Even Supreme Court finds Excise Laws Complicated
Please have a look at Section 11AA and 11AB of the Central Excise Act extracted below.
11AA . Interest on delayed payment of duty.-
(1) Subject to the provisions contained in section 11AB , where a person, chargeable with duty determined under sub-section (2) of section 11A , fails to pay such duty within three months from the date of such determination, he shall pay, in addition to the duty, interest at such rate not below ten per cent. and not exceeding thirty six per cent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty:
Provided that where a person chargeable with duty determined under sub-section (2) of section 11A before the date on which the Finance Bill, 1995 receives the assent of the President, fails to pay such duty within three months from such date, then, such person shall be liable to pay interest under this section from the date immediately after three months from such date, till the date of payment of such duty.xxxxx
(2) The provisions of sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President.
11AB . Interest on delayed payment of duty.-
(1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent. and not exceeding thirty six per cent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of section 11A till the date of payment of such duty:
xxxxx
(2) The provisions of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President.
Once, a group of IRS probationers was asked to find out the difference between Section 11AA and 11AB – NOT ONE COULD ANSWER – and they had passed one of the toughest competitive examinations in the world. What Probationers – even the Supreme Court finds these provisions complicated.
The Apex Court observed,
“If the object of the law is to state clearly and unambiguously the obligations of the person whom the law addresses and to spell out plainly and without any confusion the consequences of failure to discharge the obligations cast by the law, then the four sections of the Act fall miles short of the desired objective. Even as originally cast the provisions were far from very happily framed and worded. Subjected to amendments from time to time those provisions have now become so complicated that in order to discern their meaning it becomes necessary to read them back and forth several times . We see no reason why the two periods for which interest is leviable may not be put together and dealt with in one consolidated provision instead of being split up in sections 11AA and 11AB. Also, there is much scope to reorganise all the different subsections of section 11A and to present the scheme of that section in a more coherent and readable form.”
It requires extraordinary talent to draft such laws which get such mild but stinging rebuke from the Apex Court. The Board should seriously think of hiring some good High School English teachers to draft their laws.
All the three stories above pertain to the decision of the Supreme Court which held that interest is payable on differential Duty on Supplementary Invoices.