An inquiry to be continued by Adjudicating Authority as per Notification dt. 27.9.2018 was in vogue and not under superseded notification

Auro Logistics Ltd Vs Assistant Director (SRO) (Madras High Court)

An inquiry to be continued by Adjudicating Authority as per Notification dt. 27.9.2018 was in vogue and not under superseded notification

Conclusion: The contention of assessee-company that the person issuing the show cause notice i.e., Special Director was “the” Adjudicating Authority and all proceedings pursuant to the show cause notice issued by him should be continued and concluded by the person issuing the show cause notice and no other was rejected. Show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 was saved. The further proceedings could not proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry would have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification.

Held: In the instant case, on the basis of a complaint lodged under Section 16(3) of the Foreign Exchange Management Act, 1999, by the Assistant Director (AD), Directorate of Enforcement, Hyderabad, the Special Director, Directorate of Enforcement, Southern Regional Office, Chennai, issued a show cause notice to assessee under Section 7 of the Act of 1999, read with Regulations 8, 9(1), and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, for non-repatriation of the export proceeds. Subsequent to the issuance of the show cause notice, Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, directed assessee to appear on 19.2.2020 before the Additional Director for adjudication proceedings. Thereafter, assessee-company sought further time and copies of the documents relied upon by the respondents. There was an exchange of communication between the parties, and, ultimately, by the notice issued by Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, assessee-company were required to be present for a hearing before the Additional Director, Directorate of Enforcement. During the interregnum period, i.e., from the date of issuance of show cause notice dated 23.2.2018 till the date of issuance of the letter dated 6.2.2020, directing assessee to appear before the Additional Director, the notification dated 27.9.2018 was issued enhancing the pecuniary jurisdiction of the Adjudicating Authorities. The notification enhanced the pecuniary limits of the Adjudicating Authorities and empowered them to be Adjudicating Authorities to hold inquiry for the purpose of adjudicating under Section 13 of the Act of 1999. Assessee submitted that the notification dated 27.9.2018 issued by Central Government exercising the power under Section 16 of the Act of 1999, revising the pecuniary jurisdiction of the Officers of the Enforcement Directorate and transferring the cases was prospective in nature, but in the case on hand the said notification was given retrospective effect and the Special Director issued notice way back on 23.2.2018, to writ, prior to the issuance of notification revising the pecuniary jurisdiction, and hence the savings clause contained in the notification to the effect that “except as respects things done or omitted to be done before such supersession…” came to the aid of assessee. The substratum of the contentions was that the person issuing the show cause notice i.e. Special Director was “the” Adjudicating Authority and all proceedings pursuant to the show cause notice issued by him should be continued and concluded by the person issuing the show cause notice and no other. Much emphasis was laid on the use of the word “the” Adjudicating Authority. According to him, the use of the word “the” specifies a particular person. It was held that the contention of assessee-company that the person who issued the show cause notice under Rule 4(1) of the Rules of 2000 would alone be the Adjudicating Authority till the culmination of the proceedings could not be comprehended and need to be rejected. The phrase “except as respects things done or omitted to be done before such supersession…” would mean that whatever acts were done till the date of issuance of the notification superseding the earlier notification were saved. The show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 was saved. The further proceedings could not proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry would have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification. The court stated that the single judge has not committed any error while dismissing the writ petitions.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

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