ED files a FEMA case against BBC India, more employees questioned

The BBC released a two-part documentary titled India: The Modi Question in January this year covering such events as the 2002 Gujarat pogrom, the election of Prime Minister Narendra Modi in 2014 and again in 2019, the abrogation of the autonomy of J&K soon after Modi's re-election, and the protests against the controversial Citizenship (Amendment) Act, 2019, among other things. The documentary highlighted the role of the ruling Bharatiya Janata Party in the systematic otherisation of Indian Muslims.

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THE Enforcement Directorate (ED) has registered a case against the British Broadcasting Corporation (BBC) India under the Foreign Exchange Management Act (FEMA), 1999 for alleged foreign exchange violations. The move comes in the aftermath of the tax 'survey' of BBC's offices in Mumbai and Delhi in February this year. 

The ED case was registered two weeks ago and so far, six BBC India employees have been questioned, including one of its directors, the Indian Express reported, quoting an unnamed government official. According to sources, the BBC has been asked to furnish books of accounts and financial statements, and the questioning of its employees is still ongoing.

The specific provisions of FEMA under which the BBC has been charged are not yet clear.

The FEMA's objective is to facilitate external trade and payments, and for promoting the orderly development and maintenance of the foreign exchange market in India. The Act makes offences related to foreign exchange civil offences.

Offences under the FEMA include violations of Foreign Direct Investment rules, non-compliance with transfer pricing norms under the Income-tax Act, 1961, illegal diversion of profits, and false or misleading declarations of information.

A contravention of the FEMA or any rule, regulation, etc., issued under the Act or by the Reserve Bank of India (RBI), is liable, upon adjudication, to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to ₹2,00,000 where the amount is not quantifiable. If the contravention is a continuing one, further penalty may extend to ₹5,000 for every day after the first day during which the contravention continues.

After a three-day 'survey' conducted under Section 133A (power of survey) of the Income Tax Act, 1961, a press release was issued by the Union Ministry of Finance on February 17 justifying the exercise and revealing its findings. The press release did not mention the BBC by name, describing it only as a "prominent international media company".

The 'survey' claimed to have found profits disproportionate to the BBC's scale of operations in India and unpaid taxes on certain remittances. It also claimed that "crucial evidence" was unearthed by way of statements of employees, while also accusing them of employing "dilatory tactics". 

Other related allegations contained in the press release were: discrepancies concerning the level of relevant function, asset and risk (FAR) analysis, the incorrect use of comparables which are applicable to determine the correct arms length price (ALP), and inadequate revenue apportionment.

The BBC released a two-part documentary titled India: The Modi Question in January this year covering such events as the 2002

Gujarat pogrom, the election of Prime Minister Narendra Modi in 2014 and again in 2019, the abrogation of the autonomy of J&K soon after Modi's re-election, and the protests against the controversial Citizenship (Amendment) Act, 2019, among other things. The documentary highlighted the role of the ruling Bharatiya Janata Party in the systematic otherisation of Indian Muslims.