1990 (4) TMI 264 - HC - VAT and Sales Tax

Summary

Issues:
1. Legality of collection of compounding fee of Rs. 40,000.
2. Legality of collection of Rs. 80,000 towards tax for the year 1989-90.

Detailed Analysis:
1. The petitioner challenged the action of the Commercial Tax Officer in collecting Rs. 40,000 towards compounding fees and Rs. 80,000 towards tax for the year 1989-90. The Court examined the legality of the compounding fee collection under section 32 of the Andhra Pradesh General Sales Tax Act, 1957. The Court noted that there was no admission of the alleged offence, offer to compound the offence, or any order passed for compounding. As per section 32, an order or proceeding by the prescribed authority is essential for compounding. Since no such order or proceeding existed, the collection of Rs. 40,000 towards compounding fees was held to be illegal. The Court directed the respondent to refund the amount within one month.

2. Regarding the collection of Rs. 80,000, the petitioner claimed it was unauthorized and paid under coercion. The respondents contended that the amount was paid voluntarily due to irregularities suggesting tax evasion. The Court observed that no protest was made by the petitioner promptly after payment. As assessment proceedings were initiated, the Court declined to order a refund solely based on the absence of an assessment order at the time of payment. Instead, the Court directed the assessing authority to finalize the assessment within three months. The amount collected would be adjusted against any tax or penalty payable, with the balance to be refunded to the petitioner. The writ petition was partly allowed, with no costs imposed.

In conclusion, the judgment addressed the legality of the compounding fee collection and the tax collection for the year 1989-90. It emphasized the necessity of proper orders or proceedings for compounding offenses and the importance of timely assessment in tax matters. The Court balanced the interests of the petitioner and the tax authorities by directing a refund of the compounding fee and adjusting the tax amount against future liabilities, ensuring fairness and compliance with legal procedures.