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Issues: (i) whether the prescribed authority had jurisdiction under section 32 of the Andhra Pradesh General Sales Tax Act, 1957 to collect Rs. 3,000 as tax in addition to the composition fee for an offence relating to failure to maintain correct and complete accounts; and (ii) whether the collection of Rs. 1,000 by way of composition fee was valid.
Issue (i): whether the prescribed authority had jurisdiction under section 32 of the Andhra Pradesh General Sales Tax Act, 1957 to collect Rs. 3,000 as tax in addition to the composition fee for an offence relating to failure to maintain correct and complete accounts.
Analysis: Section 32 distinguishes between cases where the offence consists of failure to pay tax or evasion of tax recoverable under the Act and other offences. Only in the former class can the authority accept, in addition to the tax recoverable, a further sum within the statutory limit. The offence here was not payment default or tax evasion, but maintenance of incorrect accounts under section 25. That situation falls within the residual category under clause (b), where the authority may accept only a composition amount not exceeding the prescribed limit and has no power to collect tax as such.
Conclusion: The collection of Rs. 3,000 was jurisdiction and was rightly quashed, in favour of the assessee.
Issue (ii): whether the collection of Rs. 1,000 by way of composition fee was valid.
Analysis: For an offence of failure to maintain true and correct accounts, the prescribed authority was competent to compound the offence and accept a composition fee within the statutory ceiling. The amount of Rs. 1,000 was within that limit and was referable to the power to compound under section 32.
Conclusion: The levy of Rs. 1,000 as composition fee was valid, in favour of the revenue.
Final Conclusion: The writ petition succeeded only to the extent of the Rs. 3,000 collected as tax, which was directed to be refunded, while the composition fee of Rs. 1,000 was sustained.
Ratio Decidendi: Where an offence under the sales tax law is not one of non-payment or evasion of tax but is confined to a contravention such as failure to maintain correct accounts, the authority empowered to compound the offence cannot collect tax in addition to the composition amount unless the statute expressly authorises it.
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