20 - Interest and Penalty

No. In the case of Port Officer [2010 (7) TMI 167 - GUJRAT HIGH COURT], it was held that so far as Section 76 of the Act is concerned, it is not possible to read any further discretion, further than the discretion provided by the legislature when legislature has prescribed the minimum and the maximum limits. The discretion vested in the authority is to levy minimum penalty commencing from one hundred rupees per day on default,  subject to a cap of not exceeding 50% of  the amount of service tax payable. 

From this discretion it is not possible to read a further discretion being vested in the authority so as to entitle the authority to levy a penalty below the stipulated limit of one hundred rupees per day. The moment one reads such further discretion in the provision it would amount to re-writing the provision which, as per settled canon of interpretation, is not permissible. It is not as if the provision is couched in a manner so as to lead to absurdity if it is read in a plain manner. Nor is it possible to state that the provision does not further the object of the Statute or violates the legislative intent when read as it stands. Hence, Section 76 of the Act as it stands does not give any discretion to the authority to reduce the penalty below the minimum prescribed.

The same judgement was followed in Ashish Amand & Co. [2010 (11) TMI 861 - GUJARAT HIGH COURT] and BSGK Shsatry [2010 (10) TMI 243 - GUJARAT HIGH COURT].

Penalty under Section 76 cannot be reduced below the statutory minimum; authority's discretion is confined to the prescribed range. Section 76 penalty under the Finance Act, 1994 confines the authority to a legislatively prescribed minimum-to-maximum range; authorities lack power to reduce the penalty below the statutory minimum per day of default, and courts have rejected construing any additional discretion into the provision as that would amount to rewriting the statute.