Unlawful spot tax collection without notice or enquiry was set aside, with refund directed for amounts collected from business premises.

Tax and compounding fee cannot be collected from business premises on a spot basis without a show cause notice and proper enquiry. Where the collection was made in the petitioner's absence, based only on inspection material and a statement from the person in charge, the statutory procedure had to be followed before demanding payment. Even if tax liability or return-related default may have existed, the respondents had no authority to bypass the prescribed process and recover amounts without notice. The collection was therefore treated as lacking authority of law, and refund of the amounts collected was directed.

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Issues: Whether the respondents could collect compounding fee and tax from the petitioner's business premises without issuing a show cause notice or holding proper enquiry, and whether such collection was lawful.

Analysis: The collection was made in the petitioner's absence on the basis of an inspection and a statement from the person in charge. The materials showed protest by the petitioner in relation to the payment and cheque issuance. The procedure contemplated under the relevant tax laws had not been followed before collecting the amounts. The Court held that even if there was a possible liability for tax or a violation in filing returns, the respondents had no authority to bypass the prescribed statutory procedure and make a spot collection without notice and enquiry.

Conclusion: The collection of Rs. 1,000 as compounding fee and Rs. 37,577 by cheque was authority of law, and the amounts were directed to be refunded; the writ petition was allowed.

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