1973 (3) TMI 120 - HC - VAT and Sales Tax

Summary

Issues:
Notice issued for compounding fee under Tamil Nadu General Sales Tax Rules, 1959 - Violation of rules 26(9) and 26(14) - Authority of Deputy Commercial Tax Officer II to issue notice challenged.

Analysis:
The petitioners challenged a notice from the Deputy Commercial Tax Officer II, demanding a compounding fee of Rs. 50 for alleged violations of rules 26(9) and 26(14) of the Tamil Nadu General Sales Tax Rules, 1959. The inspection wing of the commercial taxes department found discrepancies in the maintenance of stock and production accounts during a visit to the petitioners' business premises. The petitioners argued that they were not given a fair opportunity to prove otherwise and questioned the authority of the Deputy Commercial Tax Officer II to issue the notice.

The court noted that the prescribed authority under section 46 has the power to issue a compounding notice upon being satisfied that an offence has been committed or reasonably suspected. In this case, the inspection wing obtained information about the lack of prescribed account books, leading to suspicion of wilful contravention by the petitioners. The Deputy Commercial Tax Officer chose to pursue compounding under section 46 based on reasonable suspicion, rather than direct prosecution under section 45.

The court considered whether the Deputy Commercial Tax Officer could reasonably suspect the petitioners of committing an offence. It highlighted that the notices were served on individuals who admitted to not maintaining the required account books, indicating a violation. The court emphasized that if the petitioners authorized these individuals to represent the firm, they could not evade responsibility for their actions. Consequently, the court found the Deputy Commercial Tax Officer's actions justified based on the circumstances and upheld the compounding option.

The court allowed the petitioners to compound the offences by paying the demanded amount within a week, despite the expiration of the original deadline, in the interest of justice. Failure to comply would result in the respondent proceeding with chargesheeting the petitioners before a Magistrate as per the law. The court concluded by ordering compliance with the compounding requirement within the specified timeframe to avoid further legal action.