TaxTMI 
TaxTMI 
2024 (10) TMI 392
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....`the Regulation of 2000). The penalty was imposed on delay of 24 days in reporting of the Foreign Direct Investment (FDI) of USD 3,09,00,000 equivalent to Rs. 204,91,04,000/- to the RBI. 2. Learned counsel for the appellants submitted that M/s Shell India Markets Pvt. Ltd. is one of the well-diversified international energy companies in the Oil and Gas sector in India. Reserve Bank of India (RBI) vide its Circular No.77 dated 12.02.2015 initiated online filing of (i) Advance Remittance Form (ARF) to report FDI inflows; and (ii) Foreign Currency Gross Provisional Return (FCGPR) Form to report issue of eligible instruments to the overseas investors. The online reporting on the e-Biz platform from 12.02.2015 was in addition to the manual system of reporting. 3. The RBI vide its another Circular No. 9 dated 21.08.2015, in order to promote and ease reporting transaction under FDI enabled online filing of the Foreign Currency Transfer of Shares (FCTRS) convertible debentures etc. from a person resident in India or vice versa. It was again in addition to manual operation. On 01.02.2016, RBI issued another Circular to provide online filing of the ARFs from 08.02.2016. The physical filing....
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....peal. 8. Learned counsel for the appellant submitted that the imposition of penalty is in reference to Section 6(3)(b) of FEMA though it was omitted by the Act of 2015 w.e.f. 15.10.2019. Simultaneously, Section 47(3) was inserted to provide that the regulation made by RBI under Section 6 and 47 of FEMA on capital account transaction would now vest with the Central Government, however, it shall continue to be valid until amended or rescinded by the Central Government. 9. The Central Government through the Ministry of Finance notified the regulation called as the Foreign Exchange Management (Non-debt Instruments) Regulations, 2019. The regulations of 2019 were made relating to the mode of payment and reporting requirement for investment in India by a person resident out of India. The imposition of penalty was, however, made in reference to the provision omitted w.e.f. 15.10.2019 while the proceedings were initiated in the year 2022. It was even in ignorance of the fact that the appellant had faced technical difficulties in reporting the FDIs after introduction of online system. This was informed to the RBI with a prayer to condone the delay and issue the UIN. The RBI issued UIN and....
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....order. 14.Per contra, the appeal has been contested by the counsel for the respondents on the legal as well as on factual issues. It is submitted that as per Section 6(3) (b) of FEMA read with Para 9(1)(A) of Schedule-I of Regulation 5(1) of 2000, the appellant was under obligation to report receipt of FDI within 30 days. However, in the instant case, appellant made report of the FDI on 54th day i.e. with the delay of 24 days. The lame excuse in reference to change of system from manual to online for reporting of the FDI on the forms (ARF) has been taken. The excuse of technical difficulties has been taken but no material was submitted to support it. It is otherwise a vague statement of fact regarding teething difficulties on the start of online system for ARF. 15. The learned counsel clarified that online system was not introduced by the RBI for the first time on 08.02.2016 rather it was introduced by the Circular dated 12.02.2015 though there was option to submit ARF manually also. However, online system became operational from 12.02.2015. The further circular in reference to it was issued on 21.08.2015 in order to promote and ease reporting of transaction of FDI under the aegi....
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....in Section 47 of FEMA where sub-section (3) was added w.e.f. 15.10.2019. Section 47(3) so added saved the regulation of RBI notified under Section 6 and 47 on capital account transactions till rule making power in reference to it is exercised by the Central Government. The regulation framed in reference to capital account transaction by the RBI remain operational. 20. By virtue of the amendment w.e.f. 15.10.2019 in Section 47 of the FEMA, the appellant remained under obligation to follow the mandate of Rule 5 (1) of the Regulation of 2000 as per the Schedule 9(1)(A). It was however clarified that Regulations of 2000 were superseded by the subsequent Regulation i.e. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 (for short `Regulation of 2017') and thereafter Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instrument) Regulations, 2019 (for short `Regulation of 2019') but the provisions contained in the Regulation of 2000 remain part of the Regulation for reporting of FDI. Therefore, the legal issue raised by the appellant in reference to the amendment, to repeal Section 6(3)(b) is of n....
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....b) as was existing before its repeal/omission and is quoted hereunder: "6. Capital Account transactions. (1) and (2)** ** ** (3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations, prohibit, restrict or regulate the following- (a) transfer or issue of any foreign security by a person resident in India; (b) transfer or issue of any foreign security by a person resident outside India; (c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India; (d) any borrowing or lending in foreign exchange in whatever form or by whatever name called; (e) any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India; (f) deposits between persons resident in India and persons resident outside India; (g) export, import or holding of currency or currency notes; (h) transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India; (i) acquisition or transfer of immovable property in India, other than a lea....
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....irst time on 08.02.2016 but it was in operation from 12.02.2015 and was made compulsory w.e.f. 08.02.2016. On 21.08.2015, the reporting of transaction under FDI was made under the aegis of e-Biz project to promote and ease the reporting. The fact aforesaid shows that online system was in operation much before making it compulsory w.e.f. 08.02.2016. 27. In view of the above, we are unable to accept the excuse taken by the appellant in reference to teething problems. Teething problem, if substantiated, may remain initially but not in deplorable form under operation for a year before making it compulsory. Thus, the lame excuse taken by the appellant cannot be accepted to justify the delay. It is more so when there is no material placed on record to prove any teething problem in reporting. The appellant had not placed on record that even other Company also faced the difficulties which the appellant faced to substantiate their plea/excuse. 28. The appellants no doubt have made reference of the letter sent to the RBI to seek excuse for delay in reporting and issuance of UIN. The RBI is not the authority to take up the matter of delay rather if reporting is made even with delay, UIN can....
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.... of 2019. The provision of FEMA so repealed and the relevant provision of Regulation have been quoted earlier by us. It is not in dispute that Section 6(3)(b) was omitted or repealed w.e.f. 15.10.2019 but what would be the effect of omission needs to be considered in the light of Section 6, 6A and 24 of the General Clauses Act and the provisions aforesaid are quoted hereunder for ready reference: "6. Effect of repeal.- Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right....
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...."19. From a reading of the notes on clauses and the Memorandum of the Finance Bill, 1990, it is clear that Section 280Y(d) which was omitted with effect from 1.4.1990 was so omitted because it had become "redundant". It was redundant because it had no independent existence, apart from providing a definition of "urban area" for the purpose of Section 280ZA which had been omitted with effect from the very date that Section 54G was inserted, namely, 1.4.1988. We are, therefore, of the view that the High Court in not referring to Section 24 of the General Clauses Act has fallen into error. Section 24 states: "24. Continuation of orders, etc., issued under enactments repealed and re- enacted. -Where any 44 [Central Act] or Regulation, is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided any 45 [appointment notification,] order, scheme, rule, form or bye- law, 45 [made or] issued under the repealed Act or Regulation, shall, so far as it is not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been 45 [made or] issued under the provisions so re-enacted, unless and....
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....ith reference to which the debt in question had been written off, is deemed to be an order made under Section 36(1)(vii) of the 1961 Act and such order is what is contemplated under Section 41(4) of that Act. Any amount which is recovered on any such debt is attracted by the provisions of Section 41(4) of the 1961 Act and is, therefore, chargeable to tax in terms of that sub- section to the extent of the =excess' specified therein." (at para 7). 21. In State of Punjab v. Harnek Singh [2002] 3 SCC 481, this Court held:- "17. Section 24 of the General Clauses Act deals with the effect of repeal and re-enactment of an Act and the object of the section is to preserve the continuity of the notifications, orders, schemes, rules or bye-laws made or issued under the repealed Act unless they are shown to be inconsistent with the provisions of the re-enacted statute. 23. We do not find any force in the submission of the learned counsel appearing for the respondents that as reference made in sub-section (2) of Section 30 of the 1988 Act is only to Section 6 of the General Clauses Act, the other provisions of the said Act are not applicable for the purposes of deciding the controvers....
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....s, rules etc. that are made under a Central Act which is repealed and re-enacted with or without modification. The idea of Section 24 of the General Clauses Act is, as its marginal note shows, to continue uninterrupted subordinate legislation that may be made under a Central Act that is repealed and re- enacted with or without modification. It being clear in the present case that Section 280ZA which was repealed by omission and re-enacted with modification in section 54G, the notification declaring Thane to be an urban area dated 22.9.1967 would continue under and for the purposes of Section 54G. It is clear, therefore, that the impugned judgment in not referring to section 24 of the General Clauses Act at all has thus fallen into error. 23. But then Shri Arijit Prasad put before us two roadblocks in the form of two Constitution Bench decisions. He cited Rayala Corporation (P) Ltd. and M.R. Pratap v. Director of Enforcement, New Delhi [1969[ 2 SCC 412 which was followed in Kolhapur Canesugar Works Ltd. & Anr. v. Union of India & Ors., [2000] 2 SCC 536. He argued based upon these two judgments that an "omission" would not amount to "repeal" and that since the present case was conc....
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.... 838] and has relied upon the principles laid down therein. The Full Bench overlooked the position that that was a case under Section 24 of the General Clauses Act which makes provision for continuation of orders, notification, scheme, rule, form or bye-law, issued under the repealed Act or regulation under an Act after its repeal and re- enactment. In that case Section 6 did not come up for consideration. Therefore the ratio of that case is not applicable to the present case. With respect we agree with the principles laid down by the Constitution Bench in RayalaCorpn. Case [(1969) 2 SCC 412 : (1970) 1 SCR 639] . In our considered view the ratio of the said decision squarely applies to the case on hand." 27. The Kolhapur Canesugar Works Ltd. judgment also concerned itself with the applicability of Section 6 of the General Clauses Act to the deletion of Rule 10 and 10A of the Central Excise Rules on 6th August, 1977. 28. An attempt was made in General Finance Company & Anr. v. Assistant Commissioner of Income Tax, Punjab, [2002] 7 SCC 1 to refer these two judgments to a larger bench on the point that an omission would not amount to a repeal for the purpose of Section 6 of the Ge....
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....tio decidendi for the said decision and both reasons would be binding upon us. But we find that once it is held that Section 6 of the General Clauses Act would itself not apply to a rule which is subordinate legislation as it applies only to a Central Act or Regulation, it would be wholly unnecessary to state that on a construction of the word "repeal" in Section 6 of the General Clauses Act, "omissions" made by the legislature would not be included. Assume, on the other hand, that the Constitution Bench had given two reasons for the non-applicability of Section 6 of the General Clauses Act. In such a situation, obviously both reasons would be ratio decidendi and would be binding upon a subsequent bench. However, once it is found that Section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word "repeal", an "omission" would not be included. We are, therefore, of the view that the second so- called ratio of the Constitution Bench in Rayala Corporation (P) Ltd. cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta. 32. Secondly, we find no reference to Section 6A of the General Clauses Ac....
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....h would attend the case of an express repeal. Where an intention to effect a repeal is attributed to a legislature then the same would, in our opinion, attract the incident of the saving found in Section 6 for the rules of construction embodied in the General Clauses Act are, so to speak, the basic assumptions on which statutes are drafted......." (At page 484) 35. The two later Constitution Bench judgments also did not have the benefit of the aforesaid exposition of the law. It is clear that even an implied repeal of a statute would fall within the expression "repeal" in Section 6 of the General Clauses Act. This is for the reason given by the Constitution Bench in M.A. Tulloch & Co. that only the form of repeal differs but there is no difference in intent or substance. If even an implied repeal is covered by the expression "repeal", it is clear that repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Cl s Act". 32. The judgment in the case of Fibre Boards Pvt. Ltd. (supra) applies to the facts of this case. The detailed judgment of the Apex Court not only make....
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....he limit up to which any person may possess foreign currency or foreign coins under clause (a) of section 9; (e) the class of persons and the limit up to which foreign currency account may be held or operated under clause (b) of section 9; (f) the limit up to which foreign exchange acquired may be exempted under clause (d) of section 9; (g) the limit up to which foreign exchange acquired may be retained under clause (e) of section 9; (ga) export, import or holding of currency or currency notes; (h) any other matter which is required to be, or may be, specified. (3) All regulations made by the Reserve Bank before the date on which the provisions of this section are notified under section 6 and section 47 of this Act on capital account transactions, the regulation making power in respect of which now vests with the Central Government, shall continue to be valid, until amended or rescinded by the Central Government". Section 47(3) quoted above saves the regulations made by the Reserve Bank under Section 6 and 47 of this Act on capital account transaction. The regulation making power was given to Central Government but the earlier Regulation was to continue until amended o....
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....ned under the rules, shall report such issue in Form FC-GPR, not later than thirty days from the date of issue of equity instruments. Issue of 'participating interest / rights' in oil fields shall be reported in Form FC-GPR. (2) Annual Return on Foreign Liabilities and Assets (FLA): An Indian Company which has received FDI or an LLP which has received investment by way of capital contribution in the previous year including the current year, shall submit form FLA to the Reserve Bank on or before the 15th day of July of each year. Explanation: Year for this purpose shall be reckoned as April to March. (3) Form Foreign Currency-Transfer of Shares (FC-TRS): (a) Form FCTRS shall be filed for transfer of equity instruments in accordance with the rules, between: i. a person resident outside India holding equity instruments in an Indian company on a repatriable basis and person resident outside India holding equity instruments on a non-repatriable basis; and ii. a person resident outside India holding equity instruments in an Indian company on a repatriable basis and a person resident in India, The onus of reporting shall be on the resident transferor / transferee or the person....
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....m LEC (NRI) the purchase / transfer of equity instruments by Non Resident Indians or Overseas Citizens of India on stock exchanges in India. (10) Form InVI: An Investment vehicle which has issued its units to a person resident outside India shall file Form InVI within 30 days from the date of issue of units. (11) Downstream Investment a. An Indian entity or an investment vehicle making downstream investment in another Indian entity which is considered as indirect foreign investment for the investee Indian entity in terms of the Rules, shall notify the Secretariat for Industrial Assistance, DPIIT within 30 days of such investment, even if equity instruments have not been allotted, along with the modality of investment in new / existing ventures (with / without expansion programme). b. Form DI: An Indian entity or an investment Vehicle making downstream investment in another Indian entity which is considered as indirect foreign investment for the investee Indian entity in terms of Rule 22 of the Rules shall file Form DI with the Reserve Bank within 30 days from the date of allotment of equity instruments. (12) Form Convertible Notes (CN): a. The Indian startup company issuing C....