Composition demand under tax law must fit the correct statutory provision; excessive fee notice was struck down.

A composition demand under a taxing statute must match the specific provision governing the factual situation. Where no assessment had been completed and no tax had been finally determined as recoverable, the provision applicable only to completed assessments could not be used to fix composition in lieu of prosecution. The residual composition provision alone applied, and it imposed a lower statutory ceiling. A notice demanding a composition fee far above that maximum was therefore illegal and without jurisdiction to that extent, and further action under it was restrained, while the question of prosecution was left open.

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Issues: Whether the impugned notice proposing prosecution and composition under the Madras General Sales Tax Act was illegal because the prescribed composition provision applicable to a completed assessment was invoked despite there being no completed assessment, and because the amount proposed exceeded the statutory maximum.

Analysis: The notice sought composition in lieu of prosecution on the basis of a computation treating the alleged transactions as taxable sales and fixed the amount with reference to the provision governing composition where tax is recoverable on a completed assessment. That provision applies where tax has already been determined as recoverable and the assessee has failed to pay or evaded payment. In the present case no assessment had been completed and no tax had been finally fixed as recoverable. The residual composition provision alone could therefore govern the matter, and that provision capped the amount at a lower maximum. A notice demanding a composition fee far beyond what the statute permitted was patently illegal and prejudicial to the petitioner.

Conclusion: The notice was struck down as illegal and without jurisdiction in so far as it proposed an impermissible composition fee; the petitioner succeeded.

Final Conclusion: The writ petition was allowed, and further action under the impugned notice was restrained, while the broader question of maintainability of prosecution was left open.

Ratio Decidendi: A composition demand under a taxing statute must conform to the specific statutory provision governing the factual situation, and a demand made under a provision applicable only to completed assessments cannot stand where no such assessment exists and the amount proposed exceeds the statutory maximum.

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