Show-Cause Notices Issued to Foreigners in Goa for Alleged FEMA Violations
Panaji, May 28: In a significant move, the Directorate of Enforcement (DoE) has initiated show-cause notices against foreign nationals who allegedly acquired properties in Goa, violating the Foreign Exchange Management Act (FEMA).
Notices and Response
- The notices, served directly to the parties and through the state government, inquire why their properties involved in the contravention of FEMA should not be confiscated to the central government account, as per Section 13(2) of FEMA 1999.
- Respondents (foreigners) are required to appear in person or through a legal practitioner at the DoE's Mumbai office on specified dates mentioned in the notice.
- Parties have 30 days to reply to the show-cause notice, justifying why adjudication proceedings under FEMA should not be initiated.
Background and Investigation
- Goa's FEMA Violation Cases: The state government reported 392 cases of alleged FEMA violations, leading to the formation of a high-level Anupam Kishore committee to investigate.
- Committee Findings: The committee identified violations in 298 cases, which were subsequently referred to the Directorate of Enforcement and Reserve Bank of India (RBI).
- Nationalities Involved: UK and Russian nationals top the list of foreigners who invested in Goan properties, predominantly through company formations.
Official Insights
- Mr. Anil Kumar Singh, DoE's Assistant Director:
"Cases involving investments above Rs 1 crore will be heard by the Special Director, while those below Rs 1 crore will be referred to the Deputy Director."
"Most properties in question are valued below Rs 1 crore, as they were purchased during 2000-2001 when the real estate market was not booming."
Legal Perspective
- Mr. Vikram Varma, Legal Expert:
"Section 7 of FEMA restricts nationals from specific countries (Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan) from buying Indian properties without prior RBI permission."
"Given the Union Government's approval of 100% Foreign Direct Investment (FDI) in the tourism sector, and considering the properties in question (old Portuguese houses, apartments, or small bungalows with panchayat NOCs), these purchases do not violate FEMA."
"Companies registered in Goa are Indian entities and cannot be deemed foreign."