1971 (8) TMI 208 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioner's challenge against the levy of a compounding fee under section 46 of the Tamil Nadu General Sales Tax Act, 1959 is valid.
2. Whether the requirement of a direction by the Deputy Commissioner of Commercial Taxes and the Board of Revenue for initiating action under section 46 is mandatory.
3. Whether rule 53 of the Rules made under the Act mandates a direction from the Deputy Commissioner of Commercial Taxes and the Board of Revenue for exercising the option of levying a compounding fee.
4. Whether the prescribed authority must adhere to directions issued by higher authorities in cases of levying compounding fees.
5. Whether the Board of Revenue's role in issuing general directions interferes with the discretion of the prescribed authority under section 46.

Analysis:
The judgment revolves around the petitioner, a dealer under the Tamil Nadu General Sales Tax Act, 1959, who was issued a notice to pay a compounding fee of Rs. 100 for selling goods without issuing a bill. The petitioner challenged the levy of the fee, arguing that a direction from the Deputy Commissioner of Commercial Taxes and the Board of Revenue was necessary before initiating such action under section 46. The court examined the provisions of section 46, which provide the prescribed authority with the option to offer a compounding fee for offenses under the Act. The court noted that the petitioner's explanation for not issuing a bill was accepted, leading to a reasonable suspicion of an offense. The petitioner contended that rule 53 mandated a direction from higher authorities for levying a compounding fee. However, the court disagreed, stating that rule 53 serves as guidance rather than a binding directive on the prescribed authority. The court emphasized that the prescribed authority must exercise independent judgment in deciding whether to levy a compounding fee, as per the statute.

Furthermore, the court highlighted that the Deputy Commissioner of Commercial Taxes and the Board of Revenue act as revisional authorities under the Act, with provisions for further revision. The court clarified that any violation of administrative directions by the prescribed authority would be corrected during the revision process by the Deputy Commissioner or the Board of Revenue. The court emphasized that the discretion to levy a compounding fee lies with the prescribed authority, and any direction from higher authorities is of an administrative nature and does not restrict the prescribed authority's independent decision-making. Therefore, the court dismissed the petitioner's challenge against the levy of the compounding fee, stating that the requirement for a direction from the Deputy Commissioner of Commercial Taxes and the Board of Revenue before initiating action under section 46 is not mandatory, and the rule nisi was discharged, with the writ petition dismissed.