📰 𝗦𝘂𝗽𝗿𝗲𝗺𝗲 𝗖𝗼𝘂𝗿𝘁 𝗥𝘂𝗹𝗶𝗻𝗴: 𝗡𝗼 𝗣𝗲𝗻𝗮𝗹𝘁𝘆 𝗳𝗼𝗿 𝗘𝘅𝘁𝗲𝗻𝗱𝗲𝗱 𝗣𝗲𝗿𝗶𝗼𝗱 𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝗜𝗻𝘁𝗲𝗻𝘁𝗶𝗼𝗻𝗮𝗹 𝗦𝘂𝗽𝗽𝗿𝗲𝘀𝘀𝗶𝗼𝗻 𝗶𝗻 𝗥𝗲𝗹𝗶𝗮𝗻𝗰𝗲 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝗶𝗲𝘀 𝗖𝗮𝘀𝗲

📢 The court held, “Penalty under Section 11A of the Central Excise Act, 1944, for an extended limitation period requires intentional suppression of facts with the intent to evade duty.”

🔍 𝗙𝗮𝗰𝘁𝘀: • 𝗖𝗮𝘀𝗲 𝗧𝗶𝘁𝗹𝗲: The Commissioner, Central Excise and Customs & Another vs M/s Reliance Industries Ltd. • 𝗖𝗮𝘀𝗲 𝗡𝘂𝗺𝗯𝗲𝗿𝘀: CIVIL APPEAL NO. 6033 OF 2009 and CIVIL APPEAL NO. 5714 OF 2011 • 𝗖𝗼𝘂𝗿𝘁: Supreme Court of India • 𝗗𝗮𝘁𝗲: 04-Jul-2023

𝗜𝘀𝘀𝘂𝗲: The Revenue Department sought to impose a penalty on Reliance Industries Ltd. for an extended period under Section 11A of the Central Excise Act, alleging that the company concealed the duty component in its sales transactions related to advance license transfers. The department argued that this non-disclosure amounted to "suppression of facts," justifying an extended limitation for penalty imposition. Reliance contended that their valuation practice followed the prevailing CESTAT ruling in IFGL Refractories Ltd., which was subsequently overturned by the Supreme Court. Furthermore, there was no specific mandate for disclosing advance license sales details in returns.

𝗖𝗼𝘂𝗿𝘁’𝘀 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻: The Supreme Court examined whether the term "suppression of facts" should be construed as an omission or as an intentional act with the intent to evade duty. The Court determined that “suppression of facts” alongside terms like fraud or collusion implies intentional non-disclosure to evade duty, not a mere omission. Thus, it held that intent, or mens rea, is essential for applying penalties under an extended limitation.

⚖ 𝗝𝘂𝗱𝗴𝗺𝗲𝗻𝘁: The Supreme Court dismissed the Revenue's appeal, ruling that without evidence of intentional suppression or intent to evade duty, an extended period penalty was unwarranted. The Court emphasized that a change in interpretation or adherence to the prevailing legal understanding of valuation does not constitute suppression of facts.

📜 This judgment reinforces the principle of mens rea (guilty mind) in tax evasion cases, underscoring the need for intentional conduct for extended period penalties. It has broader implications for GST and Income Tax, as it limits penalties to cases involving deliberate intent to evade taxes, offering taxpayers greater clarity and protection against retrospective penalty imposition. Team GSTpanacea 7503031378