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BETWEEN:
AND:
1 . UNION OF INDIA
THROUGH THE MINISTRY OF FINANCE
GOVERNMENT OF INDIA
NORTH BLOCK
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CABINET SECRETARIAT
RAISINA HILL
NEW DELHI – 110 001
REPRESENTED BY ITS SECRETARY.
2 . DIRECTORATE OF ENFORCEMENT
BANGALORE ZONAL OFFICE
3RD FLOOR, B BLOCK
BMTC SHANTINAGAR TTMC
K.H.ROAD, SHANTINAGAR
BENGALURU – 560 027.
3 . MR.SOMASHEKAR N.,
ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT
BANGALORE ZONAL OFFICE
3RD FLOOR, B BLOCK
BMTC SHANTINAGAR TTMC
K.H.ROAD, SHANTINAGAR
BENGALURU – 560 027.
4 . MR.MANOJ MITTAL
DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT
BANGALORE ZONAL OFFICE
3RD FLOOR, B BLOCK
BMTC SHANTINAGAR TTMC
K.H.ROAD, SHANTINGAR
BENGALURU – 560 027.
5 . MR.MANISH GODARA
JOINT DIRECTOR
DIRECTORATE OF ENFORCEMENT
BANGALORE ZONAL OFFICE
BMTC SHANTINAGAR TTMC
K.H.ROAD, SHANTINAGAR
BENGALURU – 560 027.
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6 . MRS.B.YAMUNA DEVI
COMMISSONER OF CUSTOMS
(APPEALS-I), CHENNAI
[COMPETENT AUTHORITY
UNDER SECTION 2(gg) OF FEMA]
60, RAJAJI SALAI
CUSTOM HOUSE
CHENNAI – 600 001.
... RESPONDENTS
ORDER
are as follows:-
from its group entities viz., Xiaomi H.K. Limited and Zhuhai Xiaomi
one Mr. Nitin Ajage in the office of the petitioner. The summons was
issued under Section 37(1) and 37(3) of the Act read with Section
131 (1) of the Income Tax Act, 1961. The petitioner claims that
further steps were taken to take the summons forward. The 3rd
said to have resigned from the Company and finally the Company
2022.
Inc. and Qualcomm Tech Inc. and (ii) Beijing Xiaomi Mobile
Inc. Qualcomm Tech Inc., USA and Beijing Xiaomi Mobile Software
essential patents that are used in mobile phones sold by it. The
petitioner claims that it, therefore, pays royalty for use of these
Agreement (‘SULA’ for short) was entered into between Xiaomi Inc.,
Co. Limited and Xiaomi Inc. and Xiaomi Corporation. Thereafter the
China. From 2013-14 onwards the royalty moved out from the
from Beijing Xiaomi Mobile Software Co. Ltd. under the license and
entire Xiaomi group. The petitioner has charted the royalties that
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under Section 37A of the Act from the current bank account of the
seizure order notices that there were reasons to believe that the
outside India by the group. The reason for seizure was on the
was not a part of the product cost. No work order or purchase order
upon the impugned seizure, seizure order was passed on 29th April
order dated 05-05-2022 on the ground that the seizure order under
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11
11. Heard Sri Udaya Holla, learned senior counsel for the
petitioner along with Sri Aditya Vikram Bhat, Sri Deepak Chopra,
Sri Harpeet Singh, Smt. Radhika V. and Sri Mithel Reddy, learned
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12
12. The learned senior counsel Sri Udaya Holla appearing for
the petitioner would contend that Section 37A of the Act suffers
1
ILR 1966(2) P & H 794 (FB)
2
(1974) 1 SCC 549
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submission:–
arbitrariness is one of the ground that can be the basis for striking
judgments:–
14
6
(2017) 9 SCC 1
7
(2009) 5 SCC 342
8
(1981) 4 SCC 335
9
(2013) 8 SCC 519
10
(2021) 6 SCC 771
11
(2020) 10 SCC 274
12
(2021) 7 SCC 413
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the Act. He would contend that “hold” would mean lawfully held and
submit that the payment of royalty is not held by the petitioner nor
contention:–
13
(2008) 2 SCC 302
14
(1969) 2 SCC 481
15
(1996) 3 SCC 282
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the learned senior counsel to contend that the writ petition insofar
under Section 37A of the Act need not be gone into. In support of
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19
AIR 1964 SC 1140
20
2003 SCC OnLine All 109
21
2007 SCC OnLine Del.951
22
2022 SCC OnLine SC 929
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tackle the menace of black money being parked outside the nation,
in the garb of business, like how the petitioner has managed and,
regulatory. He would contend that the Delhi High Court in the case
23
2018 SCC OnLine Del.6523
24
(1994) 5 SCC 54
25
Civil Appeal No.4081 of 2022 decided on 13-07-2022
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GST is paid and, therefore, it does not become a Company alien for
this Court to dismiss the writ petition on the ground that the
Section 37A of the Act. The learned senior counsel would admit and
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consideration:
Issue No.I:
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the outset.
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follows:
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shall not deny to any person equality before the law or equal
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with right to freedom. Article 19(1) mandates that all citizens shall
liberty. Article 19 directs that all citizens shall have the right as
of India; right to reside and settle in any part of India and right to
available for citizens only albeit they being available with imposition
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by the Apex Court and other constitutional Courts. The High Court
26
AIR 1993 Del.252
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27
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29
30
31
1986 Tamil Nadu Act on the ground that it was arbitrary and,
therefore, violative of Article 14. Two separate arguments were
addressed under Article 14. One was that the Act in question
was discriminatory and, therefore, violative of Article 14. The
other was that in any case the Act was arbitrary and for that
reason would also violate a separate facet of Article 14. This is
clear from para 45 of the said judgment. The judgment went on
to accept both these arguments. Insofar as the discrimination
aspect is concerned, this Court struck down the 1986 Act on the
ground that it was discriminatory in paras 46 and 47. Paras 48
to 50 are important, in that this Court struck down the 1986 Act
for being arbitrary, separately, as follows: (SCC pp. 256-57)
32
(emphasis supplied)”
The Apex Court refers to its earlier judgment in the case of K.R.
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34
35
(Emphasis supplied)
was with regard to Article 19(1)(f) coupled with Articles 14 and 31.
any person, who is not a citizen of this country. Same goes with
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which deals with life and liberty and does not include the rights
therefore, held that it was available only to Indian citizens and not
to foreigners.
and they are not restricted to the citizens of the country only.
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Therefore the first issue that has arisen for consideration qua
Issue No.II:
Section 37A i.e., clauses of the amendment of the year 2015 which
38
… … …
95. Taxation is an instrument of social and economic
engineering. Tax collections help the Government to provide
education, healthcare, housing and other basic facilities to the
people to improve their quality of life and to address the
problems of poverty, unemployment and slow development. To
achieve these objectives, it has been our endeavour in the last
nine months to foster a stable taxation policy and non-
adversarial tax administration. A very important dimension to
our tax administration is the fight against the scourge of black
money. A number of measures have already been taken in this
direction. I propose to do much more.
… … …
39
40
(Emphasis supplied)
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what was the foundation that came about for amendment to the
Act. Clause 9 supra makes specific reference to the Act. The Act
also envisaged. Section 142 of the Finance Act, 2015 deals with
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43
reads as follows:
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seizure.
45
Tribunal. This is the broad frame work of the Act i.e., Section 37A.
manifestly arbitrary.
46
It was held by the Apex Court, that triple talak was manifestly
reconciliation to save it. It was further held that form of talak was
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Constitution. The Apex Court strikes down triple talak on the very
48
49
50
wherein it was held that greater the restriction, the more the
need for scrutiny. The High Court noticed that in the guise of
regulation, the legislation has imposed a total ban on dancing in
the establishments covered under Section 33-A. The High Court
has also concluded that the legislation has failed to satisfy the
doctrine of direct and inevitable effect. (See Maneka Gandhi
case [(1978) 1 SCC 248] .) We see no reason to differ with the
conclusions recorded by the High Court. We agree with Mr
Rohatgi and Dr Dhavan that there are already sufficient rules
and regulations and legislation in place which, if efficiently
applied, would control if not eradicate all the dangers to the
society enumerated in the Preamble and the Statement of
Objects and Reasons of the impugned legislation.
51
52
53
132. The Rules under the Bombay Police Act, 1951 have
been framed in the interest of public safety and social welfare
and to safeguard the dignity of women as well as prevent
exploitation of women. There is no material placed on record by
the State to show that it was not possible to deal with the
situation within the framework of the existing laws except for
the unfounded conclusions recorded in the Preamble as well as
the Statement of Objects and Reasons. [See State of
Gujarat v. Mirzapur Moti Kureshi Kassab Jamat [(2005) 8 SCC
534 : AIR 2006 SC 212] wherein it is held that: (SCC p. 573,
para 75) the standard of judging reasonability of restriction or
restriction amounting to prohibition remains the same,
excepting that a total prohibition must also satisfy the test that
a lesser alternative would be inadequate.] The Regulations
framed under Section 33(1)(w) of the Bombay Police Act, more
so Regulations 238 and 242 provide that the licensing authority
may suspend or cancel a licence for any breach of the licence
conditions. Regulation 241 empowers the licensing authority or
any authorised police officer, not below the rank of Sub-
Inspector, to direct the stoppage of any performance forthwith if
the performance is found to be objectionable. Section 162 of the
Bombay Police Act empowers a competent authority/Police
Commissioner/ District Magistrate to suspend or revoke a
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55
56
57
58
59
What was called in question before the Apex Court was the
proportionality.
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65
The Apex Court, on the summary of the findings, observes that the
follows:
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76.2. The writ petition before the High Court under Article
226 of the Constitution challenging the order of provisional
attachment was maintainable.
76.8. In the facts of the present case, there was a clear non-
application of mind by the Joint Commissioner to the provisions of
Section 83, rendering the provisional attachment illegal.
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25. There are other cases where the Apex Court considers the
and has turned it down. The Apex Court in the case of K.S.
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(2017) 10 SCC 1
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68
(Emphasis supplied)
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legitimate State aim; it is needed to ensure that the law does not
there is presumption that the legislation does not suffer from any
such arbitrariness.
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(2019) 4 SCC 17
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71
The Apex Court holds that while looking into viability and feasibility
Court did not find that the operational creditors are discriminated
arbitrariness.
held as follows:
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(2019) 8 SCC 416
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73
(Emphasis supplied)
30
(2021) 5 SCC 1
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435. This is a case where the law giver has not left
anything to speculation or doubt. We have already indicated
about the effect of the proviso mandating the compulsory
withdrawal of the application. We are of the view that this is a
case, where the law, in question, is retrospective, in that,
contrary to the requirement in the law, at the time, when the
application was filed, a new requirement is placed, even though,
it is sought to be done by superimposing this condition, not at
the time, when the application was filed, which really is the
relevant time to determine the question of maintainability of the
application, with reference to what the law provided in regard to
who can move the application but at the stage of the new law.
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The above were the cases where the Apex Court has rejected the
arbitrariness.
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was given life in the year 2015, has six sub-sections. Sub-section
the Central Government who has reason to believe that any foreign
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subject matter i.e., the seizure made under sub-section (1). The
proceedings under the Act if the aggrieved person discloses the fact
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as follows:
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84
85
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… … …
(Emphasis supplied)
The Apex Court holds that the Act is a complete code by itself.
Though was rendered at a point in time when Section 37A was not
Court.
Section 37A of the Act does not suffer from any manifest
37A are also quoted and analysed. Therefore, the second point that
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Issue No.III::
of Section 37A of the Act. The petitioner was already before this
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section (5) of Section 37A of the Act is that the order of the
mind is discernible from any order, if the order contains reasons for
Competent Authority for this Court to hold that the order suffered
It is not the number of pages that matters, but the content in those
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wood on the tree. Therefore, the order does not suffer from non-
Appellate Tribunal.
SUMMARY:
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ORDER
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consequence.
Sd/-
JUDGE
bkp