Vardhaman Jewelleries vs Commercial Tax Officer (Intelligence), Vijayawada, Krishna District and Another

P. Venkatarama Reddy, J.—In this writ petition, the petitioner who is a dealer in jewellery at Vijayawada, has challenged the action of the first respondent, viz., the Commercial Tax Officer (Intelligence), Vijayawada, in collecting a sum of Rs. 40,000 towards compounding fees and Rs. 80,000 towards tax for the year tax for the year 1989-90 on September 6, 1989 and September 8, 1989. The petitioner is seeking for a consequential direction to refund the tax and compounding fee collected.

On September 6, 1989, the first respondent along with his staff inspected the business premises of the petitioner. He noticed certain excess stocks of gold and gold ornaments and silver and silver articles. He recorded the statement from the petitioner and prepared a stock inventory statement signed by the petitioner. By an order passed on the same day, he also seized certain account books and slips of papers found in the business premises as he suspected the evasion of tax. An estimate of the tax due in respect of the excess stocks noticed by him was made on the same day, according to which, the tax due would come to Rs. 60,000 approximately. An amount of Rs. 60,000 towards tax for the year 1989-90 and compounding fees of Rs. 40,000 for 1989-90 was collected on September 6, 1989 and a receipt was passed on by the Assistant Commercial Tax Officer (Intelligence), Vijayawada. On September 8, 1989, a further sum of Rs. 20,000 was collected by the Assistant Commercial Tax Officer (Intelligence), towards tax for the said year.

It appears from the record that the seized books and the material gathered as a result to the inspection made on September 6, 1989, have been forwarded to the Commercial Tax Officer, Suryaraopet, Vijayawada, for the purpose of making final assessment.

The learned counsel for the petitioner contends that the tax and compounding fee were collected from the petitioner under coercion and that such collection is illegal as it is not supported by any order or proceeding. We will first deal with the question whether the collection of compounding fee of Rs. 40,000 is legal and valid ? The relevant provision dealing with the composition of offences is section 32 of the Andhra Pradesh General Sales Tax Act, 1957, which reads thus :

"32. Composition of offences. - (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 offense -

(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.

(2) Any order passed or proceeding recorded by the prescribed authority under sub-section (1) shall be final and no appeal or application for revision shall lie there from"

The records disclose that there was no admission of the alleged offence by the petitioner. There was no offer or willingness to compound the offence for a sum of money. 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 compounding fees on the very day of inspection by the subordinate of the respondent, viz., Assistant Commercial Tax Officer (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 fees by the Assistant Commercial Tax Officer (Intelligence), is de hors the provisions of section 32 of the Andhra Pradesh General Sales Tax Act. The first respondent is, therefore, directed to refund the amount of Rs. 40,000 collected towards compounding fees within one month from the date of receipt of this order.

With regard to collection of Rs. 80,000 the petitioner''s contention is that in the absence of assessment - provisional or final, such collection was unauthorised and in fact the amount was paid by the petitioner under threat and coercion. This allegation has been denied by the respondents in the counter. In the counter, it is stated that the amount was paid by the petitioner voluntarily when he was confronted with a series of irregularities suggesting evasion of tax. It may also be noted that the petitioner did not, within a reasonable time from the date of the said payment, protest against the alleged harassment or threat said to have been resorted to by the first respondent. It appears that action has already been initiated for the finalisation of the assessment for the year 1989-90 by the competent assessing officer and a notice has also been issued to the petitioner on November 16, 1989, by the Commercial Tax Officer, Suryaraopet, Vijayawada. Under these circumstances, we are not inclined to exercise our discretion under article 226 of the Constitution and give a direction for the refund of the tax merely because at the time of payment of tax, no assessment order was passed or demand raised. Suffice it to give a direction that the concerned assessing authority, viz., the Commercial Tax Officer, Suryaraopet, Vijayawada, should finalise the assessment within three months form the date of receipt of the order, if not already finalised. The amount of Rs. 80,000 collected on September 6, 1898, and September 8, 1989, will be adjusted towards any tax or penalty that may be payable by the petitioner as a result of the assessment proceedings and the balance, if any, shall be refunded to the petitioner.

The writ is thus partly allowed as indicated above. There will be no order as to costs. Government Pleader''s fee Rs. 250.

Writ petition partly allowed.