HC upholds order quashing lookout circular against Huawei India CEO

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The Delhi High Court has refused to quash a lower court order that had set aside the Income Tax Department’s lookout circular (LOC) against Huawei Telecommunications (India) chief executive Li Xiongwei.

However, the high court in its order on Tuesday imposed more conditions to permit Li travel abroad. He must make a fixed deposit of ?5 crore with a nationalised bank in India before leaving the country, and the money will be forfeited if he doesn’t join the investigation twice. The trial court last month had set this amount at ?5 lakh.

Li, a Chinese national, should also give an undertaking to the tax department that he would continue to join the investigation as and when directed by the investigating officer through video conferencing. Another undertaking must be given to the trial court, that he would appear before it as and when required and “in the mode directed by the trial court” on commencement of trial, “if any against him”.

The tax department had issued the LOC in February this year over a tax evasion case against the local unit of Chinese smartphone company Huawei. It approached the high court after the trial court set aside the circular.

In its 90-page order, Justice Anu Malhotra said: “No LOC could have been issued in relation to an alleged commission of a non-cognisable offence”.

The LOC had termed Li a flight risk, and that a number of details were required from him. The high court said the investigation into the case could take considerable time.

The order reads: “Taking into account the factum that there is no extradition treaty of our country with China, Li falls within the category of a flight risk, but, the factum that he is alleged to have committed only a non-cognisable and an alleged bailable offence can also not be overlooked.”

Endorsing the trial court’s findings, it said the allegations against the petitioner did not relate to any aspect of the departure of Li being detrimental to the sovereignty, security or integrity of India. They also do not affect any bilateral relations or the strategic interest of the country. It noted that the petitioner did not raise any issue of the respondent potentially indulging in any act of terrorism or offences against the state.

Appearing on behalf of Li, advocate Vijay Aggarwal had contended that the offence alleged against Li was a bailable offence. He had argued that there could be no discrimination between a foreign national and an Indian national.

Counsel for the Income Tax Department had alleged that the departure of Li would affect the economic interest of the country.

The department had also argued that the aspect of its investigation into alleged tax evasion of more than ?600 crore by the company was in progress and “Li, having been the CEO at the relevant time of the alleged commission of the tax evasion” was liable to be guilty of the offence committed by the company.

Countering this, Aggarwal had submitted that Huawei had already made a fixed deposit of ?200 crore, and a tax refund of ?30 crore to it was withheld, taking the total revenue secured by the department to ?230 crore against the probable demand of ?600 crore.

Source from: https://economictimes.indiatimes.com/news/india/delhi-high-court-permits-huawei-india-ceo-to-travel-abroad-refuses-to-interfere-with-order-quashing-loc/articleshow/94356561.cms

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