Compounding power under sales tax law is independent; prior case-specific direction under the rules was not required.

Section 46 of the Tamil Nadu General Sales Tax Act, 1959 was construed as conferring independent discretion on the prescribed authority to compound an offence in lieu of prosecution when an offence is committed or reasonably suspected. Rule 53 of the Tamil Nadu General Sales Tax Rules, 1959 was treated as providing only general administrative control and guidance, not a case-specific prior direction from the Deputy Commissioner of Commercial Taxes or the Board of Revenue as a condition precedent. The court held that reading such a requirement into the rule would improperly curtail the statutory power, and the revisional hierarchy under the Act provided sufficient supervision over misuse. The levy of compounding fee was therefore upheld.

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Issues: Whether the levy of compounding fee under section 46 of the Tamil Nadu General Sales Tax Act, 1959 was illegal for want of a prior direction by the Deputy Commissioner of Commercial Taxes or the Board of Revenue under rule 53 of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: Section 46 confers power on the prescribed authority to offer composition of an offence in lieu of prosecution where an offence under the Act is committed or reasonably suspected. Rule 53, which states that the specified officers may exercise the powers under section 46 subject to the control and direction of the Deputy Commissioner and the Board of Revenue, was construed as laying down only general administrative guidance. It was held that the rule could not be read as requiring a case-specific prior direction as a condition precedent to the exercise of the statutory power, because that would displace the independent discretion vested by the Act in the prescribed authority. The revisional hierarchy under the Act also provided control over improper exercise of the power, making the petitioner's objection unsustainable.

Conclusion: Prior individual direction under rule 53 was not necessary before exercising power under section 46, and the compounding fee levy was valid.

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