Jeevanlal Jain vs The Commercial Tax Officer and Another

A. Lakshmana Rao, J.—Rule nisi.

Heard the learned counsel for the petitioner as well as the learned Government Pleader appearing for the Respondents.

This writ petition is filed for the issue of a writ of mandamus declaring the collection of a sum of Rs,18,327/- vide receipt dated 13-9-1990 from the petitioner as illegal and arbitrary, and to consequently direct the respondents to refund the collected amount.

The petitioner is a dealer in oil and oil-seeds. On 13-9-1990 the Commercial Tax Officer (Intelligence) the 1st respondent herein, inspected the mill premises of the petitioner, along with the members of his staff, from 7-00 p.m. to 11-30 p.m. and got recorded some statements. The case of the petitioner is that, at the instance of the Commercial Tax Officer, the 1st respondent herein, the petitioner had paid Rs. 6,109/- towards tax payable on the alleged suppressed turnover of Rs. 1,52,718/- and a further sum of Rs. 12,218/- towards compounding fee. It is contended by the learned counsel for the petitioner that no proceedings were recorded by the Commercial Tax Officer and no order had been passed levying tax. It is further argued that since no proceedings have been recorded by the Commercial Tax Officer levying tax, he is not justified in demanding and collecting compounding fee.

On behalf of the respondents a counter-affidavit is filed by the Commercial Tax Officer (Intelligence) Vizianagaram. It is averred therein that the Commercial Tax Officer inspected the business premises of the petitioner on 13-9-1990 and took inventory of stocks for verification. He noticed variation of groundnuts, castor-seeds, and groundnut kernal. It was further noticed that 385 bags of groundnuts which were stated to be belonging to ryots, were stored in the business premises. According to the Department, the said quantity of groundnuts belonged to the petitioner-dealer, and not to ryots as mere was no separate exhibition of stocks and the entire stocks were lying in the mill premises. It is stated that, in those circumstances, the estimated tax of Rs. 6,109/- on an estimated turnover of Rs. 1,52, 718/- was collected from the petitioner on 13-9-1990.

Having been of the opinion that the petitioner had violated the provisions of the A.P. General Sales Tax Act, 1957, and committed an offence punishable u/s 32 read with Section 25, and Rule 45 of the APGST Rules, he Collected compounding fee of Rs. 12,218/-.

This matter is directly covered by the decision of this court in Vardhaman Jewelleries, Governorpet v. Commercial Tax Officer, 1990(II)A.P.S.T.J. 5. The relevant portion of the judgment reads as follows:-

"There was no order passed or any proceeding recorded relating to composition of the offence. As already stated, only a receipt was issued for a sum of Rs. 40,000/- towards ''C'' fees on the very day of inspection by the subordinate of the respondent, viz., A.C.T.O. (Intelligence) Vijayawada. Section 32 clearly contemplates an order being passed or proceeding recorded by the prescribed authority. Apart from the language of Sub-section (2) of Section 32, it is clear that having regard to the nature of and conditions for the exercise of power u/s 32, passing of an order or issuing a proceeding is essential. As already noticed above, we do not find in the record any offer of composition nor admission of the offence by the petitioner. There is no order passed or proceeding recorded by the prescribed authority. We therefore, hold that the collection of Rs. 40,000/- towards compounding fee by the A.C.T.O. (Intelligence) is de hors the provisions of Section 32 of the A.P.G.S.T. Act. The 1st respondent is therefore directed to refund the amount of Rs. 40,000/- collected towards compounding fee within one month...".

In the instant case also there is no order passed or proceeding recorded by the prescribed authority. The Commercial Tax Officer (Intelligence) inspected the business premises of the petitioner on 13-9-1990, and on the very same day he collected Rs. 6,109/- towards estimated tax and Rs. 12,218/- towards compounding fee. In view of the aforesaid decision, we direct the respondents to refund the amount of Rs. 12,218 / - collected towards compounding fee, to the petitioner, within one month from the date of receipt of a copy of this order.

So far as the collection of estimated tax of Rs. 6,109/- is concerned, it is contended by the learned counsel for the petitioner that in the absence of assessment, whether provisional or final, such collection of tax was unauthorised. But, it is averred in the counter-affidavit filed on behalf of the respondents that the amount was paid by the petitioner voluntarily, when he was confronted with a series of irregularities suggesting evasion of tax. The petitioner protested against the alleged harassment of threat by the 1st respondent six days after the date of inspection, and not immediately after the inspection. It is submitted by the learned Government Pleader, appearing for the respondents, that the respondents will immediately take steps for finalisation of the assessment proceedings for the relevant period. In those circumstances, we are not inclined to give a direction for refund of the tax. Suffice it to say that the concerned assessing authority shall finalise the assessment proceedings expeditiously, if not already finalised. The amount of Rs. 6,109 /- collected on 13-9-1990 from the petitioner will be adjusted towards the tax or penalty or both if any, that may be payable by the petitioner as a result of the assessment proceedings, and the balance, if any, shall be refunded.

The writ petition is allowed to the extent indicated above, with costs. Advocate''s fee Rs. 200/-