2015 (3) TMI 302 - HC - VAT and Sales Tax

Compounding of offence - offences falling under Section 72(1)(a) of TNVAT Act, 2006 - dealer has attempted to evade tax payable under TNVAT Act - Held that - Without going into the question as to whether registration, as a dealer, under the provisions of the TNVAT Act is mandatory or not, we are of the considered opinion that the appellant should consider the reply of the respondent pursuant to the compounding notice and pass final orders. - Having regard to the fact that the respondent is not a registered dealer, it is not proper to direct the appellant to release the goods on payment of tax, as, in the event, the respondent is liable to pay the compounding fee, it will be difficult for the appellant to recover the same from the respondent, on account of his non-registration as a dealer. - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Legality and validity of the order passed by the appellant.
2. Applicability of compounding fee and tax under TNVAT Act.
3. Requirement of registration under TNVAT Act for engaging in business.
4. Direction for release of seized goods by the appellant.
5. Consideration of respondent's representation by the appellant-authority.

Analysis:
1. The respondent challenged the order passed by the appellant regarding the tax payable under TNVAT Act, 2006. The Writ Court directed the respondent to pay the tax amount to release the seized goods.
2. The respondent contended that he is willing to pay the tax but questioned the imposition of the compounding fee. The respondent argued that registration as a dealer under TNVAT Act may not be mandatory for starting a business.
3. The Court refrained from deciding on the mandatory registration issue and directed the appellant to consider the respondent's reply to the compounding notice before passing final orders.
4. Due to the respondent's non-registration as a dealer, the Court found it improper to release the goods solely on payment of tax, as the compounding fee might pose difficulties in recovery.
5. The Court directed the appellant-authority to make a final decision after evaluating the respondent's representation within two weeks, emphasizing that the decision should be independent of any prior observations made by the Court.

This judgment highlights the importance of proper assessment and consideration of all aspects before imposing tax and compounding fee under the TNVAT Act. It also underscores the significance of registration requirements for engaging in business activities under the relevant tax laws.