1996 (12) TMI 355 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of compounding fee imposed under section 47 of the Kerala General Sales Tax Act, 1963.
2. Challenge to the compounding fee amount set by the first respondent.
3. Interpretation of section 47(1) of the Act regarding the maximum compounding fee.

Detailed Analysis:
1. The petitioner, an abkari contractor, was inspected by the Intelligence Squad under the Kerala General Sales Tax Act, 1963, where irregularities in maintaining accounts were found. The Intelligence Officer issued a notice stating the petitioner failed to maintain true accounts, leading to penal action under section 46 of the Act. The petitioner applied for compounding the offense under section 47, offering to pay a sum not exceeding Rs. 50,000. The first respondent accepted the offer and imposed a compounding fee of Rs. 50,000, which the petitioner paid (Para 1).

2. Subsequently, the petitioner challenged the compounding fee amount in a revision petition, arguing that the maximum fee that could be levied under section 47(1)(b) was only Rs. 5,000. The revision petition was dismissed by the Deputy Commissioner and the Board of Revenue, leading to the filing of a writ petition against these orders (Para 2).

3. The petitioner sought to quash the order imposing the compounding fee and requested a direction to prevent its enforcement. The Deputy Commissioner stated that the fee was fixed based on the petitioner's application for compounding and was dismissed in revision on that basis. The petitioner contended that the compounding fee of Rs. 50,000 was excessive, as the offense related to not maintaining accurate accounts, falling under section 27 of the Act (Para 3).

4. The petitioner argued that the compounding fee should have been limited to Rs. 5,000 as per section 47(1)(b) of the Act. The petitioner claimed that the first respondent mechanically imposed the fee without due consideration of the offense alleged. The petitioner's counsel asserted that the orders were flawed due to the excessive compounding fee (Para 4).

5. The Government Pleader highlighted the seriousness of the irregularities found during the inspection, including shortages and unaccounted sales of arrack. It was argued that the compounding fee was justified under section 47(1)(a) due to the nature of the offenses. The Government Pleader relied on previous court decisions to support the position that the petitioner's challenge lacked merit (Para 5).

6. The court analyzed the situation and emphasized that the petitioner knowingly offered to compound the offense for a sum not exceeding Rs. 50,000 under section 47. The court observed that the petitioner's acceptance of the compounding fee and payment without objection precluded challenging the order later. The court cited precedents to support the view that the petitioner's actions indicated acceptance of the compounding fee, thereby dismissing the original petition (Para 6).