2013 (8) TMI 414 - CGOVT - Customs

Foreign Travel Tax (FTT) - Delay in Depositing the amount The Carrier failed to deposit an amount of towards the FTT for the month of March, 2003 within the period as stipulated in Rule 9 of the FTT Rules, 1979 read with Notification No. 1/2002 and deposited the same after a delay of 2 days The Applicant while denying all the charges submitted that there was no delay and if any it was not deliberate or intentional - Notice was issued as to why the amount should not be recovered from them towards interest in terms of Section 35A(1) of the Finance Act, 1979 read with Notification No. 3/94-FTT for depositing the said amount of FTT after a delay of 3 days and penal action under Section 38(3) of the Act for violating the provisions of Rule 4 of the FTT Rules, 1979 - Held that - The applicant failed to deposit the full amount of tax collected into the account of the Central Govt. by due date, hence they were liable to penal action under Section 38(3) in addition to the payment of tax not so paid and the interest leviable - The only option with the adjudicating authority was the quantum of penalty to be imposed on the applicant which was to be within the range of minimum one-fifth of the tax not paid and maximum up to three times tax not paid as prescribed in the Section itself - The adjudicating officer had imposed the appropriate minimum penalty after considering all the facts, circumstances and submissions of the applicant as made - Therefore Commissioner (Appeals) has rightly upheld the imposition of said penalty. Applicant had deliberately contravened the provisions of Section 38(3) of Finance Act, 1979 (FTT) - For these contraventions, the applicant was now circumventing the basic truths and for these contraventions the department had very rightly imposed the minimum penalty as mandatorily prescribed in the Section itself The conclusion of the Government finds support from the judgement MALAYSIAN AIRLINES Versus UNION OF INDIA 2010 (8) TMI 786 - BOMBAY HIGH COURT Decided against applicant.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Time-barred Show Cause Notice.
3. Payment of tax and interest.
4. Applicability of Section 38 of the Finance Act, 1979.
5. Harmonious construction of Sections 35, 35A, and 38.
6. Jurisdiction of the Show Cause Notice and proceedings.

Detailed Analysis:

1. Violation of principles of natural justice:
The applicant argued that the order dated 13-10-2005 was passed without affording them an opportunity to be heard. They contended that the Assistant Commissioner of Customs (FTT) recorded incorrect attendance and admissions. However, the Government noted that reasonable opportunities for hearings were provided on multiple dates, and the applicant did not avail of these opportunities. Therefore, the argument of violation of natural justice was found untenable.

2. Time-barred Show Cause Notice:
The applicant claimed that the Show Cause Notice dated 27-4-2004 was issued beyond the statutory period of limitation of six months. The Government observed that the notice was not for payment of tax not paid or underpaid but for confirmation of admitted delay in deposit and invocation of penal provisions, for which no time limitation is prescribed under Section 38 of the Finance Act, 1979. Hence, the notice was not time-barred.

3. Payment of tax and interest:
The applicant had admitted to a delay of two days in depositing the Foreign Travel Tax (FTT) amount for March 2003 and had paid the interest amount of Rs. 4,940/-. The Government confirmed that there was indeed a delay, and the applicant had complied with the rule after the violation.

4. Applicability of Section 38 of the Finance Act, 1979:
The applicant argued that Section 38 should not be invoked as they had already paid the tax and interest. The Government, however, emphasized that Section 38(3) mandates a penalty for failure to pay the tax on time, in addition to the tax and interest. The penalty ranges from one-fifth to three times the amount of the tax not paid. The adjudicating authority imposed a minimum penalty, which was upheld by the Commissioner (Appeals).

5. Harmonious construction of Sections 35, 35A, and 38:
The applicant contended that Sections 35, 35A, and 38 should be interpreted harmoniously to avoid redundancy and double jeopardy. The Government disagreed, stating that Section 38(3) explicitly prescribes a penalty for delayed payment, independent of the interest payable under Section 35A. The penalty is mandatory and does not require proof of mens rea.

6. Jurisdiction of the Show Cause Notice and proceedings:
The applicant argued that the Show Cause Notice and subsequent proceedings were without jurisdiction as the provisions regarding FTT had been abolished. The Government dismissed this argument, citing that the relevant statutory provisions were still applicable at the time of the violation.

Conclusion:
The Government upheld the imposition of the minimum penalty under Section 38(3) of the Finance Act, 1979, and found no infirmity in the Order-in-Appeal. The Revision Application was rejected as devoid of merits. The judgment emphasized the mandatory nature of the penalty for delayed payment of FTT and confirmed that the adjudicating authority had acted within the bounds of the law.