2013 (12) TMI 1750 - AT - FEMA

Summary

Issues:
- Application for exemption/waiver of pre-deposit of penalty
- Consideration of prima facie case and balance of convenience
- Interpretation of the Foreign Exchange Management Act, 1999
- Contention regarding the nature of the purchased land
- Goa Land Revenue Code provisions on land use
- Undue hardship due to confiscation of property
- Assessment of financial impact on the appellants
- Decision on pre-deposit and bank guarantee requirements

Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi pertains to an application for exemption/waiver of pre-deposit of penalty filed by the appellants. The appellants argued that they have a strong prima facie case and emphasized the lack of incriminating evidence against them. The Tribunal was tasked with evaluating whether the appellants had a prima facie case, the balance of convenience favored them, and what conditions could be imposed for dispensation with the pre-deposit of penalty under the Foreign Exchange Management Act, 1999.

Regarding the nature of the purchased land, the appellants contended that the land was acquired for a hotel and resort, not for agricultural activities. They highlighted that necessary permissions were obtained for non-agricultural use, indicating their intention to set up a hotel. Conversely, the respondent argued that the land was agricultural, citing the absence of a conversion certificate for non-agricultural use as per the Goa Land Revenue Code.

The issue of undue hardship arose due to the confiscation of the property, hindering the appellants' ability to generate profits. The appellants claimed financial loss, impacting their ability to develop the property and generate income. However, the respondent opposed the dispensation of pre-deposit based on an affidavit suggesting that the appellants' financial loss was not substantial enough to warrant complete exemption.

Ultimately, the Tribunal directed the appellants to deposit 30% of the penalty within a specified timeframe and provide a bank guarantee for the remaining penalty amount to ensure penalty realization. Failure to comply would lead to dismissal of the appeal. The decision balanced the financial impact on the appellants with the need to secure penalty realization, showcasing a nuanced approach to addressing the issues raised in the case.