Published Paper Details:

Evasion of tax generates a parallel economy working against the national interest. Naturally stringent laws against the same became necessary. For imposing penalty "mens rea" was considered necessary and discretion in imposing the same was conferred on the authorities. As time advanced, the element of "mens rea" in imposing penalties against tax evasion is often taken away. The role of discretion on the part of authorities in imposing penalties has become less and less. For example, the main penalty provisions in the Central Goods and Service Tax Act, 2017 do not invest the authority imposing penalty with discretion and the power to consider mens rea. The authority is bound to impose penalty in the given situation. The reason for such harsh law without conferring discretion is the severe nature of the acts or omissions committed by the assessee. The Legislature therefore imposes deterrent laws. However, the operation of such provisions sometimes leads to patent injustice. In the course of working of such penalty provisions, even innocent and bona fide persons are trapped in the net of penalties. Even if there is no guilty intention or mens rea on the part of the assessee, the authorities are forced to levy the mandatory penalties. The view that the discretionary powers of the authorities in imposing penalties should be taken away is unrealistic. This paper briefly analyses the lack of discretion and absence of mens rea in imposing penalties invoking Sections 122 and 125 of the Central Goods and Service Tax Act, 2017.