Mandatory penalty for delayed Foreign Travel Tax deposit upheld; strict compliance applied and mens rea was held irrelevant.

Delay in depositing Foreign Travel Tax and in filing the return attracted mandatory penalty under the Finance Act, 1979 and the FTT Rules, 1979, because the statutory scheme required timely remittance of tax collected and monthly compliance. The Court held that the penalty provisions were strictly enforceable, that mens rea was irrelevant, and that only an opportunity of hearing was required before imposition. As the petitioner was heard and the explanation for delay was considered, the minimum statutory penalty was upheld and the challenge failed.

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Issues: Whether the penalty imposed for delayed deposit of Foreign Travel Tax and delayed filing of the return was justified and liable to be interfered with.

Analysis: The levy of Foreign Travel Tax was governed by Section 35 of the Finance Act, 1979 and the applicable FTT Rules, 1979. The statutory scheme required timely deposit of tax collected and submission of monthly returns. Section 38(3) prescribed a mandatory penalty range for failure to pay the tax to the credit of the Central Government, while Section 38(5) required only that an opportunity of hearing be given before penalty was imposed. The petitioner was heard, the explanation for delay was considered, and the penalty imposed for delayed payment was the minimum statutory penalty, being approximately one-fifth of the amount involved. The Court held that the provision required strict compliance and that mens rea had no place in such matters.

Conclusion: The penalty was upheld and the challenge to its imposition failed.

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