In CA No. 3481 OF 2022- SC- Penalty and interest leviable under Section 45 and 47(4A) of Gujarat Sales Tax Act, 1969 are statutory and mandatory and there is no discretion vested in the Commissioner/Assessing Officer as to whether to levy the penalty or not, rules Supreme Court
Justices M.R. Shah & B.V. Nagarathna [17-04-2023]

Read Order: State of Gujarat and Anr v. M/s Saw Pipes Ltd. (known as Jindal Saw Ltd.)

Chahat Varma

New Delhi, April 20, 2023: The Supreme Court has recently held that penalty and interest leviable under Section 45 and 47(4A) of the Gujarat Sales Tax Act, 1969 are statutory and mandatory and there is no discretion vested in the Commissioner/Assessing Officer to levy or not to levy the penalty and interest other than as mentioned in Section 45(6) and Section 47 of the Act.

The said decision was made while hearing an appeal filed by the State of Gujarat against the order of the Gujarat High Court, setting aside the levy of penalty and interest, mainly on the grounds that the tax imposed had already been paid and that the assessee was under a bonafide opinion as to its tax liability and was following expert advice and therefore, paid the tax at the rate of 2%.

A bench of Justice M.R. Shah and Justice B.V. Nagarathna, placed reliance on Union of India v. M/s. Dharamendra Textile Processors & Ors [LQ/SC/2008/1994], wherein the three-judge bench of Supreme Court was of view that when the term used is shall be leviable, the adjudicating authority will have no discretion.

The division bench observed that mens rea is not an essential ingredient for contravention of the provisions of a civil act and that the breach of a civil obligation which attracts penalty would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention or not.

“The intention of the legislature is very clear and unambiguous that the moment any eventuality as mentioned in Section 45(5) occurs, the penalty shall be leviable as mentioned in sub-section (6) of Section 45. No other word like mens rea and/or satisfaction of the assessing officer and/or other language is used like in Section 11AC of the Central Excise Act. It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous,” the bench opined.

Allowing the appeal, Supreme Court quashed the order passed by the High Court of Gujarat and restored the order(s) passed by the Assessing Officer, confirmed by the Tribunal, levying penalty and interest under Section 45(6) and Section 47(4A) of the Gujarat Sales Tax Act, 1969.