Annual Returns/FC-4 Form – "Can't Penalize Citizen For Discrepancy In Form Prescribed By Government": Delhi High Court

The Delhi High Court recently observed that a citizen cannot be penalized for a discrepancy in the form prescribed by the Government authorities resulting in the form being unable to be submitted even in the case of a law-abiding citizen. The Bench of Justice C. Hari Shankar was hearing the plea of Arbor Charitable Foundation and others who are the recipients of foreign contributions in accordance with the protocol set out in the Foreign Contribution Regulation Act, 2010 FCRA. The grievance It may be noted that every association registered under Foreign Contribution Regulations Act (FCRA) has to submit an Annual Return (Form FC-4) to the Ministry of Home Affairs (MHA). This annual return (Form FC-4) is related to the contributions received by beneficiaries under the Foreign Contribution Regulation Act, 2010 ("FCRA"). Section 18 of the FCRA requires the beneficiary of the contribution to file an intimation before the Central Government regarding the contributions received. Importantly, this FC-4 Form is required to be accompanied by a copy of the Statement of Account of the beneficiary from the bank in which the beneficiary/association maintains Foreign Contribution Account. Last year, Section 12 of the FCR (Amendment) Act, 2020 amended Section 17 of the FCRA and, by virtue of said amendment, foreign contribution can be received only in a branch of the State Bank of India (SBI) located at New Delhi. Vide notification dated 7th October, 2020, the Government had prescribed SBI [New Delhi Main Branch, 11, Sansad Marg, New Delhi -11001] as the bank in which the FCR account was to be opened In this backdrop, the petitioners submitted that through 31st March, 2020 would be the relevant date for filing of the return for the year 2019-2020, the requirement of the account under the FCRA/FCR Rules being in the SBI, New Delhi was introduced only in September, 2020. The petitioners submitted that the bank branch of SBI was notified only on 7th October, 2020 and prior thereto, there was no requirement of the FCR account being in SBI. Thus, the petitioners contended that the accounts wherein foreign contributions were received by them were not in the SBI, till 7th October, 2020 and as a result of this, it has now become impossible for them to submit the return under FC-4 Form for the year 2019-2020. They also submitted that para 7(a) of the FC-4 Form (which has to be submitted online), too, accepts the entry only if the account is in the SBI, New Delhi Main Branch, 11, Sansad Marg, New Delhi -11001. Court's observations At the outset, the Court noted that the difficulty being faced by the petitioners appeared, prima facie, to be genuine. Therefore, till the next date of hearing, the respondent was restrained from taking any coercive action against the petitioner for failure to file the requisite return under the FC-4 Form before 30th June, 2021. However, the Court said that in case the respondent comes up with a solution to the impasse, it would be at liberty to move the court by way of an appropriate application so that a quietus can be achieved to the dispute. Case title - Arbor Charitable Foundation & Ors. v. Union Of India Click Here To Download OrderRead Order

Annual Returns/FC-4 Form – "Can't Penalize Citizen For Discrepancy In Form Prescribed By Government": Delhi High Court

Sparsh Upadhyay

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