1996 (6) TMI 328 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 47(1)(a) of the Kerala General Sales Tax Act, 1963 regarding composition of offences and payment of compounding fee.

Analysis:
The judgment delivered by the Kerala High Court involved a tax revision petition by a registered dealer in printing ink under the Kerala General Sales Tax Act, 1963. The dealer's return for the assessment year 1991-92 was rejected by the assessing authority due to irregularities in accounting for sales to a specific entity. The dealer had compounded the offense by paying a fee, but the assessing authority did not adjust this fee towards the tax due, leading to a series of appeals. The Appellate Tribunal held that the compounding fee cannot be deducted from the sales tax payable by the dealer, which led to the dealer filing a revision petition challenging this decision.

The substantial question raised in the case was whether the compounding fee paid under section 47(1)(a) includes the tax payable on the suppressed turnover. Section 47(1)(a) allows for the composition of offenses by paying a sum of money in addition to the tax payable, with a minimum and maximum limit. The Court analyzed that for the provisions of section 47 to apply, there must be a mutual agreement between the dealer and the department, and once the fee is paid, the composition of the offense is complete. The section specifies that the compounding fee is separate from the tax payable by the dealer, and it is an additional amount over and above the tax sought to be evaded. The Court emphasized that the dealer cannot claim that the compounding fee paid includes the tax amount, as the intention of the provision is to ensure that the dealer still pays the tax sought to be evaded even after compounding the offense.

The Court concluded that the dealer's contention that the compounding fee should be deducted from the total tax due was without merit. The judgment dismissed the tax revision petition at the admission stage, upholding the decision of the Appellate Tribunal. The Court's analysis clarified the interpretation of section 47(1)(a) and emphasized that the compounding fee is separate from the tax payable by the dealer, ensuring that the tax sought to be evaded is still paid even after compounding the offense.