UNION OF INDIA AND ORS. versus M/S DHARAMENDRA TEXTILE PROCESSORS AND ORS.

Citation: [2008] 14 S.C.R. 13 · Decided: 29-09-2008 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 14 S.C.R. 13 
--\ 
UNION OF INDIA AND ORS. 
A 
II. 
M/S DHARAMENDRA TEXTILE PROCESSORS AND 
ORS. 
(Civil Appeal Nos. 10289-10303 of 2003) 
1 
SEPTEMBER 29, 2008 
B' 
[DR. ARIJIT PASAYAT, P. SATHASIVAM AND AFTAB 
ALAM, JJ] 
CENTRAL Exc1sE Acr, 1944: 
c 
s.11AC- penalty for short levy or non levy of excise duty 
- Nature of - HELD: Penalty under the provision is for breach 
of civil obligation .and is mandatory - Mens rea is not an es-
sential element for imposing the penalty - The adjudicatory 
authority has no discretion to levy duty less than what is le-' D 
gaily and statutorily /eviable - Interpretation of Statutes - Gen-
tral Excise Rules, 1944, rr. 96ZO and 96ZQ. 
Interpretation of-Statutes - Principles of casus omissus, 
and reading the statute as a whole - Explained. 
E 
Maxims: 
(i) Casus omissus et oblivioni datus dispositioni com-
munis juris relinquitur, and 
< 
(ii) Quad enim semel ailt bis existit praetereunt . F 
legislatores - Applicability of 
In the instant appeals, a Division Bench of the Su-
preme Court noticing the decision in Chairman, SEBl's 
case1 , and doubting the correctness of the decision in 
Dilip N. Shroff's case2 , referred for consideration of the G 
larger Bench the questions (i) whether Section 11AC of 
the Central Excise Act, 1944 inserted by Finance Act, 1996 
with the intention of imposing mandatory penalty on per-
sons who evaded payment of tax should be read to con-
13 
H 
14 
SUPREME COURT REPORTS 
[2008] 14 S.C.R. 
A 
tain mens rea as an essential ingredient and (ii) whether 
there was a scope for levying a penalty below the pre-
scribed minimum. 
.. 
In some of the cases the assessees had challenged 
B 
the vires of Rule 96ZQ(5) of the Central Excise Rules, 1944 
and the High Court held that the said rule incorporated 
) 
the requirement of mens rea. The Division Bench of the 
Supreme Court referring the matter to the larger Bench 
\.-· 
clarified that if the larger bench would take a view to say 
that the· penalty leviable under the said clause was man-
c datory, itwas st.ill open to the assessee to challenge the 
vires of Rule 96ZQ(5). During the course of hearing, par-
ties agreed that a similar is·sue was involved in respect of 
Rule 96ZO. 
D 
Answering the reference and allowing some of the 
appeals, the Cqurt 
·~. 
j 
HELD: 1.1 In Chairman SE.Bi's case, the Court rightly 
held that mens rea was not an essential element for im-
posing pen.alty for breach of civil obligation. In that case, 
E reference was made to the statutory scheme. It was noted 
that the penalty was mandatory. It was pointed out that 
r 
there was a scheme attracting imposition of penalty with 
\. 
reference to a statute relating to breach of civil obligation. 
[para 9] [37-B] 
! 
F 
1.2 In Dilip Shroff's case, the c:onceptual and contex-
ti.tal difference between Section 271 (1) (c) and Section 
276C of the Income Tax Act, 1961 was lost sight of. The 
Explanations appended to Section 272(1)(c) of the IT Act 
entirely indicates the element of strict liability on the as-
G sessee for concealment or for giving inaccurate particu:. 
lars while fifing return. The judgment in Dilp N. Shroof's 
\.. 
case has not considered the effect and relevance of Sec-
j 
tion 276C of the l.T. Act. The objec.t behind the enactment 
of Section 271 (1 )(e) read with the Explanations indicates 
H that the said section has been enacted to provide for a 
y 
UNION OF INDIA & ORS. v. M/S DHARAMENDRA 
15 
TEXTILE PROCESSORS & ORS. 
remedy for loss of revenue. The penalty under that provi-
A 
sion is a civil liability. Wilful concealment is not an essen-
tial ingredient for attracting civil liability as is the case in 
the matter of prosecution under Section 276C of the l.T. 
Act. [para 25] [49-0-E] 
2.1 In Union Budget of 1996-97, Section 11AC of the 
B 
Central Excise Act, 1944 was introduced. It has made the 
position clear that there is no scope for any discretion. In 
para 136 of the Union Budget reference has been made 
. to the provision stating that the levy of penalty is a man-
datory penalty. In the Notes on Clauses also the similar C 
indication has been given. [para 26] [49-F] 
2.2 It cannot be accepted that the use of the expres-
sion "assessee shall be liable" proves the existence of 
discretion. In fact in the same provision there is an ex-
0 
press ion used, "liability to pay duty". It can not be said 
that the adjudicating authority has even a discretion to 
levy duty less than what is legally and statutor

Excerpt shown. Read the full judgment & AI analysis in Lexace.