TaxTMI 
TaxTMI 
2023 (12) TMI 787
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....s (Annexure P-7), Seizure Order No. 02/2021 bearing no. T- 3/HYZO/75/2021 dated 30 September, 2021 annexed as (Annexure P-26); and Seizure Order No. 03/2021 bearing no. T3/HYZO/75/2021 dated 15 December, 2021 annexed as (Annexure P-29) and unfreeze all the bank accounts frozen by way of the above referred Seizure Orders; (b) Issue a writ on mandamus, or any other appropriate writ, order or direction directing the Respondent No. 1 to close any and all the proceedings undertaken by Respondent No. 1 or by any agency/ department under its instructions, under Foreign Exchange Management Act, 1999 as there is no violation whatsoever by the Petitioner, as alleged by Respondent No. 1. (c) Issue a writ of mandamus, or any other appropriate writ, order or direction directing the Respondent No. 1 to release the amounts seized under the Seizure Order No. 01/2021 bearing No. F. No. T-3/HYZO/75/2021 dated 26 August 2021 read with letter bearing no. T3/HYZO/75/2021/4721 dated 12 October 2021, Seizure Order No. 02/2021 bearing no. T-3/HYZO/75/2021 dated 30 September, 2021; and Seizure Order No. 03/2021 bearing no. T3/HYZO/75/2021 dated 15 December, 2021 and defreeze the bank acco....
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....ering the comprehensive requirements of the business risk management, which includes the services scope, Software Licence Agreement commitment and responsibility. The Board had also considered and referred to the industry practice. The Board had also consulted with tier-1 Chartered Accountant Firm/Independent Consultant, Ernest & Young LLP, India ('EY India'), which resulted in independent benchmarking reports. 6. It is contended that Mobimagic was the original developer of the CashBean software, which was subsequently transferred by it to HK Fintango on 26.09.2019. Post such transfer, HK Fintango has been awarded with the new Software Copyright Certificate for the same. The petitioner states that for the business of the petitioner, HK Fintango has granted access to its Software App in a source code format and technical support has been received from Mobimagic; management and other support have been received from another related party entity, namely, TenSpot Pesa Limited. 7. The petitioner claims that for the above transactions, the petitioner has maintained Transfer Pricing Documentation required under Rule 10D of the Income Tax Rules, 1962 read with Section 92D of the Incom....
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.... freely undertaken by the entities like the petitioner. He submits that in the absence of any prohibition, the petitioner cannot be said to have violated Section 4 of the Act by making the transfers of the foreign exchange in the transactions in question. 11. He submits that the Impugned Order is premised on the assertion that a Digital Application similar to the CashBean application can be developed in India at a lower cost, and that the petitioner has not done due diligence while entering into the transactions with the related company, that is, HK Fintango. He submits that not only did the petitioner deposit the Tax Deducted at Source (in short, 'TDS') on such transactions but also, the assertions made by the respondent no. 1 do not constitute a violation of the provisions of the Act or the Rules or the Regulations made thereunder and, therefore, cannot attract Section 4 of the Act. He states that business prudence cannot be tested and mere lack thereof, even presuming such to be the case, cannot be a ground to contend violation of Section 4 of the Act. 12. The learned senior counsel for the petitioner submits that the Impugned Order is based on vague allegations without th....
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....ved from M/s Opera Limited are duly evaluated by the Board of Directors of the petitioner and they are backed by feasibility reports and relying on such reports, the decisions are implemented. He submits that, therefore, the Impugned Order is based only on the conjectures and surmises and cannot be sustained. 17. Placing reliance on the judgment of the Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh & Ors., (2021) 6 SCC 771, he submits that the power of attachment is a draconian provision and the pre-conditions thereof must be strictly followed. He submits that as the pre-conditions have clearly not been fulfilled in the present case, the Impugned Order has been passed without jurisdiction and is liable to be set aside by this Court in exercise of its power under Article 226 of the Constitution of India. He submits that in such exercise, availability of an alternate remedy in the form of an appeal would not be a bar. Submissions of the Learned Counsel for the Respondents: 18. On the other hand, the learned counsel for the respondents submits that the petitioner has remitted an amount of Rs. 429,29,65,295/- for availing various services mainly from Ch....
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....being released. The Court accepted the undertaking of the petitioner that no part of the amount, so released, shall be remitted overseas. (b) The above order was challenged by the respondents by way of an appeal, being LPA 487/2022, titled as Directorate of Enforcement vs. P.C. Financial Services Private Limited & Anr. The said Appeal was disposed of by the Division Bench of this Court vide order dated 24.08.2022, recording the submission of the learned senior counsel for the petitioner that the petitioner shall not press for the interim order to be implemented while this Court adjudicates the present petition at an earlier date. (c) It is relevant to note that at the time when this petition was entertained by this Court, the Appellate Tribunal, in terms of Section 18 of the Act, had not been constituted. During the pendency of the petition, however, the Appellate Tribunal was constituted. On 13.09.2022, however, the petitioner stated that it would be withdrawing its appeal pending before the Appellate Tribunal. (d) The petitioner withdrew its appeal filed before the Appellate Tribunal, as recorded in the order dated 12.10.2022 of the Appellate Tribunal. ....
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....o the Tribunal had already been constituted." Learned counsel for the respondents does not dispute the factual position aforesaid, thus submits that the effect of the order would be to take away a right of the appeal whether it be of the appellant or the respondents. We are not able to persuade ourselves to agree with the submissions of the learned counsel for the respondents with the facts set out aforesaid. In fact the appellant did not press for the interim arrangement made by the learned Single Judge predicated only on the reasoning that the matter would be finally heard by the learned Single Judge. The respondents cannot be permitted to blow hot and cold in this behalf. The result of the aforesaid is that we set aside the impugned order and direct that the matter be heard in the writ proceedings before the learned Single Judge. In view of the passage of time, it is open to the appellant to pray for any interim orders, as advised, including, the one which has been granted earlier by the learned Single Judge dated 31.05.2022 and it will be for the learned Single Judge to consider the same on the merits. The appeal stands allowed in the aforesa....
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.... (d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation.-For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt. 4. Holding of foreign exchange, etc.-Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. 5. Current account transactions.-Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. 6. Capital account transacti....
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....person.-(1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit. (2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein. (3) An authorisation granted under subsection (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that- (a) it is in public interest so to do; or (b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder: Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter. (4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such gene....
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....ch may extend to five thousand rupees for every day after the first day during which the contravention continues. (1-A) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37-A, he shall be liable to a penalty up to three times the sum involved in such contravention and confiscation of the value equivalent, situated in India, the Foreign exchange, foreign security or immovable property. (1-B) If the Adjudicating Authority, in a proceeding under sub-section (1-A) deems fits, he may, after recording the reasons in writing, recommend for the initiation of prosecution and if the Director of Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director. (1-C) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed....
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....rd to the representatives of the Directorate of Enforcement and the aggrieved person. Explanation.-While computing the period of one hundred eighty days, the period of stay granted by court shall be excluded and a further period of at least thirty days shall be granted from the date of communication of vacation of such stay order. (4) The order of the Competent Authority confirming seizure of equivalent asset shall continue till the disposal of adjudication proceedings and thereafter, the Adjudicating Authority shall pass appropriate directions in the adjudication order with regard to further action as regards the seizure made under sub-section (1): Provided that if, at any stage of the proceedings under this Act, the aggrieved person discloses the fact of such foreign exchange, foreign security or immovable property and brings back the same into India, then the Competent Authority or the Adjudicating Authority, as the case may be, on receipt of an application in this regard from the aggrieved person, and after affording an opportunity of being heard to the aggrieved person and representatives of the Directorate of Enforcement, shall pass an appropriate o....
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....s that any person who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to the 'Authorised Person' under subsection (5) of Section 10, does not use it for such purpose or does not surrender it to the 'Authorised Person' within the specified period, or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition or foreign exchange is not permissible under the provisions of the Act or the Rules or Regulations or Direction or Order made thereunder, shall be deemed to have committed an offence/contravention of the provisions of the Act for the purpose of the said section. 34. Section 13 of the Act states that if any person contravenes any provision of this Act, or contravenes any Rule, Regulation, Notification, Direction, or Order issued in the exercise of the powers under the Act, shall be liable to a penalty. 35. In the present case, it is the allegation of the respondent no. 1 that the petitioner has contravened the provisions of Section 4 of the Act, inasmuch as it holds foreign exchange outside India through its group entities and such foreign exchange has been transferred to suc....
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....Fintango has not developed the said app and there was no proof of its purchase in the duration of 04.0 9.2019 to 30.09.2019. The respondent company utterly failed led to show or demonstrate that the seller Hongkong Fintango is either the developer or acquired licence from the developers or from third party. None of the arguments advance by the respondent answer the fundamental questions of the app developer, licence fee etc. In the absence of any material evidence, the bonafide doubt raised by Enforcement directorate w.r.t transfer of foreign outward remittances to the tune of Rs.271 crores to Hongkong Fintango merits consideration and qualified the rules of prudence and fair play. The contention of the respondent is that the price for the Cashbean app was decided based on EY transfer pricing report is unmeritorious and unfounded as the report is dated 24.12.2020 which is later to the purchase date 01.10.2019." 38. Even though I find merit in the contention raised by the learned senior counsel for the petitioner that violation of Section 10(6) of the Act cannot be alleged merely because, according to the respondents, the commercial arrangement entered into by the declarant under....
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....xercised not only for the enforcement of fundamental rights, but for any other purpose as well; 27.2 The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person; 27.3 Exceptions to the rule of alternate remedy arise where: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; 27.4 An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; 27.5 When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoki....