The Petitioner had been subjected to a Show Cause Notice, demanding differential duty on alleged short-payment of duties during the import of goods. It was alleged that the Petitioner did not declare entire amount payable of the imported model with intent to evade payment of customs duty. The Petitioner had unsuccessfully preferred an application before the Settlement Commission, who crystalized the demand along with interest and penalty. Aggrieved, the Petitioner preferred a Writ before the Bombay HC.
The Bombay HC observed where there is no substantive provision requiring the payment of interest, the authorities cannot, for the purpose of collecting and enforcing payment of tax, charge interest thereon. It was further observed that interest on delayed payment of duty is applicable only for customs duty leviable u/s. 12 of Customs Act and the charging section for levy of additional duty is the not u/s. 12, but u/s. section 3 of the amended Act. Accordingly, there is no substantive provision requiring the payment of penalty or interest.
In view of the above observations, the HC held that the imposition of interest and penalty on portion of demand pertaining to surcharge or additional duty of customs or special additional duty of customs is incorrect and without jurisdiction.
Mahindra and Mahindra Limited (Automotive Sector) [2022-VIL-690-BOM-CU]
GLS Comments:
The Bombay HC has rightly set-aside the imposition of interest and penalty on additional duties. It would be pertinent to note that as a settled principle of law, must be a charging section to create liability. In RE: Khemka and Co. (Agencies) Private Limited [1975 (2) SCC 22], it had been held that there must be, firstly a liability created by the Act, secondly, the Act must provide for assessment and thirdly, the Act must provide for enforcement of the taxing provisions. Thus, imposing of a liability on an assessee in absence of a express provision, is unsustainable.
In RE: Modi Sugar Mills Limited [1961 (2) SCR 189], the Apex Court had held that taxing statutes cannot be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed. Thus, nothing can be implied, which is not expressly provided.
Disclaimer:
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
Sign up for the Newsletter