2007 (11) TMI 427 - HC - Central Excise

Evasion of tax - Penalty - it would show that the plea which they have taken before the authorities that ignorance of law cannot be diluted but it cannot be an excuse in law - Bona fide impression for ignorance of law - Penalty is reduced from Rs. 2, 08, 709 to Rs. 1 lac - Appeal is disposed of

Summary

Issues:
Penalty imposed by the Tribunal for failure to file return due to ignorance of law.

Analysis:
The High Court of Calcutta, comprising Pinaki Chandra Ghose and Sankar Prasad Mitra, JJ., deliberated on the issue of the excessive penalty imposed by the Tribunal. The core question revolved around whether the penalty was justified given the petitioner's admission before the Appellate Authority regarding their ignorance of the law leading to the failure to file the return. The petitioner had paid the amount along with the penalty before the issuance of the show cause notice, indicating a bona fide intention not to evade tax. The Court acknowledged the petitioner's failure to file within the stipulated time but noted their payment along with interest, emphasizing that ignorance of the law cannot serve as an excuse. Consequently, the Court opined that while the penalty should be upheld, it should be reduced from Rs. 2,08,709 to Rs. 1 lac based on the petitioner's bonafideness and acknowledgment of their error.

The judgment further highlighted the petitioner's demonstration of bonafideness in acknowledging their ignorance of the law as a mitigating factor. By reducing the penalty amount, the Court aimed to strike a balance between upholding the penalty for non-compliance and recognizing the petitioner's genuine intentions. The Court reinstated the order passed by the Commissioner of Central Excise (Appeals) with the revised penalty amount, underscoring the importance of compliance with legal obligations despite any lack of awareness.

The Court concluded by disposing of both the appeal and the application based on the revised penalty terms. Additionally, since no affidavit-in-opposition was filed, the allegations made in the petition were not admitted. The judgment also directed the provision of an urgent xerox certified copy of the order to the parties upon application, subject to fulfilling all necessary formalities.