Separate statutory defaults justify penalty despite compounding fee, as distinct contraventions under the sales tax law

Composition of an offence for failure to maintain true and correct accounts under sections 40, 45(2)(d) and 46 of the Tamil Nadu General Sales Tax Act does not bar a separate penalty under section 12(3) for filing incomplete, incorrect, or wilfully omitted returns. The two liabilities operate in different fields because each arises from an independent statutory default. No principle of double penalty applies where the compounding fee and the penalty relate to distinct contraventions. The Tribunal was therefore wrong in treating the earlier collection of compounding fee as a bar to penalty, and the penalty was restored.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act could be deleted on the ground that compounding fee had already been collected for failure to maintain proper accounts under sections 40 and 46 of the Act.

Analysis: The levy of penalty for failure to submit true and proper returns and the composition of an offence for failure to maintain true and correct accounts operate in different fields. Section 40 casts the duty to maintain correct accounts, section 45(2)(d) treats wilful contravention as an offence, and section 46 provides for composition of that offence. By contrast, section 12(3) authorises a penalty in addition to tax where the return is incomplete or incorrect or where there is wilful failure to submit a return. The collection of compounding fee therefore arose from an independent contravention, while the penalty related to a distinct statutory default. No principle of double taxation or double penalty was attracted, and the fact that the compounding fee was within prescribed limits removed any basis for questioning its quantum.

Conclusion: The Tribunal was wrong in law in holding that the earlier collection of compounding fee barred imposition of penalty under section 12(3). The deletion of penalty was unsustainable.

Final Conclusion: The tax revision was allowed and the penalty restored.

Ratio Decidendi: Composition of one statutory offence does not preclude a separate penalty for a distinct default under another provision where each liability arises from an independent contravention of the Act.

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