The Madras High Court held that the levy of penalty at twice the amount of entry tax on imported goods is unjustifiable.

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Levy of Penalty at twice the amount of Entry Tax on Imported Goods is unjustifiable: Madras HC [Read Judgment]

September 18, 2020 3:12 pm| By : Mariya Paliwala
entry tax – imported goods – penalty – Taxscan

The Madras High Court held that the levy of penalty at twice the amount of entry tax on imported goods is unjustifiable.

The petitioner, M/s.National Asphalt Products and Construction Company is a company involved in the business of road laying and construction.

Through three Bills of Entries, the petitioner had imported three heavy road laying vehicles. Owing to the then prevailing law laid down by the Division Bench of the Kerala High Court, the petitioner had not paid the entry tax.

However, the Supreme Court in the case of State of Kerala and others Vs. Fr. William Fernandez and others had subsequently upheld levy of entry tax on imported vehicles.

The Enforcement Wing conducted a verification, pursuant to which, the petitioner had admitted omission to pay Entry Tax and accordingly, an amount was paid by the petitioner on the same day itself.

However the impugned notice has been issued, proposing to levy penalty at twice the amount of tax as per Sec 15(1) of the Entry Tax Act, 1990.

The petitioner submitted that as on the date of their import, the prevailing laws exempted the petitioner from payment of Entry Tax, and hence they were under the bonafide belief that they were not required to pay the Entry Tax. But when the respondent authority had pointed out that there was omission to pay Entry Tax on these three vehicles.

Consequently, the petitioner paid the Entry Tax itself. In view of the bona-fide belief, she would submit that proposal to levy penalty should be waived.

The single judge bench of Justice M.S. Ramesh while setting aside impugned notice the proposed levy of penalty is unjustifiable.

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