CASE STUDY
INTRODUCTION
Section 11 AC of the Central Excise Act, 1944 prescribes penalty to be imposed on an assessee for short levy of non levy of duty in certain cases. Whether mens rea is required to be proved? Whether there is scope for levy of lesser penalty than the prescribed minimum? These questions have been referred by the Division Bench of Apex Court to Larger Bench in the case which we are going to examine in this case study. Earlier also, we have done the case study on this topic when the duty is deposited before issue of show cause notice. But the situation has changed with the verdict of Apex court. We will be discussing the same in length in this case study.
RELEVANT PROVISIONS
Section 11AC of the Central Excise Act, 1944 -: Penalty for short levy or non levy of duty in certain cases. - Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11A, shall also be liable to pay a penalty equal to the duty so determined.
Provided that where such duty as determined under sub-section (2) of Section 11 A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this Section be twenty-five per cent of the duty so determined:
Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso :
Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then for the purposes of this section, the duty, as reduced or increased, as the case may be shall be taken into account:
Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court then the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty five per cent, of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect.
Explanation - For the removal of doubts, it is hereby declared that -
(1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of section 11 A, relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President;
(2) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.
Rule 96ZO of the Central Excise Rules, 1944 -: Procedure to be followed by the manufacturer of ingots and billets: (1) A manufacturer of non-alloy steel ingots and billets falling under sub- heading Nos. 7206.90 and 7207.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), shall debit an amount calculated at the rate of Rs. 750 per metric tone at the time of clearance of ingots and billets of non-alloy steel from his factory in the account-current maintained by him under sub-rule (1) of Rule 173G of the Central Excise Rules, 1944, subject to the condition that the total amount of duty liability shall be calculated and paid in the following manner :-
(a) a manufacturer shall pay a total amount calculated at the rate of Rs. 750 per metric tonne on capacity of production of his factory for the period from 1st day of September, 1997 to the 31st day of March, 1998, as determined under the Induction Furnace Annual Capacity Determination Rules, 1997. This amount shall be paid by 31st day of March, 1998;
(b) the amount of duty already paid, together with on-account amount paid by the manufacturer, if any, during the period from 1st day of September, 1997 to the 31st day of March, 1998, shall be adjusted towards the total amount of duty liability payable under clause (a);
(c) if a manufacturer fails to pay the total amount of duty payable under clause (a) by the 31st day of March, 1998, he shall be liable to pay the outstanding amount (that is the amount of duty which has not been (paid by the 31st day of March, 1998) along with interest at the rate of eighteen percent per annum on such outstanding amount calculated for the period from the 1st day of April, 1998 till the date of actual payment of the outstanding amount:
Provided that if the manufacturer fails to pay the total amount of duty payable under clause (a) by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstanding amount of duty as on 30th day of April, 1998 or five thousand rupees, whichever is greater.
II. Total amount of duty liability for a financial year subsequent to 1997-98
(a) a manufacturer shall pay a total amount calculated at the rate of Rs. 750/- per metric tonne on the annual capacity of production of his factory as determined under the Induction Furnace Annual Capacity Determination Rules, 1997. This amount shall be paid by the 31st day of March of the financial year;
(b) the amount of duty already paid, together with on-account amount paid by the manufacturer, if any, during the financial year shall be adjusted towards the total amount of duty liability;
(c) if a manufacturer fails to pay the total amount of duty payable under clause (a) by the 31st day of March, of the relevant financial year, he shall be liable to, -
(i) pay the outstanding amount of duty (that is the amount of duty which has not been paid by the 31st day of March of the relevant financial year) along with interest at the rate of eighteen per cent, per annum on such outstanding amount, calculated for the period from the 1st day of April of the immediately succeeding financial year till the date of actual payment of the whole of outstanding amount; and
(ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater.
(1A) If any manufacturer removes any of the non-alloy steel ingots and billets specified in sub-rule (I) without complying with the requirements of the provisions of that sub-rule, then all such goods shall be liable to confiscation and the manufacturer shall be liable to a penalty not exceeding three times the value of such goods, or five thousand rupees, whichever is greater.
(2) Where a manufacturer does not produce the ingots and billets of non- alloy steel during any continuous period of not less than seven days and wishes to claim abatement under sub-section (3) of Section 3A of the Central Excise Act, 1944, the abatement will be allowed by an order passed by the Commissioner of Central Excise of such amount as may be specified in such order, subject to the fulfillment of the following conditions, namely –
(a) the manufacturer shall inform in writing about the closure to the 1 Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise 1, with a copy to the Superintendent of Central Excise, either prior to the date of closure or on the date of closure;
(b) the manufacturer shall intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise 1, with a copy to the Superintendent of Central Excise, immediately after the production in his factory is stopped along with the closing balance of stock of the ingots and billets of non-alloy steel;
(c) the manufacturer, when he starts production again, shall inform in writing about the starting of production to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise 1, with a copy to the Superintendent of Central Excise, either prior to the date of starting production or on the date of starting production;
(d) the manufacturer shall on start of production again along with the closing balance of stock on restarting the factory, intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise 1, with a copy to the Superintendent of Central Excise;
(e) the manufacturer shall while sending intimation under clause (c), declare that his factory remained closed for a continuous period starting from -hours on -(date) to -hours on -(date).
(3) Notwithstanding anything contained elsewhere in these rules, if a manufacturer having a total furnace capacity of 3 metric tonnes installed in his factory so desires, he may, from the first day of September, 1997 to the 31st day of March, 1998 or any other financial year, as the case may be, pay a sum of rupees five lakhs per month in two equal installments, the first installment latest by the 15th day of each month, and the second installment latest by the last day of each month, and the amounts so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of September, 1997 to the 31st day of March, 1998, or any other financial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under sub-section (4) of the Section 3A of the Central Excise Act, 1944 (1 of 1944):
Provided that for the month of September, 1997 the Commissioner may allow a manufacturer to pay the sum of rupees five lakhs by the 30th day of September, 1997:
Provided further that if the capacity of the furnaces installed in a factory is more than or less than 3 metric tonnes, or there is any change in the total capacity, the manufacturer shall pay the amount, calculated pro rata:
Provided also that where a manufacturer fails to pay the whole of the amount payable for any month by the 15th day or the last day of such month, as the case may be, he shall be liable to, -
(i) pay the outstanding amount of duty along with interest thereon at the rate of eighteen per cent per annum, calculated for the period from the 16th day of such month or the 1st day of next month, as the case may be, till the date of actual payment of the outstanding amount; and
(ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater.
Provided that if the manufacturer fails to pay the total amount of the duty payable for each of the months from September, 1997 to March, 1998 by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstanding amount of duty as on 30th day of April, 1998 or five thousand rupees, whichever is greater.
Explanation. - For removal of doubts it is hereby clarified that sub-rule (3) does not apply to an induction furnace unit which ordinarily produces castings or stainless steel products but may also incidentally produce non-alloy steel ingots and billets.
(4) In case a manufacturer wishes to avail of discharging his duty liability in terms of sub-rule (3), he shall inform the Commissioner of Central Excise, with a copy to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, in the following proforma:
"We (name of the factory), located at (address) hereby wish to avail of the scheme described in sub-rule (3) of Rule 9620, for full and final discharge of our duty liability for the manufacture of ingots and billets of non-alloy steel under section 3A of the Central Excise Act, 1944 (1 of 1944).
Dated Sd/-
Name and Designation
(With stamp)
Rule 96ZQ of the Central Excise Rules, 1944 -: Procedure to be followed by an Independent processor of textile fabrics. - (1) An independent processor of textile fabrics falling under heading Nos. 52.07, 52.08, 52.09, 54.06, 54.07, 55.11, 55.12, 55.13 or 55.14, or processed textile fabrics of cotton or man-made fibers, falling under heading Nos. or sub-heading Nos. 58.01, 58.02, 5806.10, 5806.40. 6001.12, 6001.22, 6001.92, 6002.20, 6002.30, 6002.43 or 6002.93, of the First Schedule to Central Excise Tariff Act, 1985 (5 of 1986), shall debit an amount of duty of Rs. 2.0 lakhs per chamber per month, Rs. 2.5 lakhs per chamber per month, Rs. 3.0 lakhs per chamber per month or Rs. 3.5 lakhs per chamber per month, as the case may be, on the annual capacity of production as determined under the Hot-air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998.
(2) The amount of duty payable under sub-rule (1) shall be debited by the independent processor in the account current maintained by him sub-rule (1) of Rule 173G of the Central Excise Rules, 1944.
(3) Fifty per cent of the amount of duty payable for a calendar month under sub-rule (1) shall be paid by the 15th of the month and the remaining amount shall be paid by the end of that month:
Provided that the amount of duty payable for the period from 16th December, 1998 to 31st December, 1998 shall be deposited on or before the 31st day of December, 1998.
(4) The independent processor shall continue to maintain records, and file returns, pertaining to production, clearance, manufacturing, storage, delivery or disposal of goods, including the materials received for or consumed in the manufacture of excisable goods or other goods, the goods and materials in stock with him and the duty paid by him, as prescribed under the Central Excise Rules, 1944 and the notifications issued there under.
(5) If an independent processor fails to pay the amount of duty or any part thereof by the date specified in sub-rule (3), he shall be liable to, -
(i) pay the outstanding amount of duty along with interest at the rate of twenty-four percent per annum calculated for the outstanding period on the outstanding amount; and
(ii) a penalty equal to an amount of duty outstanding from him at the end of such month or rupees five thousand, whichever is greater.
(6) If an independent processor, removes the processed textile fabrics referred to in sub-rule (1) without complying with any of the requirements contained in sub-rule (4), then, all such goods shall be liable to confiscation and the independent processor shall be liable to a penalty not exceeding rupees ten thousand.
(7) Where an independent processor does not produce or manufacture the processed textile fabrics specified in sub-rule (1) during any continuous period of not less than fifteen days and wishes to claim abatement under subsection (3) of Section 3A of the Act, the abatement shall be allowed by an order passed by the Joint Commissioner of Central Excise of such amount as may be specified in such order, subject to fulfillment of the following conditions, namely:-
(a) abatement shall be applicable only on the complete closure of the hot air stenter containing the chambers and not in case of closure of anyone or more chambers contained in such stenter;
(aa) the independent processor shall not clear any non-stentered fabrics during the period for which abatement is claimed, and any clearance by him of non-stentered fabrics during such period shall be liable to confiscation;
(b) the independent processor shall inform, in writing, about such closure to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least three days prior to the date of such closure, giving the following details, namely :
(i) the name of the manufacturer of the stenter;
(ii) the date of purchase of the stenter;
(iii) the number of chambers as determined under the Hot-air Stenter Independent Textile Processors Annual Capacity Determination Rules, 2000;
(iv) the serial number or identification no. of the stenter;
(v) reason for closure of the stenter;
(vi) approximate number of days for which the stenter shall remain closed;
(vii) date and time from which the closure is intended;
(c) the stenter or stenters shall be sealed in such manner as may be prescribed by the Commissioner of Central Excise;
(d) the independent processor, when he starts production again, shall inform in writing about the date of starting of production to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least three days prior to the date of starting production, and get the seal opened in such manner as may be specified by the Commissioner of Central Excise before recommencing the production;
(e) When the claim for abatement by the independent processor is for a period less than one month, he shall be required to pay the duty, as applicable, for the entire period of one month and may subsequently seek such claim after payment of such duty;
(f) when the claim for abatement by the independent processor is for a period of less than one month or more, he shall not be required to pay the duty for that period in advance;
(g) If the claim for abatement by the independent processor has been disallowed by the Joint Commissioner of Central Excise, by a written order made in this regard, the independent processor shall pay the duty, and interest if any applicable, prior to getting the stenter or stenters sealed under condition (c) re-opened for resuming production :
Provided that the Commissioner of Central Excise may condone, for reasons to be recorded in writing, the delay in giving prior information under clause (b), if he is satisfied that such delay in giving information was caused due to unavoidable circumstances.
Explanation. - For the purposes of these rules, an "independent processor" means a manufacturer who is engaged primarily in the processing of fabrics with the aid of power and who also has the facility in his factory (including plant and equipment) for carrying out heat-setting or drying, with the aid of power or steam in a hot-air stenter and who has no proprietary interest in any factory primarily and substantially engaged in the spinning of yarn or weaving or knitting of fabrics, on or after the 10th December, 1998.
Section 271 of the Income Tax Act, 1961 -: Failure to furnish returns, comply with notices, concealment of income, etc. –
(1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person –
(a) Omitted
(b) Has failed to comply with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or fails to comply with a direction issued under sub-section (2A) of Section 142; or
(c) Has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, -
(i) Omitted
(ii) In the cases referred to in clause (b), in addition to any tax payable by him, a sum which shall not be less than one thousand rupees but which may extend to twenty-five thousand rupees for each such failure;
(iii) In the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income :
Explanation 1: Where in respect of any facts material to the computation of the total income of any person under this Act, -
(A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) to be false, or
(B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed.
Explanation 2 : Where the source of any receipt, deposit, outgoing or investment in any assessment year is claimed by any person to be an amount which had been added in computing the income or deducted in computing the loss in the assessment of such person for any earlier assessment year or years but in respect of which no penalty under clause (iii) of this sub-section had been levied, that part of the amount so added or deducted in such earlier assessment year immediately preceding the year in which the receipt, deposit, outgoing or investment appears (such earlier assessment year hereafter in this Explanation referred to as the first preceding year) which is sufficient to cover the amount represented by such receipt, deposit or outgoing or value of such investment (such amount or value hereafter in this Explanation referred to as the utilised amount) shall be treated as the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the first preceding year; and where the amount so added or deducted in the first preceding year is not sufficient to cover the utilised amount, that part of the amount so added or deducted in the year immediately preceding the first preceding year which is sufficient to cover such part of the utilised amount as is not so covered shall be treated to be the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the year immediately preceding the first preceding year and so on, until the entire utilised amount is covered by the amounts so added or deducted in such earlier assessment years.
Explanation 3 : Where any person who has not previously been assessed under this Act, fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and, until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under Section 148.
Explanation 4 : For the purpose of clause (iii) of this sub-section, the expression "the amount of tax sought to be evaded", - (a) In any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds the total income assessed, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income;
(b) In any case to which Explanation 3 applies, means the tax on the total income assessed;
(c) In any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished.
Explanation 5 : Where in the course of a search under Section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income, - (a) For any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date, or, where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income,
Unless,
- (1) Such income is, or the transactions resulting in such income are recorded, - (i) In a case falling under clause (a), before the date of the search; and
(ii) In a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date; or
(2) He, in the course of the search, makes a statement under subsection (4) of Section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of Section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax together with interest, if any, in respect of such income.
Explanation 6 : Where any adjustment is made in the income or loss declared in the return under the proviso to clause (a) of sub-section (1) of Section 143 and additional tax charged under that section, the provisions of this sub-section shall not apply in relation to the adjustment so made.
Section 271C of the Income Tax Act, 1962 -: Penalty for Failure to deduct tax at source.
(1) If any person fails to -(a) Deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or
(b) Pay the whole or any part of the tax as required by or under, -
(i) Sub-section (2) of Section 115-0; or
(ii) Second proviso to Section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner."
Union of
[2008 (231) ELT 0003 (S.C.)]
BRIEF FACTS OF THE CASE
- The Division Bench of the Apex Court has made reference to the larger bench to consider the correctness of the view expressed in “Dilip N. Shroff v/s Joint Commissioner of Income Tax, Mumbai & Anr” [2007 (8) SCALE 304].
- The revenue has taken the stand before the Division Bench that Section 11AC of the Central Excise Act, 1944 should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined.
- The assessee has referred to Section 271(1)(c) of the Income Tax Act, 1961 and have contended that Section 11 AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty.
- The Division Bench has made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 and a decision of the Supreme Court in “Chairman, SEBI v. Shriram Mutual Fund and Anr.” [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under Section 271(1) (c) of IT Act, Section 11AC of the Act and Rule 96 ZQ (5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case.
QUESTION FOR CONSIDERATION
The question for consideration before the larger bench of the
“Whether Section 11AC of the Central Excise Act, 1944 inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient” and “whether there is a scope for levying penalty below the prescribed minimum.”
CONTENTIONS OF THE ASSESSEE
The Assessee had placed reliance upon the judgment given in the case of State of M.P. and Ors v/s Bharat Heavy Electricals [1997 (7) SCC 1] and contended that even if this Court (Apex Court) held that it appears to give the expression that the impositions of penalty is mandatory, yet there was a scope for exercise of discretion.
The Assessee has contended that the absence of specific reference to mens rea is a case of casus omissus.
It is contended that the use of the expression "assessee shall be liable" proves the existence of discretion.
JUDGMENT OF SUPREME COURT
- The Larger Bench went through all the relevant and referred provisions as well as went throught eh judgments delivered in the cases of “Chairman, SEBI v. Shriram Mutual Fund and Anr” as well as “Dilip N. Shroff v/s Joint Commissioner of Income Tax, Mumbai & Anr”.
- The Larger Bench noted that in the case of “Chairman, SEBI v. Shriram Mutual Fund and Anr” reference was made to the statutory scheme and it was noted that the penalty was mandatory. It was pointed out that there was a scheme attracting imposition of penalty. With reference to a statute relating to breach of civil obligation, Section 9 of the Act in that case related to criminal proceedings.
- In the case of “Chairman, SEBI v. Shriram Mutual Fund and Anr”, inter alia, it was held that mens rea is not essential element for imposing penalty for breach of civil obligations or liabilities.
- The Larger Bench has held that the decision given in the case of Bharat Heavy Electricals cannot be of any assistance to the assessee because the said case proceeded on the basis of concession. Even otherwise, it was not open to the Bench to read, into a statute which was specific and clear, something which is not specifically provided for in the statute. It was held that the said case did not indicate the correct position in law.
- It was held that acceptance of the contention of assessee that the use of the expression "assessee shall be liable" proves the existence of discretion, would lead to an absurd result. In fact in the same provision there is an expression used i.e. "liability to pay duty". It can by no stretch of imagination be said that the adjudicating authority has even a discretion to levy duty less than what is legally and statutorily leviable.
- The Larger Bench considered the principles of interpretation of statutes as well as the judgments on them and concluded that the court only interprets the law and cannot legislate it. The court can only interpret the provisions by remaining within the four corners of that enactment. The Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. Language employed in a statute is determinative factor of legislative intent.
- The Larger Bench held that the absence of specific reference to mens rea is a case of casus omissus.
- The Larger Bench noted that the conceptual and contextual difference between Section 271(1) (c) and Section 276C of the IT Act was lost sight of in Dilip N. Shroff's case. The Explanations appended to Section 272(1) (c) of the IT Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. Object behind enactment of Section 271(1)(e) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C of the I.T. Act.
-
The plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained.
DECISION OF SUPREME COURT
The
COMMENTS & CONCLUSION
The issue involved was “whether mens rea can be said to be an essential ingredient for imposing mandatory penalty under Section 11 AC of the Central Excise Act, 1944 and “whether there is a scope for levying penalty below the prescribed minimum.” The Larger Bench of the
But for imposition of penalty under Section 11AC is imposable only when the short payment is by reasons of fraud, collusion or any willful suppression of facts or contravention of any provisions of this Act or of rules made thereunder with intent to evade payment of duty. Thus, it is being agitated that these conditions should be satisfied when the penalty under Section 11AC is to be imposed.
Rebecca Andrews on 05 August, 2009 wrote: