Se impone una sanción por la presentación tardía de informes de IED, ya que las disposiciones modificadas mantuvieron el requisito de presentación de informes.

Dictaminado por

Hon’ble SAFEMA in the matter of 

M/s Shell India Markets Private Limited Vs The Special Director, ED, Banagluru (FPA-FE-43 & 44/BNG/2023)

The Appellant, an Indian Company, received FDI of INR 204 Crores through automatic approval route. The Company was required to file the Advance Remittance Form (ARF) within 30 days of receipt of FDI.  The Company delayed in reporting of FDI to RBI by 24 days. Therefore, the penalty was imposed on the company of INR 20 Crores and on the directors of INR 5 Crores.

The Appellant contended that the RBI initiated online filing of ARF form with effect from 08.02.2016 for the first time and delay occurred due to technical issues faced by the appellant on the portal. Also, penalty is imposed in pursuance of Section 6(3)(b) of FEMA. However, such provisions were omitted w.e.f. 15.10.2019, whereas, the penalty proceedings were initiated in 2022. Further, the penalty can be imposed of a maximum amount of INR 2 Lakhs.

The Hon’ble Tribunal held that:

1. Online system was in operation much before making it compulsory w.e.f. 08.02.2016. Thus, the excuse taken by the appellant cannot be accepted to justify the delay. Further, technical delay needs to be substantiated properly.
2. The requirement of reporting was maintained and otherwise the repeal of the Regulation operating in the year 2016 would have no effect in the light of Section 6 and 6A of the General Clauses Act read with Section 24 of the same Act. Regulations framed by RBI remain in operation pursuant to section 47(3) as amended, the Appellate Tribunal SAFEMA held that appellant could not take excuse regarding repeal/omission of provision.
3. The delay is of 24 days but for it the penalty of Rs.20 crores on the Company and Rs.5 crores on the Director is excessive in our opinion. Reasonableness in imposition of penalty needs to be shown. Accordingly, the penalty amount was reduced.

1. Resumen de los hechos del caso

• The Appeal is filed against the Impugned order issued by the Adjudicating Authority imposing a penalty of INR 25 Crores on the Company and Directors for contravention of FEMA on account of delay in reporting of Foreign Direct Investment (FDI) to the RBI.
• M/s Shell India Markets Pvt. Ltd. (“The Appellant”) is one of the well-diversified international energy companies in the Oil and Gas sector in India.
• Vide Circular No.77 dated 12.02.2015, RBI initiated online filing of:
  • Advance Remittance Form (ARF) to report FDI inflows; and
  • Foreign Currency Gross Provisional Return (FCGPR) Form to report issue of eligible instruments to the overseas investors.

• The Appellant received the FDI of USD 3,09,00,000(INR 204 Crore) under automatic route, i.e., no prior approval of the RBI or Government of India was required.
• The appellant Company faced issues and difficulties in the online filing system as it was relatively new and this caused a delay of 24 days in reporting FDI remittance.
• The Appellant also filed an application for condonation of delay on the ground of unwarranted delay in the reporting occurred.
• The RBI allotted UIN to the Appellant post reporting of the remittance. Therefore, it implied that RBI has condoned the delay.
• After six years, the Bank of the Company received notice from the Assistant Director, Directorate of Enforcement, for furnishing records of the appellant company within 6 days.
• The Bank submitted the requested information and details.
• After all hearing, the Assistant Director, Directorate of Enforcement filed a complaint against the Appellant alleging violation of Section 6(3)(b) of FEMA and Regulation 5(1) of FEMA.
• It was in ignorance of the fact that Section 6(3)(b) of FEMA had already been repealed.
• After Show cause notice and reply, the Adjudicating Authority imposed a penalty of INR 20 crores on the appellant company and INR.5 crores on the Director.
• Aggrieved by the order, the appellant immediately preferred this appeal.

2. Relevant Legal Extract

Relevant extract of the law is reiterated below for ready reference:

"6. Capital Account transactions.

(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-

..

(b)transfer or issue of any foreign security by a person resident outside India;".

The above mentioned provisions is omitted w.e.f. 15.10.2019. 

"9. Report by the Indian Company

(1) An Indian Company issuing shares or convertible debentures in accordance with these Regulations shall submit through AD Bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered Office of the company operates,  (A) not later than 30 days from the date of receipt of the amount of consideration for issue of shares or convertible debentures or warrants, a report in the form specified in Annex. `C' to this schedule along with a copies of Foreign Inward Remittance Certificate (FIRC), Know Your Customer (KYC) Reporton the non-resident investor and details of the Government approval, if any."

3. Alegaciones del apelante

El apelante alegó lo siguiente:

• The penalty is imposed in reference to Section 6(3)(b) of FEMA. However, such section has been omitted w.e.f. 15.10.2019.
• Further, as per Section 47(3), regulation made by RBI under Section 6 and 47 of FEMA would now vest with the Central Government. However, it shall continue to be valid until amended or rescinded by the Central Government.
• In pursuance of power received under section 47(3) of FEMA, The Central Government notified the regulation called the Foreign Exchange Management (Non-debt Instruments) Regulations, 2019.
• The regulations were made relating to the mode of payment and reporting requirement for investment in India by a person resident out of India.
• The Penalty was imposed in reference to a provision which was omitted w.e.f. 15.10.2019, whereas, the penalty proceedings were initiated in 2022.
• Further, the fact of technical difficulty faced by the appellant after introduction of the online system was also ignored.
• Condonation of delay was filed with RBI and request was made to issue the UIN. The RBI issued UIN and therefore, the appellant presumed that delay had been condoned by the RBI.
• Further, post such bonafide default, the appellant did not commit any delay in reporting.
• It was at best a case of technical default and in view of the judgments of the Apex Court, the penalty could not have been imposed.
• Also, as per the provisions of FEMA, in the present case, the maximum penalty that could have been imposed is INR 2 lakhs and not INR 25 Crores.
• Once a provision is omitted, the action cannot be taken in reference to such a provision, as held by the Apex Court in the case of Kolhapur Cane sugar Works Ltd & Ors Vs. Union of India and Ors., wherein it was held that a show cause notice after the provision is omitted would not be sustainable.

4. Alegaciones del recurrido

El recurrido alegó lo siguiente:

• The appellant has taken an excuse of technical difficulties, however, no material has been submitted to support it.
• The online system was not introduced for the first time on 08.02.2016. Rather, the same was made operative from 12.02.2015 though there was an option to submit ARF manually also.
• The online system was made compulsory w.e.f. 08.02.2016 and there could not be any teething problem as the online system was operational for almost a year prior to making it compulsory.
• The appellant is a reckoned defaulter; it has also committed default in earlier years and an application for compounding was submitted thereupon.
• With respect to the legal aspect, notice was issued in reference to Section 6(3)(b) of FEMA as this section was operational when the appellant committed default.
• With omission of section 6(3)(b), w.e.f. 15.10.2019, a new section 47(3) was also inserted to save the regulation of RBI notified under Section 6 and 47 till rule making power is exercised by the Central Government.
• The regulation framed in reference to capital account transactions by the RBI remains operational.
• If on the pretext of technical default, no penalty is imposed then the excuse of technical default would be taken by every defaulter and thereby nobody would make compliance of the provisions of the Law.

5. Analysis and finding by Hon’ble Appellate Authority

The Hon’ble Appellate Authority made following findings and analysis:

• Para 9(1)(A) of Schedule-I of FEMA requires to report the receipt of the amount of consideration for issue of shares or convertible debentures or warrants within a period of 30 days.

1. Problemas técnicos:

• El apelante sostuvo que la presentación de informes en línea se hizo efectiva a partir del 08.02.2016 por parte del RBI y que, de lo contrario, los informes debían realizarse manualmente, por lo que el apelante enfrentó problemas iniciales al presentar los informes en línea.
• Los demandados demostraron que el sistema en línea se introdujo el 12.02.2015, aunque con la libertad de realizar los informes manualmente.
• Esto demuestra que el sistema en línea estaba en funcionamiento mucho antes de que fuera obligatorio a partir del 08.02.2016.
• Por lo tanto, no podemos aceptar la excusa presentada por el apelante en referencia a los problemas iniciales. Los problemas iniciales, si se justifican, pueden persistir al principio, pero no de forma deplorable tras un año de funcionamiento antes de hacerlo obligatorio.
• Así pues, la excusa presentada por el apelante no puede aceptarse para justificar el retraso.
• Si se aceptara la alegación del apelante y no se impusiera ninguna sanción, no habría validez en el mandato de informar sobre la IED. Nadie presentaría un informe a tiempo y no se podrían imponer sanciones con el pretexto de un retraso técnico.
• De hecho, el retraso técnico debe definirse adecuadamente.

2. Condonación de la demora por parte del RBI

• Los apelantes presentaron una solicitud de condonación de la demora ante el RBI y la emisión del UIN.
• El RBI no es la autoridad competente para tratar el asunto de la demora. El UIN puede emitirse incluso en caso de presentación tardía de informes.
• Por lo tanto, las cartas enviadas al RBI no pueden subsanar la deficiencia. Además, no fue la primera vez, sino que en varias ocasiones el apelante causó retrasos en la presentación de informes sobre IED.

3. Omisión de la Sección 6(3)(b) de la FEMA e introducción del Reglamento de 2017:

• La Sección 6(3)(b) de la FEMA fue omitida a partir del 15.10.2019, pero el efecto de dicha omisión debe considerarse a la luz de las Secciones 6, 6A y 24 de la Ley de Cláusulas Generales.
• En lo que respecta a los reglamentos, no han sido redactados por el Gobierno Central y, por lo tanto, los Reglamentos redactados por el RBI permanecen en vigor de conformidad con la Sección 47(3) de la FEMA.
• Cuando dichas disposiciones tienen continuidad, el apelante no puede presentar excusas relativas a la derogación/omisión de la disposición a la luz de la aplicación de las Secciones 6 y 6A de la Ley de Cláusulas Generales en relación con la Sección 24.
• La cuestión queda totalmente cubierta por la sentencia en el caso de Fibre Boards Pvt. Ltd. (supra), en la que se sostuvo que:
  • Las normas se establecieron para regular la inversión en la India por parte de personas residentes fuera de la India.
  • El Gobierno Central notificó posteriormente los Reglamentos de 2019, denominados Normas de Gestión de Divisas (Instrumentos que no son de deuda), 2019. Esto supuso la sustitución de los Reglamentos de 2017 sobre Gestión de Divisas (Transferencia de Emisión de Valores por Personas Residentes fuera de la India).
  • El requisito de presentación de informes se mantuvo allí también y, por lo demás, la derogación del Reglamento vigente en el año 2016 no tendría efecto a la luz de las Secciones 6 y 6A de la Ley de Cláusulas Generales en relación con la Sección 24 de la misma Ley.

4. Cuantía de la sanción

• La Autoridad Adjudicadora ha impuesto una sanción de 200 millones de rupias a la empresa y de 50 millones de rupias al director por el retraso en la presentación de informes sobre IED.
• Este no es un caso simple de incumplimiento técnico cuando se trata de un incumplimiento de las disposiciones. Sin embargo, incluso si el incumplimiento se refiriera a las disposiciones de la Ley y los Reglamentos, la imposición de una sanción siempre debe ser razonable.
• La sanción no puede evaluarse solo si se ha producido alguna pérdida, porquela determinación del importe no depende de la pérdida.
• Más bien, en caso de que se produzca alguna pérdida, puede dar lugar a daños y perjuicios. El resultado de la conclusión anterior es que, si bien los daños requieren una evaluación de la pérdida causada por las acciones de la otra parte, tal requisito no existe para la sanción.
• El retraso es de 24 días, pero, en nuestra opinión, la sanción de 200 millones de rupias a la empresa y 50 millones de rupias al director es excesiva.
• Debe demostrarse la razonabilidad en la imposición de la sancióny, en consecuencia, intervenimos en la cuantía de la sanción y la sustituimos por la imposición de una sanción de 20 millones de rupias a la empresa, mientras que para el director será de 500.000 rupias.

6. Order

El Honorable Tribunal sustituyó la cláusula de sanción. Sin embargo, se mantiene la orden impugnada en cuanto a las cuestiones legales y de hecho tratadas por la Autoridad Adjudicadora.