TaxTMI 
TaxTMI 
2024 (5) TMI 1678
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....ion. It was alleged that a sum of 9,17,543.20 USD could not be realized by the appellant from their buyers in Singapore, USA and Malaysia. 3. The respondents accordingly proceeded against the appellants for contravention of section 8 and 13(1) of the Act of 1999 read with Regulation 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulation 2000. 4. The appellants filed reply to the show cause notice. It was submitted that the Company had not effected the export, rather it was by two different partnership firms named in the show cause notice. The show cause notice could not have been issued to a company whose name does not exist as an exporter in any of the documents. It cannot be only for the reason that the appellant Company alleged to be the partner in the firm or said to have taken over the partnership firm. 5. The challenge on proceedings under the Act of 1999 was also made because it was given effect from 1st June, 2000 while the export was even prior to it. It was in the FERA regime. The Adjudicating Authority did not accept the arguments and accordingly passed the impugned order imposing a penalty of Rs. One Crore Fifty lakhs on the appellant....
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....ment, a reference of Section 7 of the Act of 1999 was given to show as to against whom action can be taken. The action can be taken against the exporter and not against the company, which was not involved in the export. 12. In the light of the aforesaid, the impugned order be set aside as the show cause notice would not be sustainable against the appellants and its Ex-Directors. 13. It is lastly contended that the export took place prior to 01.06.2000 and therefore the provisions of FERA may apply but the appellant was served with the notice under the Act of 1999, when it was not even applicable rather given effect from 01.06.2000. 14. It is lastly argued that penalty on the Directors has been imposed even though they joined the company subsequent to the export by the firms. 15. Thus for all these reasons given above, the impugned order deserves to be set aside. 16. The appeal has been contested by the respondent. It is submitted that all the issues raised by the appellants have been considered by the authority below and finding no merit, the impugned order imposing the penalty was passed. 17. It is submitted that the name of exporter is no doubt M/s Sunwear & M/s....
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....hey even failed to take steps to recover the amount. Finding violation of the provision of the Act of 1999 and Regulation of 2000, the appellant company was served with the show cause notice dated 20.02.2009. The show cause notice was served on the appellant Company for the reason that it had taken over the partnerships which made export of the garments, thus liable along with its Directors for default in recovery of the export dues. 23. A challenge to the order has been made on many grounds which amongst the issuance of show cause notice to the appellant company who did not make export of garments rather it was by two partnership firms M/s Sunwear & M/s Sun Overseas Trading Corporation. The argument has been raised that the appellant company having not made export, could not have been served with the show cause notice for any default of the partnership firms made the export. A reference of section 7 of the Act of 1999 has been given and quoted here under for ready reference:- 7. Export of goods and services.-(1) Every exporter of goods shall- (a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, co....
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..... The challenge to the show cause notice has been made on the ground of delay. It is a fact that the respondent could notice default of the partnership firms to recover the export in the year 2001 itself. The appellant was called upon to make a statement which continued till 2004, as stated by the counsel for the respondent. The show cause notice was however issued almost after five years and otherwise nine years after noticing the default. No reason of delay has been given and otherwise it would be fatal in the light of recent judgement of the Apex Court in the case of Union of India versus Citi bank (Supra) The relevant part of the judgement paragraph 18 19, 20, 21 and 23 of the said judgement are quoted here under. 18. Though we have heard the learned counsels for the parties at length on various issues, we find it unnecessary to go into the said issues raised by the parties, inasmuch as, we are of the view that the show causes notices issued in the year 2002, i.e., after a period of almost one decade from the date of the alleged transactions of 1992-1993, were not tenable in law. 19. It is a settled proposition of law that when the proceedings are required to ....
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....absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assesee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." 23. Admittedly, in the present cases, the alleged transactions had taken place during the financial years 1992 and 1993. Show cause notices for the said transactions were issued in the year 2002 and that too just before the sunset period of FERA was to expire, i.e., on 1 st June 2002. We are therefore of the considered view that show cause notices and the proceedings continued thereunder are liable to be set aside on this short ground. 26. The delay in initiation of the action may effect the pr....