Special provisions relating to assets held outside India in contravention of section 4 [ Section 37A ] - FEMA Ready Reckoner - FEMA

Special provisions relating to assets held outside India in contravention of section 4 This is a new section inserted by the finance Act, 2015. This section came into force on 9 September, 2015. The genus of this section in traceable to the Government s consistent effort to tackle the evil of the Black Money stashed abroad. This section is one of several measures the Government has proposed in this respect. Section 37A(1) Seizure of value equivalent of assets held outside India To the invoke this section by the authorised officer must have reason to believe that any of the following assets is suspected to be held outside India in contravention of section 4 ; Foreign exchange Foreign Security Immovable property situated outside India. The reasons to believe may be based on either some information or otherwise . The word otherwise widens the scope of this provision so as to make it open-ended. It is not clear whether it was so intended. The officer having the reason to believe must record the reasons in writing. After recording reasons in writing, the officer may pass an order to seize value equivalent situated within India of such foreign exchange, foreign security or immovable property. No Seizure in certain cases Proviso of section 37A(1) , No such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security, or any immovable property, situated outside India, is less than the 1 Crore value. Section 37A(2) Dealing with order of seizure The order of seizure along with relevant material shall be placed by authorised officer before the Competent Authority, within a period of thirty days from the date of such seizure. Such competent Authority is appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the Government of India by the Authorised Officer. Section 37A(3) provides Disposal of order of seizure This also appears to be the tenor underlying the opportunity of banking heard given to the aggrieved person and the representative of the Directorate of Enforcement. Competent Authority may confirm or set aside order of seizure It is provided that the competent Authority shall, within a period of 180 days from the date of seizure either confirm the order of seizure or set it aside. Exclusion of period of court stay order While computing the period of 180 days, the period of stay granted by court shall be excluded and a further period of at least 30 days shall be granted from the date of communication of vacation of such stay order. Sections 37A(4) Adjudicating Order The order of the Competent Authority confirming seizure of equivalent asset shall continue till the disposal of adjudication proceedings. The Adjudicating Authority shall pass appropriate directions in the adjudication order with regard to further action as regards the seizure made under section 37(1) . At any stage of the proceedings under this Act, the aggrieved person discloses the fact of such foreign exchange, foreign security or immovable property and brings back the same into India. In the case of such disclosure, the Competent Authority or the Adjudicating Authority, as the case may be, on receipt of an application in this regard from the aggrieved person, and after affording an opportunity of being heard to the aggrieved person and representatives of the Directorate of Enforcement, shall pass an appropriate order as it deems fit, including setting aside of the seizure made under section 37(1). Section 37A(5) Appeal against order of competent Authority Any person aggrieved by any order passed by the Competent Authority may prefer an appeal to the Appellate Tribunal. In respect of appeal to the Appellate Tribunal, a reference may be made under section 19 that deals with the appeal to the Appellate Tribunal and also refer Rule 10 to 14 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 . Section 37A(6) Compounding not permissible Nothing contained in section 15 (power to compounding contravention) shall apply to this section. By Implication, once section 37A is invoked, compounding provisions become inapplicable to section 37A.