Mumbai: The Enforcement Directorate (ED) has alleged violations of the Foreign Exchange Management Act (FEMA) amounting to Rs9,362 crore by Think & Learn Pvt Ltd, the parent company of ed tech major Byju’s, and its Managing Director Byju Raveendran.
The alleged violations include failing to submit documents regarding imports, not realising proceeds of exports, and delayed filing of documents relating to Foreign Direct Investment (FDI) inflows. Other breaches include allegedly failing to file documents relating to remittances by the company outside India and not allotting shares against FDI received by the company.
As Byju Raveendran is the MD and responsible for the conduct of business, he appears to be ‘guilty’ of the alleged FEMA violations, said the show cause notice issued by the ED.
FEMA violations are civil offences and the penalty is monetary in nature. Think & Learn failed to realise export proceeds in respect of 876 export bills, reflecting transaction of Rs69.88 crore, for the period between April 2020 and January 2023, within nine months from the date of export, said the show cause notice issued by ED’s Special Director Prashant Kumar, who has been appointed as the adjudicating authority in this case.
This, it said, is in contravention of provisions of the FEMA Act. The full export value of the goods or software exported is required to be repatriated to India within nine months from the date of export, unless the Reserve Bank of India has granted an extension of a further six months, it said.
BYJU's Parent Company Fails To Submit Required Documents Related To Export Bills
Think & Learn is facing regulatory issues as it failed to submit documents related to 414 export bills totalling Rs4,54,40,348 within the mandated 21 days from the export date during the period from February 1, 2023, to October 7, 2023. The company also allegedly did not provide seven bills of entries worth Rs18.03 lakh from January 2018 to November 2021.
The ED discovered that the firm did not submit the FC-GPR form for FDI of Rs209.95 crore received in two tranches on October 4, 2021, violating the reporting requirements of the FEMA Act. It also failed to allocate shares against FDI of Rs807.58 crore received on September 22, 2022, within the stipulated 60 days.
Moreover, Think & Learn also did not submit in time the Annual Performance Report (APR) for overseas direct investments totalling Rs8,270 crore made in the 2020-23 period, which is a violation of FEMA Section 6(2). The notice also states that Raveendran, being the MD, was responsible for the conduct of the business of the company (under investigation) and “hence appears to be guilty in terms of section 42 (1) of FEMA”.
ED Raids On BYJU's
Earlier in April, the ED had conducted searches at the premises of Byju’s and the residence of Raveendran and seized documents pertaining to all investments received by the company and overseas investments made by the company. Last week, the federal agency served show cause notices to Think & Learn and Raveendran for probing forex violations under FEMA. They now have to reply to the notices in a month.
Byju’s said the queries in the notice are technical in nature, such as delay in filing APRs because of delayed statutory audits for fiscal year 2022. The company clarified that while there was a delay in APRs, it “promptly filed intimation for all FDI meeting eligibility criteria, and shares were allotted within the prescribed time frame.”
The company emphasized that the delayed APR filing, when FDI-related returns were submitted on time, is a technical issue. It expressed confidence in successfully addressing the case, citing precedent actions by the adjudicating authority, anticipating nominal fines. They provide an example of the Late Submission Fee for such reporting delays being a nominal Rs7,500, emphasizing that the ED notice does not specify a fine amount but outlines the quantum of FDI/ODI (~Rs9,000 crore) and missed deadlines.
