IGNIS Technology Solutions Pvt. Ltd. Vs Special Director (Appellate Tribunal Under SAFEMA Delhi)
SAFEMA Tribunal Upholds FEMA Contravention for Unsubstantiated Software Import, Slashes Penalties on Company and Director
The Appellate Tribunal under SAFEMA partly allowed the appeals of M/s IGNIS Technology Solutions Pvt. Ltd. and its CEO Nihar Ranjan Samantara against penalties imposed under FEMA for failure to establish import of software against foreign remittances of USD 7.525 million (₹33.42 crore) to a UAE entity. The Tribunal held that the appellants failed to produce credible evidence proving that the software was actually imported despite claiming that it had been received electronically. It found that the certificates relied upon by the appellants neither satisfied the RBI requirements for non-physical imports nor established actual receipt of the software. The Tribunal also noted serious doubts regarding the credibility of the overseas supplier, including the fact that the purchase agreement pre-dated the supplier’s incorporation in the UAE.
The Tribunal rejected the contention that the adjudicating authority had merely relied on findings recorded under other statutes such as the PMLA and CBI proceedings. It observed that, even independently of those investigations, the appellants had failed to furnish satisfactory proof of import to the authorised dealer bank as required under FEMA and the RBI Master Circular governing non-physical imports. The Tribunal further held that the company’s CEO and Director, Nihar Ranjan Samantara, was vicariously liable under Section 42(1) of FEMA, as he had signed the remittance documents, admitted that the software received was of no value, and failed to demonstrate that he had exercised due diligence to prevent the contravention.
However, considering the financial distress pleaded by the appellants, the Tribunal exercised its discretion to substantially reduce the penalties while affirming the finding of contravention. The penalty on IGNIS Technology Solutions Pvt. Ltd. was reduced from ₹7 crore to ₹1 crore, and the penalty on Nihar Ranjan Samantara was reduced from ₹70 lakh to ₹7 lakh. Accordingly, the appeals were partly allowed only to the extent of reduction of penalty, while the finding of FEMA violation was sustained.
Cases Discussed
- Xerox Modi Corp. Ltd. vs. Special Director of Enforcement Directorate (Delhi HC), (2015) 54 taxmann.com 311 Delhi
- Andaman Timbers Industries vs. Commissioner Central Excise Kolkata (SC), Civil Appeal No. 4228 of 2006, Judgment dated 02.09.2015
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeals Nos. FPA-FE-04/CHN/ 2021 filed by M/s IGNIS Technology Solutions Pvt. Ltd. (ITSPL) and FPA-FE-05/CHN/2021 filed by Shri Nihar Ranjan Samantara (Chief Executive Officer & Director), against the Order No. SDE/ SRO/BGZO/07/2020(SK) dated 30.06.2020 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of India, Chennai. The Ld. Adjudicating Authority (AA) imposed penalty of Rs. 7,00,00,000/- on the Appellant Company M/s IGNIS Technology Solutions Pvt. Ltd. for the contraventions of Section 10 (6) of the Foreign Exchange Management Act, 1999 (FEMA) read with Regulation 6 (1) of the Foreign Exchange Management (Realization Repatriation and Surrender of Foreign Exchange) Regulations, 2000. Further penalty of Rs. 70,00,000/-was imposed on Shri Nihar Ranjan Samantara CEO and Director, of the Appellant Company, vide the Impugned Order, for the aforementioned contraventions in terms of Section 42 (1) of FEMA.
