Appellate Authority has No Power to ‘Enhance’ Penalty under the Punjab Excise Act: Punjab & Haryana HC [Read Judgment]

High Court-Punjab Harayana - writ - Taxscan

The division bench of the Punjab and Haryana High Court, in M/s Nirvair Singh v. Financial Commissioner Taxation, held that the appellate authority cannot “enhance” penalty under section 14 of the Punjab Excise Act.

Penalty proceedings were completed against the assessee for violation of Excise Rules. Consequently, the Department ordered the petitioner’s liquor vend to be suspended from 13.05.2016 to 19.05.2016. The assessee preferred an appeal against the order under Section 14 of the Punjab Excise Act before the Excise and Taxation Commissioner. The appellate authority  granted an interim relief to the petitioner by staying the order with a condition that the petitioner shall pay Rs. 1 lakh to the State. Petitioner complied with the condition and availed the benefit. The appeal was, however dismissed later by imposing an additional 4 lakhs on the petitioner as penalty.

The petitioner challenged the levy of additional penalty by stating that under s. 14 of the Act, the appellate authority/revisional authority is not empowered to enhance the penalty.

The bench clarified that the amount of 1 lac was not a penalty, but only a payment enabling the petitioner to avail of the benefit of the stay order dated 18.05.2016. “The question is whether the Excise and Taxation Commissioner was entitled in the petitioner’s appeal under Section 14 to impose an additional penalty. In our view, he was not.”

In the opinion of the bench, Section 14 does not confer a power upon the appellate authority to pass an order more burdensome than the order appealed against. It does not entitle the appellate authority to enhance the penalty.  “Absent a power to the contrary conferred by a statute, an appellate authority cannot grant a relief in favour of the respondent. It can either confirm the order appealed against or set it aside. It can also modify the order, but not to the further detriment of the appellant except as to an order for costs.”

The bench noticed that where the Legislature intention was to confer a power upon an appellate/revisional authority to enhance the relief in favour of the State, it does so specifically.“For instance, Sections 128 and 128-A of the Customs Act, 1962 (in short the Customs Act) confer such a power. Sub-section (3) of Section 128-A of the Customs Act confers the power upon the Commissioner (Appeals) to enhance the penalty. This is evident from the first proviso to sub-section (3) of Section 128-A which stipulates that an order enhancing any penalty or fine in lieu of confiscation shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed enhancement. The word “modifying” in the opening part of sub-section (3), therefore, includes an order enhancing the penalty and it is for this reason that the first proviso requires an order enhancing the penalty not to be passed unless the appellant has been given a reasonable opportunity of showing cause against the same. The Punjab Excise Act does not confer such a power upon the appellate authority. The impugned order enhancing the penalty was, therefore, without jurisdiction.”

Read the full text of the Judgment below.

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