Proportionality of Penalty: Reflections From the European Court of Justice

Excise Law Times, (2018) Vol. 360

Posted: 2 Jul 2018

Date Written: June 15, 2018

Abstract

The purpose of penal provisions in the statute are multi-fold. The foremost rationale for these provisions is the deterrent effect they carry and thus are directed towards the promoting compliance of statute generally. Another aspect of the penal provisions, in the context of fiscal disputes, is the compensatory effect whereby the amount of penalty is often designed to compensate the Government for the loss of revenue on account of non-payment or delay in payment by the taxpayer.

In any circumstance, however, what cannot be ignored is the fact that the penal provisions must also be in line with the constitutional stipulations and must observe the cannons of taxation which apply unreservedly to fiscal provisions. The principle of proportionality is one such axiomatic guiding principle. A recent decision of the European Court of Justice (‘ECJ’) carries substantive reflections on the need for penal provision to observe this principle and carries crucial generic learning in the space of fiscal jurisprudence.

In this context, this article covers the ECJ's decision in Euro-Team Kft. v. Budapest Rendőrfőkapitánya (C 497/15, decision dated 22.03.2017) to position it in Indian context.

Keywords: Penalty, Proportionality, Tax

JEL Classification: H25, K34

Suggested Citation

Jain, Tarun, Proportionality of Penalty: Reflections From the European Court of Justice (June 15, 2018). Excise Law Times, (2018) Vol. 360, Available at SSRN: https://ssrn.com/abstract=3198720

Tarun Jain (Contact Author)

Supreme Court of India ( email )

New Delhi
India

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