Karnataka High Court Orders Google India to Deposit Penalties Over FEMA Allegations

The Karnataka High Court has directed Google India and three senior executives to provide bank guarantees for half of the penalties imposed due to alleged Foreign Exchange Management Act violations. These violations include unapproved transactions related to payments made to Google Ireland and equipment purchases from Google US.

The Karnataka High Court has directed Google India and three of its senior executives to deposit 50 percent of the penalties imposed for alleged Foreign Exchange Management Act (FEMA) violations as bank guarantees. This directive follows a Rs 5 crore penalty levied on Google India by the Enforcement Directorate (ED), accompanied by Rs 45 lakh in fines on three officials.

The case revolves around purported violations of section 6(3)(d) of FEMA concerning over Rs 364 crore in transactions. According to the ED, these transactions involve distributor fees and equipment acquisitions that required prior approval from the Reserve Bank of India (RBI), which were not obtained.

While the ED classified these transactions as commercial loans needing RBI approval, Google India has refuted these claims, asserting their adherence to a relevant RBI circular. Initially, the penalties were stayed by an appellate tribunal, but this decision was challenged by the ED, leading to the current court directive for Google India to secure half the penalties in bank guarantees within two weeks.

(With inputs from agencies.)