2007 (9) TMI 678 - HC - VAT and Sales Tax

Maintainability of Revision petition - Compounding of Offence - rejection of Revision Petition on the ground that the Revision Petition filed is not maintainable, since petitioner himself had compounded the offence departmentally in lieu of the prosecution proceedings - whether the petitioner can be a person who can object to an order passed by the Intelligence Officer of the Department? Held that - in fact, the petitioner had filed an application before the authorities concerned to compound the offence departmentally. Once the offer is made, it is for the prescribed authority to determine whether the offence should be compounded or not. The process of compounding would be complete only when the money offered is accepted by the authority concerned. Once the compounding of the offence is complete, the person who has committed or reasonably suspected of having committed an offence under the Act cannot be aggrieved person. In the present case, an offer was made by the assessee/dealer and it was accepted and there was exchange of money between the assessee and the authorities under the Act. Therefore, compounding the offence was complete. Therefore, it cannot be said that a person can object to such an order made by the authorities under the Act. A person in respect of whom an order of compounding made is not entitled to challenge the same by filing a petition under Section 36 or 38 of the Act - both the authorities, viz., Deputy Commissioner of Commercial Taxes as well as Commissioner of Commercial Taxes are justified in rejecting the Revision Petitions filed by the petitioner/dealer/assessee. Petition dismissed.

Summary

Issues Involved:
1. Suppression of stock and non-maintenance of books of accounts.
2. Compounding of the offence departmentally.
3. Maintainability of Revision Petition against the compounding order.
4. Legal interpretation of Sections 36 and 38 of the Kerala General Sales Tax Act, 1963.

Detailed Analysis:

1. Suppression of Stock and Non-Maintenance of Books of Accounts:
The petitioner, a registered dealer under the Kerala General Sales Tax Act, 1963, was found to have suppressed stock and failed to maintain proper books of accounts during an inspection by Sales Tax Officers on 13.10.1997. The officers seized diaries and slips from the dealer's premises, indicating discrepancies in stock and account maintenance.

2. Compounding of the Offence Departmentally:
On 18.10.1997, the petitioner applied to the Intelligence Officer, accepting the stock discrepancies and expressing willingness to compound the offence by paying Rs. 1,00,000 as a compounding fee. The Intelligence Officer accepted this request and issued a receipt, thereby compounding the offence departmentally under Section 47 of the KGST Act, 1963.

3. Maintainability of Revision Petition Against the Compounding Order:
The petitioner filed a Revision Petition before the Deputy Commissioner of Taxes, Thrissur, challenging the compounding order. The Deputy Commissioner rejected the petition, stating it was not maintainable since the petitioner had voluntarily compounded the offence. This decision was supported by a precedent in the case of Sri Sastha Trading Co., where the Kerala High Court held that a person who has opted for compounding cannot seek revision under Section 46 of the KGST Act.

The petitioner then approached the Commissioner of Commercial Taxes, Thiruvananthapuram, with a second Revision Petition, which was also dismissed. The Commissioner noted that the petitioner had ample opportunity to contest the stock details during the inspection and that the payment of the compounding fee was voluntary, not under duress.

4. Legal Interpretation of Sections 36 and 38 of the KGST Act:
Sections 36 and 38 of the KGST Act allow a person to file a Revision Petition against an order if no appeal has been filed. The court examined whether the petitioner, having compounded the offence, could be considered an "aggrieved person" eligible to file such a petition.

The court observed that the petitioner had willingly applied for compounding and paid the fee without any coercion. Once the compounding process was complete, the petitioner could not be considered aggrieved by the order. The court referenced the case of Velimparambil Hardwares vs. State of Kerala, which distinguished between compounding and assessment proceedings, but found it inapplicable to the petitioner's situation.

Conclusion:
The court concluded that the petitioner, having voluntarily compounded the offence, could not challenge the compounding order through a Revision Petition under Sections 36 or 38 of the KGST Act. Both the Deputy Commissioner and the Commissioner of Commercial Taxes were justified in rejecting the petitions. The Writ Petition was thus rejected, with both parties bearing their own costs.