Mandatory penalty for delayed tax deposit sustained where the statute required payment by the due date and no discretion to waive existed.

Belated deposit of Foreign Travel Tax attracted penalty under Section 38(3) of the Finance Act, 1979 because the delay beyond the prescribed due date was admitted and established. The authority held that the statutory scheme did not permit condonation of such delay, that a show-cause notice for admitted late payment was sufficient, and that the alleged denial of hearing was untenable because reasonable opportunity had been given at the adjudication and appellate stages. It further held that the penalty provision was mandatory, the adjudicating authority had no discretion to waive the statutory minimum, and mens rea was not required. The penalty and connected demand were therefore sustained.

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Issues: Whether the revision applicant was liable to penalty under Section 38(3) of the Finance Act, 1979 for delayed deposit of Foreign Travel Tax, and whether the objections based on alleged denial of hearing, limitation, and the scope of the penalty provision could be accepted.

Analysis: The applicant admittedly deposited the Foreign Travel Tax belatedly and the delay in payment beyond the period prescribed under Rule 4 of the Foreign Travel Tax Rules, 1979 was established. The authority held that the statutory scheme did not provide for condonation of such delay and that the show cause notice was not a notice for non-payment of tax simpliciter but for admitted delay attracting penal consequences. It also found that reasonable opportunity of hearing had been afforded at the adjudication stage and before the appellate authority, so the plea of breach of natural justice was untenable. On the construction of the Finance Act, 1979, the authority held that Section 38(3) created a mandatory penalty for failure to pay tax by the due date, that the adjudicating authority had no discretion to waive the minimum penalty, and that mens rea was not required. Reliance was placed on the comparable interpretation of analogous penalty provisions in the Inland Air Travel Tax regime.

Conclusion: The penalty under Section 38(3) of the Finance Act, 1979 was rightly imposed and upheld. The revision application was devoid of merit.

Final Conclusion: The dispute was resolved against the assessee, with the penalty and connected demand sustained and the revision rejected.

Ratio Decidendi: Where the statute prescribes a mandatory minimum penalty for failure to remit collected tax by the due date, the authority must impose the penalty once delay is established, without importing a requirement of mens rea or discretion to waive the statutory minimum.

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