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2021 (7) TMI 523 - HC - FEMAIntimation by recipients of foreign contributions - Foreign Contribution Regulation Act, 2010 ( FCRA ) - peculiarities in the FC-4 Form, whereunder returns, regarding contributions received by beneficiaries under the Foreign Contribution Regulation Act, 2010 ( FCRA ) are required to be filed - petitioners accounts wherein foreign contributions were received were not in the SBI, till 7th October, 2020. As a result, the petitioners submit that it has become impossible for them to submit the return under FC-4 Form for the year 2019-2020.HELD THAT - To a query from the Court as to how this situation could be remedied, Mr. Farman Ali, learned Counsel for the respondent, seeks a short adjournment in order to enable him to obtain instructions specifically on this aspect. However, he submits that no stay ought to be granted, as the petitioners can submit their return even after 30 th June, 2021, with appropriate penalty. This submission does not commend itself to acceptance at all. The citizen cannot be penalised for a discrepancy in the form prescribed by the respondent which has resulted in the form being unable to be submitted even in the case of a law abiding citizen. In view thereof, till the next date of hearing, the respondent is restrained from taking any coercive action against the petitioner for failure to file the requisite return under the FC-4 Form before 30 th June, 2021.
Issues:
1. Interpretation of Foreign Contribution Regulation Act, 2010 (FCRA) and Foreign Contributions Regulations Rules, 2011. 2. Requirement of filing FC-4 Form for foreign contributions received. 3. Impact of the amendment to Section 12 of the FCRA by the FCR (Amendment) Act, 2020. 4. Complications arising from the requirement of maintaining a Foreign Contribution Account in SBI, New Delhi. 5. Challenges faced by petitioners in submitting the FC-4 Form for the year 2019-2020. 6. Legal remedy sought by petitioners against coercive action for non-filing of the FC-4 Form. Analysis: 1. The judgment delves into the intricacies of the FCRA and FCR Rules concerning the filing of returns for foreign contributions. The petitioners, recipients of foreign contributions, highlight the requirement of valid certificates under Section 11 of the FCRA. The amendment to the FCR Rules in September 2020 introduced the FC-4 Form, necessitating a Statement of Account from a designated bank officer for the beneficiary's Foreign Contribution Account. 2. Section 18 of the FCRA mandates beneficiaries to intimate the Central Government about contributions received, as per Rule 17 of the FCR Rules. The petitioners faced a predicament as the amended FC-4 Form required the Foreign Contribution Account to be in SBI, New Delhi, a condition notified post-March 2020. This discrepancy led to challenges in submitting the return for the year 2019-2020, affecting compliant recipients. 3. The amendment to Section 12 of the FCRA by the FCR (Amendment) Act, 2020 restricted foreign contributions to be received only in a specified SBI branch in New Delhi. This statutory change, coupled with the FC-4 Form requirement, posed practical hurdles for recipients whose accounts were not in SBI before the notification in October 2020. 4. The petitioners' representation to the respondent regarding this issue was acknowledged, but the problem persisted. The Court recognized the genuine difficulty faced by the petitioners due to the unforeseen requirement of maintaining the Foreign Contribution Account in SBI, New Delhi, creating an impediment in filing the FC-4 Form for the relevant period. 5. In response to the respondent's submission for a short adjournment to address the matter, the Court restrained any coercive action against the petitioners for non-filing of the FC-4 Form before the stipulated deadline. The judgment emphasized that penalizing law-abiding citizens for a procedural discrepancy caused by the respondent's prescription was unjust, allowing room for a resolution to be presented before the next hearing. 6. The Court granted liberty to the respondent to propose a solution to the impasse and seek a resolution through an appropriate application, aiming to resolve the dispute amicably. This legal remedy provided a temporary reprieve to the petitioners from punitive measures, pending a potential resolution to the filing conundrum posed by the FC-4 Form's stringent requirements.
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