1974 (7) TMI 107 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of sections 44 to 46 of the Tamil Nadu General Sales Tax Act, 1959.
- Locus standi of the owner of goods in cases of non-possession of required documents by the driver.
- Compounding of offences under section 46 of the Act.
- Departmental discretion in allowing the owner of goods to compound the offence.

Analysis:
The judgment of the Madras High Court, delivered by the Chief Justice, dealt with two connected appeals involving the possession of documents as per section 44 of the Tamil Nadu General Sales Tax Act, 1959. In one appeal, the driver of a lorry was found without the required documents and paid a fine after compounding the offence. However, in the other appeal, the owner of the goods offered to pay the fine after the driver was served a notice, but the department officials refused to accept the payment from the owner. Subsequently, the owners filed petitions under Article 226 of the Constitution, which were allowed, leading to the revenue's appeals.

The court considered the provisions of sections 44 to 46 of the Act, which mandate the carrying and submission of specific documents related to goods transport. Section 45 penalizes contraventions, with fines and possible imprisonment upon conviction. Section 46 allows for the composition of offences, providing an option to pay a fine within a specified period. The court emphasized that these provisions aim to prevent evasion and ensure revenue compliance, distinguishing revenue offences from penal ones under the Indian Penal Code.

Regarding the locus standi of the owner of goods, the court held that the liability to pay tax lies with the dealer, but others involved in the transaction must also comply with certain requirements on behalf of the dealer. Thus, when a driver fails to carry required documents, the penalty under section 45 relates to the owner of goods due to the revenue exigency, not vicarious liability. Consequently, the court concluded that the owner of goods can offer to compound the offence under section 46, despite the notice being served on the driver.

In the case where compounding was already done, the court noted it could not intervene, as it was by the consent of the dealer or driver. In the other case, the court declined to interfere but emphasized that the department should allow the owner of goods to compound the offence. Ultimately, the appeals were allowed without costs, affirming the owner's locus standi and the possibility for owners to compound offences under the Act.