UNION OF INDIA vs M/S. DHARAMENDRA TEXTILE PROCESSORS &ORS

The Supreme Court, in this judgment, addressed the interpretation of Section 11AC of the Central Excise Act, 1944, which mandates penalties for tax evasion. The Court held that mens rea is not a necessary ingredient for imposing penalties under this section, thereby affirming the strict liability principle in tax law. The matter was referred to a larger bench due to doubts raised regarding the precedent set in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. (2007 (8) SCALE 304).