TaxTMI 
TaxTMI 
2025 (10) TMI 796
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.... reported to Reserve Bank of India (RBI). Based on the information, investigations were initiated under the provisions of FEMA, 1999. During the investigation, statement of Mr. Yong Chan Jung, Director of the company was recorded. Details of foreign inward remittances were also obtained from the RBI. 3. Based on the investigations, a Complaint was filed before the adjudicating authority. The said complaint contained the following allegations: • That in respect inward remittances amounting to INR 30,83,63,005/- received by M/s. Woosu Automotive India Pvt. Ltd., as per the details furnished by Reserve Bank of India vide email dated 15/10/2020, the receipt of foreign investment was not reported to RBI within 30 days of receipt of the remittances and thereby M/s Woosu Automotive India Pvt. Ltd. appears to have contravened the provisions Para 9(1)(A) of Schedule I to Regulation 5(1) of Foreign Exchange Management (Transfer or Issue of any security by a Person Resident Outside India) Regulations, 2000 to the extent of INR 30,83,63,005/-; • That in respect of 62,83,172 shares and 63,88,770 shares, M/s Woosu Automotive India Pvt. Ltd. had filed Form FC-GPRS wit....
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.... by the company in terms of section 42(1) of FEMA, 1999. 4. Having issued a Show Cause Notice (SCN) dated 24.12.2018 and having considered the reply filed by the appellant herein and also the submissions made during the course of the hearing before him, the adjudicating authority, i.e., the Ld. Special Director, Directorate of Enforcement, Southern Regional Office, Chennai, found M/s Woosu Automative India Pvt. Ltd. guilty of contravention of the provisions of Para 9(1)(A), Para 9(1)(B), Para 9(2) of Schedule-I to Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Any Security by a Person Resident Outside India) Regulations, 2000 and Regulation 13.1(3) of the FEM (Transfer or Issue of Any Security by a Person Resident Outside India) Regulations, 2017 and imposed a penalty of Rs. 4,00,00,000/- on the appellant company, and penalties of Rs. 1 Lakh on each Director. 5. Aggrieved by the said order of the Spl. Director, the appellant company has filed the present appeal before this Appellate Tribunal challenging the order on various factual and legal grounds. Arguments on behalf of the Appellant 6. It is firstly submitted that the objective of the Forei....
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....tan Steel (Supra), it was observed that it is not necessary to levy a penalty and/or confiscate the property once it is established that the only breach is just technical or venial. The Hon'ble High Court has also observed that in the absence of mala-fide or when the contravening Act was not carried out with an intent to cause loss of foreign exchange or it was not an intentional act to defeat the mandate of the law then such a contravention shall not be fit for imposition of penalty on such a party. 10. It is also argued that the Appellant has filed its reply showing that there was no delay with respect to three tranches of transactions mentioned at column No. 5, 6 and 7 at page no. 13 and 14 of the impugned order and the Ld. Adjudicating Authority has neither given any finding qua the aforementioned transaction nor has segregated the same while considering the final imposition of penalty. 11. It is further argued that the Respondent has initiated the entire investigation in defiance of settled law as the alleged contravention rules are framed pursuant to sec 6(3) FEMA, 1999 which was deleted from the Act vide the Finance Act of 2015 with effect from 15.10.2019. Hence, t....
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....r should be set aside by this Tribunal. Arguments on behalf of the Respondent 18. The counsel on behalf of the respondent has argued that the said contraventions were not bona fide mistakes as claimed by the appellant. There were repeated delays in FC-GPR filings despite clear statutory timelines and complete failure to file Annual FLA returns for almost 10 years. Therefore, the pattern of non-compliance suggests a systemic disregard for the obligations, not a one-time or isolated mistake. 19. It is also argued that proceedings under the Foreign Exchange Management Act, 1999 (FEMA) are regulatory in nature and do not require proof of criminal intent (mens rea). The appellant's reliance on the absence of mens rea is misplaced in this context. Violations of FEMA involve civil liability, where the focus is on compliance with statutory obligations, not on the presence of intent. 20. It is further argued that the penalty imposed on the appellant is not arbitrary but proportional to the scale, duration, and repeated nature of the violations. Under Section 13(1) of FEMA, the adjudicating authority is empowered to impose penalties up to thrice the amount involved in the contrav....
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....to financial loss to the Government, but rather to the sum involved in the contravention. As such absence of loss of foreign exchange cannot absolve the appellant of liability under the penal provisions of FEMA, 1999. 24. For similar reasons as above, we are also unable to accept the argument regarding absence of mens rea. Under the very scheme of FEMA, 1999, unlike the erstwhile FERA, 1973, infraction of the provisions of any rule, regulation, notification, direction or order framed under the Act entails a monetary penalty and does not entail any criminal liability. Needless to say, in a vast majority of cases, such rules, regulations, notifications and directions are in the nature of procedural compliances. If absence of intent were to be held to absolve a person from liability on account of failure to comply with the requirements of the law and the rules, regulations and guidelines issued under the Act, the penalty provisions of FEMA, 1999 would be rendered largely otiose. Such an interpretation, in our view, would be contrary to the intention of the legislature. Needless to add, the procedural compliances prescribed under the Act have been framed so as to enable the authorit....
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....as the contravention of the statutory obligation as contemplated by the Act and the Regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. On a careful perusal of Section 15D(b) and Section 15E of the Act, there is nothing which requires that mens rea must be proved before penalty can be imposed under these provisions. Hence once the contravention is established then the penalty is to follow. 21. In our view, the impugned judgment of the Securities appellate Tribunal has set a serious wrong precedent and the powers of the SEBI to impose penalty under Chapter VIA are severely curtailed against the plain language of the statute which mandat....
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....an Steel Ltd. (supra)." 27. In Suborno Bose vs. Enforcement Directorate and Ors. (05.03.2020 - SC) MANU/SC/0285/2020, which was decided specifically in the context of FEMA, 1999 Hon'ble Supreme Court has held as follows: "Mens rea is not essential element for imposing penalty for breach of civil obligations or liabilities." The ratio of the above case was also followed in B.M Ishak Maricar v. Special Director, Enforcement Directorate, 1981 SCC OnLine Mad 187 and Venkat N.R. Akkineni Vs. Appellate Tribunal for Foreign Exchange, New Delhi and others (2013) 4 ALD 529 which have been cited by the respondent. 28. It is next argued that Section 6(3)(b) was deleted by the Finance Act, 2015 and hence the SCN issued under the said provision which stood deleted at the issue of the SCN is illegal. Having considered this argument, we find that the same is legally untenable. As the appellant company itself has submitted, the provision was deleted by the Finance Act, 2015 with effect from15.10.2019, whereas the contraventions in this case pertain to the period going back to 2007, when the aforesaid provision was very much in force. No particular limitation period is prescribed ....