2012 (10) TMI 488 - CGOVT - Indian Laws

Penalty - Delay in deposit of Foreign Travel Tax - Applicant was required to collect from all passengers embarking on an international journey a Foreign Travel Tax Foreign Travel Tax is required to be deposited in Government Account/Treasury in accordance with the Foreign Travel Tax Rules, 1979/FTT (Amendment) Rules, 2003 whether it was not open for the adjudicating authority to enhance the quantum of penalty while considering the Show Cause Notice after its remand by the appellate authority to the adjudicating authority Held that - the applicant had deliberately contravened the provisions of sub-section (3) of Section 38 of Finance Act, 1979 (FTT). For these contraventions, the applicant is now circumventing the basic truths and for these contraventions the department has very rightly imposed the minimum penalty as mandatorily prescribed in this Section itself. No dispute that there had been delay - in mandatorily depositing of the impugned foreign travel tax amounts collected during the relevant three months, there is also no dispute regarding liability/responsibility of the applicant for depositing the same and therefore in contravention thereof the applicant was liable to pay all the legally imposable penalties for such delays - If one goes through the order of remand, one would find that it was not a limited remand - remand was to enable the adjudicating authority to consider all the issues after affording opportunity of personal hearing to the petitioner - Show Cause Notices were restored to the file of the adjudicating authority for consideration afresh. It was not a limited remand - it was open for the adjudicating authority to enhance the amount of penalty in consonance with the provision of sub-section (3) of section 38 of the Act.

Summary

Issues Involved:
1. Time Limitation for Filing Revision Application
2. Jurisdiction and Validity of Subsequent Show Cause Notices
3. Applicability and Quantum of Penalty under Section 38(3) of the Finance Act, 1979
4. Retrospective Effect of Amended Rule 11
5. Requirement of Mens Rea for Imposition of Penalty
6. Proportionality of Penalty

Detailed Analysis:

1. Time Limitation for Filing Revision Application:
The primary issue was whether the Revision Application filed by the applicant was time-barred. The applicant contended that they received the Order-in-Appeal dated 11-10-2005 only on 3-1-2008 through their advocate, disputing the dispatch details provided by the department. However, the government found that the order was dispatched on 11-10-2005 and subsequent communications were received by the applicant, thus rejecting the claim of delayed receipt. As per Rule 15 of the Foreign Travel Tax Rules, 1979, the application should have been filed within six months, extendable by another six months for sufficient cause. The applicant failed to file within this period without providing reasons for the delay, rendering the application time-barred and not maintainable.

2. Jurisdiction and Validity of Subsequent Show Cause Notices:
The applicant argued that the subsequent Show Cause Notices issued on 6-3-2004 were without jurisdiction as they pertained to the same alleged offences for which earlier notices had been set aside. The government held that the subsequent notices were legal and proper, as the earlier proceedings did not exhaust the department's ability to issue fresh notices under different provisions. The Commissioner (Appeals) had also stated the department's liberty to initiate fresh proceedings, thus validating the subsequent notices.

3. Applicability and Quantum of Penalty under Section 38(3) of the Finance Act, 1979:
The applicant contended that the penalty should be limited to Rs. 5,000 as per the Rule 11 cap existing during the alleged offences in 1996-97. However, the government noted that the amended provisions removing the cap were applicable at the time of issuing the Show Cause Notices and adjudicating the cases. Section 38(3) mandated a penalty not less than one-fifth but up to three times the unpaid tax, and the adjudicating officer imposed the minimum penalty considering all factors.

4. Retrospective Effect of Amended Rule 11:
The applicant argued that the amendment to Rule 11 removing the penalty cap could not be applied retrospectively. The government disagreed, stating that the amended provisions were applicable at the time of the Show Cause Notices and adjudication. The authorities must follow the statute as it stands during the proceedings, and the amendment did not explicitly provide for retrospective application.

5. Requirement of Mens Rea for Imposition of Penalty:
The applicant claimed that the delay in depositing the Foreign Travel Tax was due to a mistake without any guilty mind, and thus no penalty should be imposed. The government, referencing the Supreme Court decision in Akbar Badruddin Jiwani, held that mens rea was not required for imposing penalties under Section 38(3), as the provision was in absolute terms and did not allow for discretion based on the defaulter's intent.

6. Proportionality of Penalty:
The applicant argued that the penalty of Rs. 18,27,630/- for delays of 27, 11, and 5 days was excessive and violated the principles of proportionality. The government maintained that the penalty imposed was the minimum prescribed by law and proportionate to the offence. The adjudicating authority had no discretion to impose a lesser penalty once the statute mandated a minimum penalty.

Conclusion:
The government concluded that the Revision Application was time-barred and devoid of merits. The subsequent Show Cause Notices were valid, the penalty imposed was in accordance with the amended Rule 11, and mens rea was not required for imposing the penalty. The proportionality of the penalty was upheld as it met the statutory requirements. Therefore, the Revision Application was rejected on both grounds of time limitation and lack of merit.