Travel business penalized for late FTT deposit & filings; court upholds penalties under Finance Act.

The court upheld penalties imposed on a travel business for delay in depositing Foreign Travel Tax (FTT) and late filing of related returns. The petitioner challenged penalties under FTT Rules, 1979, but the court found the penalties justified under Section 38(3) of the Finance Act, 1979. The court emphasized the necessity of strict compliance with statutory provisions and dismissed the petition, stating the minimum penalty imposed was appropriate despite the petitioner's inconsistent explanations for the delays.

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Issues:
Challenge to penalty for delay in deposit of Foreign Travel Tax (FTT) and late filing of returns.

Analysis:
The petitioner, engaged in the travel business, challenged penalties imposed for delay in depositing FTT and filing related returns. The carrier was required to deposit the tax collected before the expiry of 30 days from the end of the month, as per FTT Rules, 1979. A show cause notice was issued, and the petitioner's response was considered, including a personal hearing. Penalties were imposed for late deposit and filing: Rs. 2,500 under Rule 10A for late submission of FTT return, and Rs. 2,84,250 under Section 38(3) of the Finance Act, 1979 for delayed payment of FTT amount. The petitioner claimed one day's delay in deposit and a 30-day delay in filing. The authorities imposed penalties based on statutory provisions.

The penalty under Section 38(3) of the Finance Act, 1979 is absolute, with discretion limited to a range not less than one-fifth but up to three times of the unpaid tax amount. In this case, the penalty was almost one-fifth of the tax amount, considered lenient by the authorities. The petitioner's explanations for the delays were inconsistent, attributing them to an accident or a misunderstanding. The respondent argued for strict compliance with the provisions, emphasizing the absence of mens rea in such matters. The court agreed that strict compliance was necessary, and the minimum penalty of one-fifth was justified. The court dismissed the writ petition, finding no cause for grievance as the minimum penalty had been imposed.

In conclusion, the court upheld the penalties for delay in depositing FTT and filing returns, emphasizing the importance of strict compliance with statutory provisions and rejecting the petitioner's varying explanations for the delays.

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