Delayed tax payment and conflicting delegated rule: parent statute prevails, and penalty can be enhanced on full remand.

Delayed remittance of foreign travel tax was treated as a failure to pay within the prescribed time, attracting penalty under Section 38(3) of the Finance Act, 1979 as a civil consequence for breach of statutory duty, without requiring proof of mens rea. The proviso to Rule 11 of the Foreign Travel Tax Rules, 1979, which limited the officer's power to impose penalty to Rs. 5,000, was held to be inconsistent with the parent Act and could not override the mandatory penalty provision. On a full remand, the adjudicating authority could reconsider the matter afresh and enhance the penalty after hearing the affected party.

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Issues: (i) Whether penalty under Section 38(3) of the Finance Act, 1979 could be imposed for delayed payment of foreign travel tax, and whether "failure to pay" covered belated payment. (ii) Whether the proviso to Rule 11 of the Foreign Travel Tax Rules, 1979 capped the penalty at Rs. 5,000 and could override Section 38(3) of the Finance Act, 1979. (iii) Whether the penalty could be enhanced on remand.

Issue (i): Whether penalty under Section 38(3) of the Finance Act, 1979 could be imposed for delayed payment of foreign travel tax, and whether "failure to pay" covered belated payment.

Analysis: The statutory scheme required collection of foreign travel tax and payment to the credit of the Central Government within the prescribed period. Section 38(3) created liability where the carrier failed to pay the tax within that period, in addition to tax and interest. The Court treated non-payment on the due date as failure to pay, holding that delayed remittance was within the ambit of the provision. It also held that the penalty was a civil consequence for breach of statutory obligation and did not depend on proof of mens rea.

Conclusion: The provision applied to delayed payment, and the penalty was attracted in favour of Revenue.

Issue (ii): Whether the proviso to Rule 11 of the Foreign Travel Tax Rules, 1979 capped the penalty at Rs. 5,000 and could override Section 38(3) of the Finance Act, 1979.

Analysis: The Court held that delegated legislation must yield to the parent Act in the event of conflict. Section 38(3) prescribed a mandatory minimum penalty and the proviso to Rule 11, which limited the officer's competence to Rs. 5,000, was inconsistent with the Act. The Court rejected the plea of casus omissus and held that reconciliation was not possible because the substantive provision of the Act was the leading provision.

Conclusion: Section 38(3) prevailed over Rule 11, and the lower cap in the rule could not control the penalty; the finding was in favour of Revenue.

Issue (iii): Whether the penalty could be enhanced on remand.

Analysis: The remand was held to be a full remand, not a limited one. The adjudicating authority was therefore free to reconsider the matter afresh and to impose penalty in accordance with the governing statutory provision after giving opportunity of hearing.

Conclusion: Enhancement of penalty on remand was permissible and the challenge failed.

Final Conclusion: The writ petitions failed because the statutory penalty for delayed payment of foreign travel tax was upheld, the restrictive rule could not override the Act, and the impugned orders were sustained.

Ratio Decidendi: Where a carrier does not pay tax within the prescribed time, delayed payment amounts to failure to pay, and a conflicting rule cannot override the mandatory penalty prescribed by the parent statute for such statutory breach.

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