amount. In the case on hand, the impugned seizure order is dated 29.04.2022. The Authorized Officer as required under sub-Section (2) has placed the seizure order along with entire material before the Competent Authority on 27.05.2022. Seizure order passed by the Authorized Officer is like a provisional decision, step in process of taking final decision by the Competent Authority. The seizure order passed by the Authorized Officer is not final and before confirming the said seizure order, petitioner would be provided with an opportunity to have his say ....
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....ion under Article 226 of Constitution of India would be available if the petitioner establishes that the impugned order under challenge is without jurisdiction. Normally, as stated above, writ petition under Article 226 of Constitution of India would be entertained when question of jurisdiction and violation of principles of natural justice is involved. In the instant case, even though the question of jurisdiction is raised, the same involves disputed questions of fact and law. The contention of petitioner is that neither there is violation of Section 4 of FEMA, nor the ingredients of Section 4 are fulfilled to initiate action under Section 37A of FEMA. It is the case of the petitioner that petitioner has paid or transferred foreign exchange to Qualcomm and Beijing Xiaomi Mobile Software Company Limited as royalty for usage of SEPs, technology, other licensed intellectual property in respect of mobiles sold in India of Qualcomm and Beijing Xiaomi Mobile Software Company Limited. On the other hand, it is the case of the respondents that petitioner purchases completely manufactured box packed ready to sell/use mobiles from the manufacturers based in India and directly sells it to dis....
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....travention of Section 4 or reasons recorded by the Authorised Officer would be sufficient to initiate action under Section 37-A of FEMA, are to be considered by the Competent Authority. At this stage, examining sufficiency of reason or otherwise under Article 226 of the Constitution of India would prejudice the case of either of the parties. It is best left to the Competent Authority to examine the same when it considers the entire issue under sub-Section (3) of Section 37-A of FEMA. 24. Learned counsel for the petitioner placed reliance on the decision of the Hon'ble Apex Court in RADHA KRISHAN INDUSTRIES vs. STATE OF HIMACHAL PRADESH AND OTHERS. reported in (2021) 6 SCC 771 to contend that the provisional attachment could be termed as very drastic and has far reaching consequences. Such power could be used sparingly and only on substantive weighty grounds and reasons. The above decision arises from Himachal Pradesh Goods and Services Tax Act, 2017. The issue before the Hon'ble Apex Court was whether the orders of provisional attachment issued are in consonance with the conditions stipulated in Section 83 of the HPGST Act and whether the High Court was right in concluding....