Delay in filing annual returns under the Foreign Contribution (Regulation) Act constitutes non-compliance and is subject to penalties; however, penalties cannot be imposed retrospectively for actions prior to the Act's enforcement.

JUDGMENT

Vibhu Bakhru, J.

Introduction

1. The petitioner impugns the Notification bearing No.S.O. 1070(E) dated 26.04.2013 (hereafter the `impugned notification') issued by the respondent under Section 41 of the Foreign Contribution (Regulation) Act, 2010 (hereafter the `FCR Act'). The petitioner claims that the impugned 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 Rs.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 the FCR Act; and

(d) if the answer to the aforesaid question is in affirmative, whether the impugned order to that extent it calls upon the petitioner to pay the penalty for a period prior to 01.05.2011 is sustainable.

Context

The relevant facts necessary to address the aforesaid controversy are as under:

2.1. The petitioner, a charitable trust, has filed the present petition through its Managing Trustee, who is 85 years of age.

2.2. The petitioner trust was formed for various charitable objectives including to establish orphanages.

2.3. The petitioner claims that it operates an orphanage, housing around fifty children.

2.4. The petitioner trust was registered under the Foreign Contribution (Regulation) Act, 1976 on 01.04.2007. In furtherance of its objectives, the petitioner trust established a mercy home, which housed around fifty orphans and the requisite Certificate of Registration from the Board of Control of Orphanages and other charitable homes from the State Government had been received.

2.5. The petitioner contends that it has been regularly filing the Income Tax Returns (ITRs) along with its accounts, duly certified by the Chartered Accountant, in compliance with the provisions of the FCR Act.

2.6. The petitioner claims that it received a letter dated 21.09.2011 from the respondent calling upon the petitioner to explain within a period of fifteen days of the receipt of the letter as to why it should not be directed to not accept foreign contribution without prior permission of the Central Government. This was in context of the allegation that the petitioner had failed to file the returns under the Foreign Contribution (Regulations) Act, 1976 for the financial year 2006-07.

2.7. The petitioner claims that he was informed by the Chartered Accountant that he was unable to file the returns (in Form FC-6) as he was unable to create a Login ID. It is claimed that this was because the petitioner's Login ID for filing the online returns under the FCR Act had already been created by the Chartered Accountant engaged earlier by the petitioner, who had since expired.

2.8. The petitioner claims that the Login ID and password necessary to file the online forms were only in the knowledge of the deceased Chartered Accountant and therefore, the petitioner could not file the requisite returns within the prescribed time. The petitioner claims that it had also informed the respondent about its predicament and had further, requested the respondent to furnish the r