Can’t act against NGO for not submitting returns, Centre told

‘Citizen can’t be penalised for discrepancy in form by Centre’

The Delhi High Court has restrained the Centre from taking any coercive steps against an NGO that was unable to submit its annual return due to discrepancy in the new form prescribed for declaring foreign contributions.

“The citizen cannot be penalised for a discrepancy in the form prescribed by the respondent [Centre], which has resulted in the form being unable to be submitted even in the case of a law abiding citizen,” said Justice C. Hari Shankar.

The court’s order came on a petition by Arbor Charitable Foundation, an NGO, which receives foreign contributions in accordance with the protocol set out in the Foreign Contribution Regulation Act, 2010 (FCRA). The NGO’s grievance arises out of the peculiarities in the new FC-4 form, in which returns, regarding foreign contributions received by it are required to be filed.

The rules

Section 18 of the FCRA requires the beneficiary of the foreign contribution to file an intimation before the Central government regarding the contributions received. The process for filing said intimation is set out in Rule 17 of the Foreign Contributions Regulations Rules, 2011.

These rules were amended with effect from September 28, 2020. By the amendment, the earlier Form FC-6, in which the intimation/ return was required to be submitted by the beneficiary of the contributions, was replaced by an FC-4 form.

The 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 maintains the requisite exclusive Foreign Contribution Account, and is also required to be certified by an officer of the bank.

In September last year, the Centre made it mandatory for all NGOs to receive foreign contributions only at the New Delhi Main Branch of the State Bank of India (SBI). Prior to this there was no requirement of the FCR account being in SBI.

A peculiar situation

The NGO submitted that this has resulted in a peculiar situation in which, though March, 31, 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 and the specific branch of the bank was notified only on October 7, 2020.

The NGO’s accounts where foreign contributions were received were not in the SBI, till October 7, 2020. As a result, the NGO submitted that it has “become impossible” for it to submit the return under FC-4 form for the year 2019-2020.

The NGO submitted that though it made a representation to the Central government on June 15, this year the problem continues.

“The difficulty being faced by the petitioners [NGO] appears, prima facie, to be genuine,” the court said.

“Till the next date of hearing, the respondent (Centre) is 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,” the High Court ordered.

The court also dismissed the submission made by the Centre’s counsel that the NGO can submit its return even after June 30, 2021, with appropriate penalty. “It [this order] would open a pandora’s box. Number of associations will come like this,” the Centre’s counsel argued.

“You said it will open Pandora’s box. What was there in Pandora’s box?,” Justice Shankar asked while rejecting the plea.

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