ED files complaint against Myntra and its directors for alleged FEMA offences worth over ₹1,645 crore
In an official release, the ED said its probe was based on what the agency called credible information that Myntra and its related companies allegedly conducted Multi Brand Retail Trade (MBRT) under the guise of 'Wholesale Cash & Carry', which violates the extant Foreign Direct Investment (FDI) policy.
According to the release, the ED investigation under provisions of FEMA, found that Myntra Designs had declared engagement in the wholesale cash and carry business, and thus and invited and received FDI from foreign investors equivalent to ₹ 1,654.35 crore.
'… that they sold majority of their goods to Vector E-Commerce (who sold the goods in retail to the ultimate customer). That Vector and Myntra re related parties and belong to same group or group of companies. Vector e-commerce was created and continued to be used as corporate entity to bifurcate the B2C (retail business) transaction into B2B (between companies) and then B2C (Vector to retail customers),' it detailed.
It added that probe found Myntra 'carried out multi-brand retail trading in the guise of wholesale cash and carry, and did not satisfy conditions laid down for 'Wholesale/Cash & Carry Trading' as they have made cent per cent sales to Vector — which is in contravention of amendment dated April 1, 2010 and October 1, 2010, which permitted only 25 per cent sale to companies belonging to the same group or group companies'.
The ED release claimed that the Flipkart group-owned Myntra and others 'have contravened provisions as per section 6(3)(b) of FEMA 1999 and consolidated FDI policy dated April 1, 2010 and consolidated FDI policy dated October 1, 2010 to the tune of ₹ 1,654 crore'.
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