TaxTMI 
TaxTMI 
2021 (2) TMI 1313
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....iefly notice the background facts of the case, as could be elicited from the petition-- (i) The petitioner is a private limited company incorporated under the Companies Act with its registered office at NOIDA. (ii) The company had been engaged in the business of software development and export of computer & business support services. Initially, the company was incorporated as M/s. Results India Systems Private Limited but as it was acquired by Fiserv Group (based in U.S.A.) in the year 2004, with effect from 24.11.2005, the name of the company was changed to Fiserv India Private Limited. (iii) On 17.8.2017, under Section 37 of FEMA, 1999, read with Section 133(6) of the Income-Tax Act, 1961, a notice was issued to the petitioner requiring it to furnish information along with documentary evidence for not utilising certain export advances within the stipulated period which the petitioner received through its authorised dealer i.e. ICICI Bank Ltd. According to the petitioner, this notice was never served upon it but, subsequently, the petitioner got it as an annexure with the impugned show-cause notice. (iv) On 5.12.2017, the first respondent sent another letter to the petitio....
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....ist was provided by the ICICI Bank of 16 export advances (including the 10 reported initially) pending utilisation by the petitioner bringing the total amount of un-utilised advances to Rs. 1,96,98,815.67. Thus, alleging that the company had contravened the provisions of FEMA and the person responsible is liable to be punished under Section 7(3) of FEMA read with Regulations 10 and 16 of Foreign Exchange Management (Export of Goods and Services) Regulation, 2000, complaint was filed. (ix) On filing of the said complaint, the first respondent issued impugned show-cause notice bearing No. T-4/18/FEMA/LKZO/2020/AD(RV)/2717 dated 30.9.2020, annexing the complaint therewith and calling upon the petitioner to show-cause in writing, within 30 days from the date of receipt of the notice, as to why adjudication proceedings as contemplated in Section 13 of FEMA should not be held against the petitioner, in the manner as provided in Rule (4) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (as amended) read with rules and regulations made thereunder, and as to why penalty as provided under Section 13(1) of FEMA be not imposed on him for the contraventions....
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....ed by Jaipur Bench of Rajasthan High Court in S.B. Civil Writ Petition No. 12937 of 2020 (M/s. Keshav Marble and Granites v. Union of India and another). 5. We have considered the submissions of the learned counsel for the petitioner and have perused the petition carefully. 6. Before we address the submissions advanced, it would be apposite to notice the relevant provisions of FEMA. FEMA was enacted as an Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. 7. Section 3 of FEMA, 1999, inter alia, provides that save as otherwise provided in the Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall deal in or transfer any foreign exchange or foreign security to any person not being an authorised person. Clause (c) of Section 3 of FEMA, 1999 further mandates that no person shall receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner. 8. Section 2(c) defines authorised p....
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.... be deemed to have committed contravention of the provisions of the Act for the purpose of this section. 13. Section 11 of FEMA, 1999, inter alia, empowers the Reserve Bank to issue directions to authorised person for the purpose of securing compliance with the provisions of the Act and of any rules, regulations, notifications or directions made thereunder. Sub-section (2) of Section 11 empowers the Reserve Bank to direct any authorised person to furnish such information, in such manner, as it deems fit for the purpose of ensuring compliance of the provisions of the Act or of any rule, regulation, notification, direction or order made thereunder. Sub-section (3) of Section 11 confers power on Reserve Bank of India to impose penalty on the authorised person in the event of contravention of any such direction. Section 12 empowers Reserve Bank of India to inspect the authorised person. 14. Section 13 of FEMA, 1999 provides for the penalties. It, inter alia, provides that if any person contravenes any provision of the Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under the Act, or contravenes any condition subject to which....
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....19. The proceedings against the petitioner company have been initiated in respect of not utilising, within stipulated period, certain export advances. As utilisation of those advances might have to be proved by submitting information and documents to the authorised dealer i.e. the Bank, whether any export advance has been utilised or not, within the prescribed period, might not, on expiry of the stipulated period, automatically come in the knowledge of the enforcement directorate or the prosecuting agency as it would depend on the mode and the manner in which the information is shared with the relevant authorities. Thus, whether the prosecuting agency or the enforcement directorate had been unduly lethargic in prosecuting the defaulter is a pure question of fact which cannot be made basis to quash a show-cause notice at the threshold, which, otherwise, coupled with the complaint, discloses all the necessary ingredients with regard to contravention of the provisions of FEMA warranting adjudicatory proceedings. More so, when the primary duty of furnishing information is on the person who takes export advance and secondary duty, might perhaps be, of the authorised dealer to share the ....
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....e provisions of FEMA, 1999 was made out, a complaint was filed in the year 2020 on which the impugned notice has been issued. The facts of the present case are therefore totally distinguishable from those which were there before the Bombay High Court in the case of Sanghvi Reconditioners Pvt. Ltd. (supra). 23. Similarly, in the case of Shirish Harshayadan Shah (supra), which arose out of Foreign Exchange Regulation Act, 1947 and FEMA, 1999, the facts before the Bombay High Court were that consequent to search operations in the month of March, 1990, a memorandum dated 18th March 1991 relating to acts and omission chargeable under the Acts was drawn arising out of certain work carried out by the company in the year, 1982, whereas, notice for hearing on the memorandum was issued to the company and its Director in the month of January, 2004. In those facts, the Bombay High Court took the view that as for a period of 12 years no steps were taken by the respondent to proceed with the adjudication, such a belated proceeding was liable to be quashed. 24. The facts of the instant case are clearly distinguishable from that case inasmuch as here, after receipt of information in respect of c....