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2. Petitioner claims that it operates as a re-seller and distributor of mobile phones and related products in India. Petitioner purchases locally manufactured smart phones for resale from third party Indian manufacturers and apart from the above, petitioner imports spare parts, accessories, mobile phones, televisions and certain other internet items and lifestyle products from its group entities. Petitioner claims that it regularly files its income tax returns and it has been assessed up to the assessment year 2017-18. Petitioner states that Qualcomm Inc., and Qualcomm technologies Inc., are the world's leading wireless technology innovators including code division multiple access [CDMA] technology and manufactures semiconductors and provides software for wireless communications, especially in mobile devices. Petitioner claims that it is beneficiary of Qualcomm's proprietary and licensed intellectual property, particularly standard essential patents (SEPs) that are used in the mobile phones sold by it and therefore pays royalty for the use of SEPs to Qualcomm. It also states that SEPs are patents which are essential for functioning of the mobile phone in a telecommunication network by implementing the technical specifications or standards and that the technology cannot be used or implemented without implant of that patent. Since the petitioner is using Qualcomm's proprietary licensed intellectual property, petitioner is said to have paid certain percentage of royalty to Qualcomm and Beijing Xiaomi Mobile Software Co., Ltd., which is as follows:

13. Learned senior counsel Sri.Sajjan Poovaiah for petitioner submits that petitioner is before this Court under Article 226 of the Constitution of India, since the Authorities under Section 37A of FEMA have no competency or jurisdiction to initiate proceedings against petitioner, as the case of the petitioner would not fall under Section 4 of FEMA. It is his submission that petitioner has not transferred or parked foreign exchange, foreign security or any immovable property situated out side India. It is submitted that petitioner has paid royalty since 2016 to the patent holder for using mobile technology i.e., SEP. It is submitted that petitioner has indirectly paid royalty to Qualcomm. Though license is indirect, payment of royalty is direct to Qualcomm. It is submitted that petitioner has paid royalty from 2016 to 2022 and the same is recognized and accepted by the Income Tax Authorities. It is submitted that Income Tax Authorities during assessment have accepted royalty paid by the petitioner to Qualcomm and when it was within the knowledge of the Authorized Officer with regard to acceptance of royalty by the Income Tax Authorities, the Authorized Officer ought not to have proceeded with. It is his submission that the ingredients of Section 4 are not satisfied so as to initiate proceedings under Section 37A of FEMA.

14. It is submitted that royalty paid to Qualcomm and Beijing Xiaomi Mobile Software Company Limited is pursuant to ordinary business transactions which have been duly disclosed and examined by the Income Tax Authorities. The conclusion of the respondents that payment of royalty in relation to Standard Essential Patent, foreign exchange has been transferred out side India by the petitioner through Qualcomm and is held out side India in contravention of Section 4 of FEMA is totally baseless and opposed to the material on record. It is submitted that Qualcomm is the owner of Standard Essential Patent Technology, without the said technology, no mobile device sold by the petitioner will have access to the mobile network interoperability. Transfer of foreign exchange by the petitioner in the form of royalty cannot be considered as transfer of foreign exchange out of India in contravention of Section 4 of FEMA.

22. It is contended that jurisdiction under Article 226 of Constitution of India would be available if the petitioner establishes that the impugned order under challenge is without jurisdiction. Normally, as stated above, writ petition under Article 226 of Constitution of India would be entertained when question of jurisdiction and violation of principles of natural justice is involved. In the instant case, even though the question of jurisdiction is raised, the same involves disputed questions of fact and law. The contention of petitioner is that neither there is violation of Section 4 of FEMA, nor the ingredients of Section 4 are fulfilled to initiate action under Section 37A of FEMA. It is the case of the petitioner that petitioner has paid or transferred foreign exchange to Qualcomm and Beijing Xiaomi Mobile Software Company Limited as royalty for usage of SEPs, technology, other licensed intellectual property in respect of mobiles sold in India of Qualcomm and Beijing Xiaomi Mobile Software Company Limited. On the other hand, it is the case of the respondents that petitioner purchases completely manufactured box packed ready to sell/use mobiles from the manufacturers based in India and directly sells it to distributors without adding any technology or any other value to the purchased phones. Petitioner has not received any kind of service/software/IPR/technology directly or indirectly in order to pay royalty. Whether the payments made by the petitioner to Qualcomm and Beijing Xiaomi Mobile Software Company Limited could be considered as royalty or whether such payment in the facts of the case would attract Section 4 of FEMA is a question of fact which the Competent Authority has to decide appreciating or considering material placed by the petitioner as well as respondents. The respondents claim that there is no agreement between petitioner and the Qualcomm and royalty is being paid based on a letter dated 17.05.2016 and amended master software agreement dated 01.08.2016. Whether the petitioner has used the technology or IPR of Qualcomm and whether there was agreement for usage of technology or IPR and whether the payment made by petitioner is for usage of technology or IPR is a question of fact which the Competent Authority has to decide. Normally, royalty is a payment made for usage of technology or IPR by the manufacturer to the IPR holder. In the case on hand, it is for the petitioner to establish that apart from manufacturer of mobile phones, the petitioner who purchases manufactured mobile phones would also be liable to pay royalty. Therefore, in the facts and circumstances of the case, I am of the opinion, that question with regard to jurisdictional issue may be urged before the Competent Authority and the Competent Authority could determine the same while passing order under sub-Section [3] of Section 37A of FEMA. The Hon'ble Apex Court in the case of Management of Express Newspaper (Private) Ltd., Madras V/s. The Workers and Others [AIR 1963 SC 569], has held that normally, the questions of fact though there may be jurisdictional facts, decision of which depends upon appreciation of evidence, should be left to be tried by the Special Tribunals constituted for that purpose. In the case on hand also, based on the agreements placed on record by the petitioner, Competent Authority would have to decide whether the case of petitioner falls within four corners of Section 4 of FEMA or the payments are towards royalty.