The Division bench of the Delhi High Court observed that the investigation conducted by the CBI concerning the Adani and Essar Group of Companies, among others, was conducted promptly. The Delhi High Court held that no further action could be taken against the assessee, considering there is no additional evidence provided to support the allegations against the implicated companies.
The court pointed out that no further action could be taken against the assessee, given the absence of additional evidence supporting the allegations against the implicated companies.
The petitioners claimed that Electrogen Infra FZE (EIF) is fully owned by EIFI, Mauritius, and EIFI is wholly owned by Asankhya Resources Pvt. Ltd (AR), incorporated in the Cayman Islands—a jurisdiction notorious for tax evasion through shell companies. Additionally, Asankhya Resources Pvt. Ltd is owned by Eagie Holding Ltd, a nominee shareholder in the Asankhya Resources Family Trust, controlled by Vinod Shanti Lal Adani, brother of Gautam Adani and a promoter of the group holding company, Adani Enterprises Ltd.
According to the petitioners, just two months after the agreement between the Adani group and EIF was signed, Mr. Vinod Adani became a Director of EIH, the holding company of Electrogen Infra FZE, UAE (EIF). The petitioners assert that this rapid transition aimed to ensure that the contract between the companies remained within the Adani group’s ownership and control. The agreement was purportedly executed shortly before Adani took over ownership, potentially to deceive Indian authorities. The petitioner further points out that two individuals, initially employees, abruptly resigned to join SME (formerly EIF) around the time of the agreement, suggesting that Adani personnel were being sent to EIF before Vinod Adani’s takeover.
Revenue stated that the investigation process is intricate and time-consuming due to the extensive number of cases, various stages involved, and the inclusion of multiple countries. Revenue pointed out that the Directorate of Revenue Intelligence (DRI) has been actively taking measures to ensure the expedited completion of the investigation.
Revenue contended that Show Cause Notices have been issued in all instances of capital goods/power equipment imports where investigations were conducted. Additionally, some cases are awaiting adjudication, and appeals have been filed in others. To gather evidence and documents, Letters Rogatory have been sent to Overseas Courts in Singapore, Dubai, Hong Kong, Switzerland, and Indonesia. Due to the time-consuming nature of the process and involvement of multiple countries, Revenue had taken all necessary measures to expedite its completion.
Revenue also contended that another investigation was initiated on 25.10.2017 in response to a written complaint. This complaint raised concerns about the import of Indonesian Coal by KISPL from companies in Hong Kong and Singapore. It was revealed that the coal was actually procured from KISPL’s Singapore wholly-owned subsidiary at much lower prices than declared during import. KISPL, obligated to supply coal to Maharashtra State Power Generation Co. Ltd., had its subsidiary contract the coal from overseas suppliers.
Revenue averred that the CBI had collected relevant documents and initiated the enquiry. Revenue further pointed out that, based on source information, another investigation was initiated on 22.01.2018 involving M/s Coastal Energy Pvt. Ltd., National Thermal Power Corporation, Metals.
The Court observed that the subsequent investigation conducted by the CBI concerning the Adani and Essar Group of Companies, among others, was conducted promptly. The court took into account the tabulated chart detailing the financial loss incurred by the public exchequer, referencing purchase orders issued by the Tamil Nadu Generation & Distribution Corporation Ltd. from Tamil Nadu ports since 2016. The court, further, pointed out that no further action could be taken against the assessee given the fact that there is no additional evidence provided to support the allegations against the implicated companies.
The court pointed out that petitions for setting up an SIT (Special Investigating Team) were raised in 2017 citing grievances over the inaction of the respondents. Considering the arguments and evidence presented by the respondent(s), the court was convinced that adequate action was being pursued by the respondents. The court dismissed the demand for setting up a Special Investigation Team (SIT).
The petitioners were represented by Prashant Bhushan, Neha Rathi, and Kajal Giri. Sarim Naved, Saurabh Sagar, and Harsh Kumar. Respondents were represented by Farman Ali, Usha Jamnal. Aditya Singla, Nikhil Goel, and Adithya Koshy Roy.
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