The High Court of Rajasthan has issued a directive to the Enforcement Directorate ( ED ) to decide on the release of seized assets, including Indian and Foreign currency, held by various petitioners in a case challenging the validity of the seizure.
The writ petitionwas filed by multiple entities, including M/s Harish Forex Services Pvt. Limited, its Managing Director Shri Harish Bhatija, and others.
The petitioners questioned the validity of the seizure and confiscation carried out by the Enforcement Directorate. The primary contention focused on the failure of the authorities to comply with the necessary procedures for releasing the seized currency, which was considered stock-in-trade for the petitioners’ foreign exchange business.
The bench noted that the search, conducted on 14th March 2019, led to the seizure of Indian and Foreign currency, along with various documents related to business transactions. The petitioners alleged irregularities in the search process, but during the proceedings, their counsel Mr. Siddharth Ranka and Mr. Daksh Pareek emphasised concerns specifically related to the seizure of currency. The respondent revenue was represented by Mr. Anand Sharma.
The court considered the legal framework, citing Section 37 of the Foreign Exchange Management Act, 1999 (FEMA, 1999), which empowers the Enforcement Directorate with search and seizure authority akin to Income Tax authorities under the Income Tax Act, 1961. The judgment also referred to Section 132B of the Income Tax Act, which governs the application of seized assets.
The bench highlighted two crucial provisos in Section 132B of the Income Tax Act: one allowing the release of assets upon application by the concerned person within 30 days and the other mandating release within 120 days from the last authorization for search.
The court noted that despite representations by the petitioners in 2019 and 2020 and a subsequent show cause notice (SCN) in October 2020, no determination had been made even after more than two years.
The court expressed concern over the inaction of the authorities in releasing the seized assets, stating it violated Section 132B of the Income Tax Act, applicable under Section 37(3) of FEMA, 1999.
In result, the division bench comprising Justice Arun Bhansali and Justice Ashutosh Kumar partly allowed the petition, directing the respondents, the Enforcement Directorate to pass appropriate orders for the release of the seized assets within four weeks. However, the release remains subject to the final outcome of the proceedings initiated by the ED against the petitioners.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
