P.V. Raghavulu and Co. vs Special Assistant Commercial Tax Officer, Renigunta, Chittoor District and Others

Jeevan Reddy, J.—The petitioner is a dealer at Sullurpet, Nellore District. He issued a cash bill and a way-bill on March 20, 1984, showing that 50 drums of ground-nut oil were consigned in favour of "Sri Siddeswara Oil Traders, Tirupati", being transported by lorry bearing No. APN-8469. The said lorry was checked on March 21, 1984, at the check-post, Renigunta. The Check-post Officer found on verification that the lorry contained 40 empty drums, which means there was no ground-nut oil in any of the drums. Thereupon, he levied and collected the tax on the footing that 50 drums of ground-nut oil have been sold by the petitioner, and that tax is payable thereon. Besides the above order, he passed a separate order of composition. The order of composition, in so far as it is relevant, reads thus :

"The person-in-charge of the goods while admitted the said irregularities gave a statement to the effect that the consignor, one M/s. P. Venkataraghavulu & Company, of Sullurpet has issued spurious sale bills in order to hoodwink the department without actually transporting 50 (fifty) drums of ground-nut oil from Sullurpet, to Tirupati. The dealer has thus violated the provisions of the Andhra Pradesh General Sales Tax Act and the Rules framed thereunder and thereby committed an offence u/s 30(8) which is punishable u/s 30(7) of the Andhra Pradesh General Sales Tax Act.

The dealer was issued with a show cause notice to have the offence compounded departmentally in lieu of prosecution.

In response to the notice the person-in-charge of the goods vehicle admitted the irregularities on behalf of the dealer and consented to get the offence compounded in lieu of prosecution and to pay compounding fees twice the tax due in a sum of Rs. 17,568 besides the tax due on the transaction. The offence is, therefore, accepted and the offence is compounded departmentally in a sum of Rs. 17,568."

In the regular assessment proceedings, the value of 50 drums of ground-nut oil was included in the turnover of the petitioner. Indeed, 50 per cent of the said turnover was added to the turnover on account of undisclosed sales. The matter was carried in appeal. The appellate authority observed that when there was no ground-nut oil in the drums, it means that no ground-nut oil was sold, and, therefore, it is un-understandable how tax could have been levied on the footing that 50 drums of ground-nut oil were sold. Accordingly, he remitted the matter back for reconsideration to the assessing authority. After remand, the assessing authority, by his order dated April 22, 1986, deleted the disputed turnover, viz., the value of 50 drums of ground-nut oil and the addition of 50 per cent thereof. The relevant portion of the order of assessment dated April 22, 1986, reads thus :

"M/s. P. V. Raghavulu & Co., Sullurpet, were assessed for the year 1983-84 in G.I. No. 11735/83-84 on a gross and net turnover of Rs. 1,05,70,849.18 and Rs. 89,10,112.24, respectively on December 13, 1985.

Aggrieved of the above orders the dealers preferred an appeal before the Deputy Commissioner (CT), Appeals, Guntur, in appeal No. 1257/85-86 disputing the addition of a turnover of Rs. 1,84,275.

The Deputy Commissioner (CT), Appeals, Guntur in appeal No. 1257/85-86 dated March 6, 1986, set aside the assessment made and remanded the case back to the assessing authority for disposal.

The dealers have produced their accounts for the year 1983-84 today for check, i.e., on April 22, 1986. The accounts have been examined in the light of the observations of the Deputy Commissioner (CT), Appeals, Guntur. My enquiries and also the examination of the accounts of the dealers revealed that thee is no evidence for evasion or suppression. I, therefore, delete the turnover of Rs. 1,84,275 from the assessment ........"

This writ petition was filed in July, 1985, questioning the validity of the order of composition, and for directing the respondents to refund the amount collected from the petitioner by way of composition. It is now contended by the petitioner that once no tax is held leviable, no penalty could have been levied and consequently, there could have been no composition. We have gone through the relevant papers placed before us. It would be evident from a reading of the order of composition that the composition amount was collected not on the ground that a taxable transaction has taken place and that the tax payable in that behalf was being evaded, or was not paid, but on the ground that the petitioner had issued spurious sale bills in order to hoodwink the department, without actually transporting oil. It was specifically stated in the said order that the violation is one under sub-section (8) of section 30, which is punishable u/s 30(7) of the Act. Hence the assessment order dated April 22, 1986, cannot be said to have knocked out the basis of the composition order. Had the composition order been passed on the footing that there has been a failure to pay, or the evasion of tax due, probably the said assessment order would have become relevant, but not in the present case. We, therefore, cannot agree that by virtue of the aforesaid assessment order dated April 22, 1986, the basis of the composition order is knocked out and, therefore, the amount collected thereunder should be refunded to the petitioner.

Learned counsel for the petitioner, however, put forward an alternative argument. His contention is that in this case the matter falls under clause (b) of sub-section (1) of section 32, and not under clause (a). If so, contends the counsel, the amount of composition cannot exceed Rs. 1,000. Sub-section (1) of section 32, which provides for composition of offences, reads as follows :

"32. (1) The prescribed authority may accept, from any person who has committed or is reasonably suspected of having committed an offence under this Act, by way of composition of such offence -

(a) where the offence consists of the failure to pay or the evasion of any tax, recoverable under this Act, in addition to the tax so recoverable, a sum of money not exceeding three thousand rupees or double the amount of the tax recoverable, whichever is greater, and

(b) in other cases a sum of money not exceeding three thousand rupees .........".

[At the relevant time clause (b) mentioned "one thousand rupees" only.]

It is not disputed before us that violation of sub-section (8) of section 30 is an offence, for which a person can be prosecuted in court, and that such offence can be compounded u/s 32. A reading of sub-section (1) shows that clause (a) is attracted only where the offence consists of the failure to pay, or evasion of tax due. In other cases, it is clause (b) that applies. In this case, as stated above, the composition amount was levied not on the ground that there was failure to pay the tax due or that there was any evasion of tax due, but on the ground that the petitioner had issued spurious sale bills in order to hoodwink the department without actually transporting 50 drums of ground-nut oil. Evidently, the case falls under clause (b); it cannot fall under clause (a). If so, the amount of composition could not have exceeded Rs. 1,000.

For the above reasons, the writ petition is allowed in part. The State is entitled to retain only a sum of Rs. 1,000 (rupees one thousand only) out of the amount of composition. The balance of Rs. 16,568 shall be refunded to the petitioner. There shall be no order as to costs. Advocate''s fee Rs. 200.

Writ petition partly allowed.