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TMI Blog2022 (9) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ely listed out in Chapter-VIII of the FCR Act. The plain language of Section 37 of the FCR Act clarifies that the punishment, as specified, would be applicable in case of noncompliance of any provision of the FCR Act for which no specific punishment is prescribed. Thus, violation of any provision of the FCR Act would attract punition, as specified. The heading of a section of an enactment may be used as an aid for interpretation of that section but does not control the meaning or import of the section where the language of the section is free from ambiguity. The contention that delay in filing of the annual return under the FCR Act is not an offence, is rejected. The question as noted in paragraph 2(b) is answered in the affirmative. Composition of certain offences - challenge to the validity of the impugned notification - Section 41 of the FCR Act expressly provides that any offence, other than an offence, which is punishable by imprisonment only, made prior to institution of any prosecution be compounded for such sums as the Central Government may specify. The impugned notification has been issued by the Central Government in exercise of powers under Section 41 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed notification is ultra vires of the provisions of the FCR Act. In addition, the petitioner also impugns an order dated 12.03.2014 (hereafter the impugned order ) issued by the respondent, whereby the petitioner was advised to pay a penalty of ₹11,78,260/- (Rupees Eleven Lakhs Seventy-eight Thousand Two Hundred Sixty Only) for compounding the offence of delay in filing of the annual returns under the FCR Act, for the financial years 2009-10, 2010-11 and 2011-12. The petitioner contends that the delay in filing an annual return is not an offence punishable under the FCR Act. It is also contended that since the FCR Act came into effect on 01.05.2011, the same cannot be applied to impute commission of an offence prior to that date. Controversy 2. The questions that fall for consideration before this Court are: (a) whether the impugned notification is violative of the provisions of the FCR Act; (b) whether the delay in filing of the returns is an offence punishable under the FCR Act; (c) whether the impugned order to the extent it advises the petitioner to pay the penalty for the financial years 2009-10, 2010-11 and 2011-12 is beyond out the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner claims that it had also informed the respondent about its predicament and had further, requested the respondent to furnish the requisite details so as to enable the petitioner to file the relevant return. 2.9 The respondent issued the impugned notification, which was published on 26.04.2013. The respondent issued the impugned order computing the penalty payable by the petitioner in terms of the impugned notification. Submissions 3. Mr Manoj V. George, learned counsel appearing on behalf of the petitioner, contended that Chapter-VIII of FCR Act contains provisions relating to Offences and Penalties and there is no provision in the said chapter, which stipulates that the delay in filing an annual return is an offence. Section 41 of the FCR Act provides for compounding of certain offences. Since delay in filing the annual return is not an offence, the question of compounding the same does not arise. 4. Next, he submitted that the effect of the impugned notification was to treat non-filing of the annual return as an offence. Thus, applying the impugned notification to cover a period prior to its issuance is unconstitutional. He contended that an offence could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.12.2015, reads as under: 17. Intimation of foreign contribution by the recipient (1) Every person who receives foreign contribution under the Act, shall submit a signed or digitally singled report electronically online in Form FC-6 with scanned copies of income and expenditure statement, receipt and payment account and balance sheet for every financial year beginning on the 1st day of April within nine months of the closure of the financial year. (2) The annual return in Form FC-6 shall reflect the foreign contribution received in the exclusive bank account and include the details in respect of the funds transferred to other bank accounts for utilisation. (3) If the foreign contribution relates only to articles, the intimation shall be submitted in FC-7. (4) If the foreign contribution relates to foreign securities, the intimation shall be submitted in form FC-8. (5) Every report submitted under sub-rules (2) to (4) shall be duly certified by a chartered accountant. (6) Every such return in Form FC-7 shall also be accompanied by a copy of a statement of account from the bank where the exclusive foreign contribution account is maintained by the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of the FCR Act would attract punition, as specified. 15. The heading of a section of an enactment may be used as an aid for interpretation of that section but does not control the meaning or import of the section where the language of the section is free from ambiguity. 16. In view of the above, the contention that delay in filing of the annual return under the FCR Act is not an offence, is rejected. The question as noted in paragraph 2(b) is answered in the affirmative. 17. The next aspect to be examined is regarding challenge to the validity of the impugned notification. It is relevant to refer to Subsection (1) of Section 41 of the FCR Act. The same reads as under: 41. Composition of certain offences.-( 1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the Official Gazette, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign Contribution (Regulation) Act Wing of Foreigners Division in the Ministry of Home Affairs. 3 Non-furnishing of return after one hundred and eighty days after 31st December every year. Penalty of five per cent of the amount received during the Financial year or rupees fifty thousand, whichever is higher with rupees five hundred per day of delay after one hundred and eighty days The Director or Deputy Secretary in charge of the Foreign Contribution (Regulation) Act Wing of Foreigners Division in the Ministry of Home Affairs. 24. The respondent had issued the impugned order applying the impugned notification. The impugned order is set out below:- Dated 12.3.2014. To MIZPAH CHARITABLE TRUST NALLUR, KAZGHIPPARA POST PALAKKAD PALLAKKAD (PALIGHAT) KEARALA-678557 SUBJECT:- Submission of annual reports under Foreign Contribution (Regulation) Act, 2010 for acceptance of foreign contribution. ______________________ Sir, Your organisation is registered with us bearing No.052890090 has submitted your annual return for the financial years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no application for relaxation or waiver of the penalty will be considered. No extension of time for the payment of penalty will be considered. No extension of time for the payment of penalty will also be allowed. Yours faithfully, Sd/- JOSEPH LUIKHAM DEPUTY SECRETARY TO GOVERNMENT OF INDIA 25. It is seen that the penalty for delay in filing the returns have been separately computed for the three financial years being financial years 2009-10, 2010-11 and 2011-12. 26. It is relevant to note that the FCR Act and FCR Rules came into force with effect from 01.05.2011. Failure to file annual returns in terms of Rule 17 of the FCR Rules prior to 01.05.2011 cannot be construed as an offence under the FCR Act. Clearly, the petitioner could not be held guilty of an offence of not filing the returns under the FCR Act, prior to it coming into force. 27. Mr Soni, learned counsel for the respondent, was also not able to point out any statutory provision for initiating prosecution of any offence under the earlier enactment Foreign Exchange (Regulation) Act, 1976. Concededly, the petitioner cannot be penalised or prosecuted for committing an offence under the FCR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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