Procedural laws are always for the execution of substantive laws, therefore the procedural laws can execute only those substantive laws which are enacted and codified. In the present times, “Tax” as defined under Section 2(43)of Income Tax Act, 1961 is a substantive law for its recovery, procedural laws may be enacted but since Penalty and Interest are not defined under the Act, therefore the mechanism of the procedural laws, has no room for the recovery of Penalty and Interest.

Penalty and Interest are being recovered under the mandate of Section 229 of Income Tax Act, 1961. The need is for defining the “penalty and interest” as a substantive law under the Act and the recovery mechanism requires reframing for recovery of Penalty and Interest. “Finnis makes an important amendment to Hart’s approach. He argues that in the legal theory, one should not take the perspective of those who merely accept the law as valid”

Natural law is a divine law and is always coupled with a morality however while legislating the positive law it is the duty casted upon the Stateby preserving thenatural Law and morality. The legal philosophies as discussed above may clearly be applied on the issue involved in the provisions of Section 229 of Income Tax Act, 1961.

From the ancient times, Tax was imposed for the common well-being of the society. It was imposed as a morality, to pay tax to the sovereign to run the society smoothly. Herein, the moral may be classified in two parts, the moral right and the moral duty wherein both are governed from the consciousness of an individual. It is the moral duty of a person to pay Tax and besides this, some moral rights may also be available to the person for the payment of interest and Tax in case of the default of the payment of the Tax. The procedural mechanism for the recovery of interest and penalty should not be mechanical because before imposing Interest and Penalty, the consciousness must be ascertained because an innocent person may not necessarily well deserve to be punished, unless and until holds a similar record for long in the past as well.

Therefore in my opinion Penalty and Interestmust be recovered as a tax only when it has attained a stage of ultimate establishment as that particular instance, the defaulter shall be conclusive defaulter and it would have been proved by that time that default was intentional and deliberate.