Unassessed tax demands and penalty collection without notice held unauthorised; voluntary cash deposit not shown to be coerced.

Tax and penalty cannot be collected from dealers without a lawful assessment or other statutory authority, and a demand raised solely on inspection material and recorded statements was held illegal and unsustainable. The court rejected reliance on the composition-of-offences provision because the amounts were not demanded as composition and the five-times penalty could not be justified under that provision. Separately, a cash remittance was not accepted as having been made under coercion, as the contemporaneous documents and surrounding circumstances pointed to a voluntary deposit. The respondents were left free to proceed in accordance with law.

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Issues: (i) Whether tax and penalty could be collected from the dealers without any assessment and without notice or opportunity of hearing under the Andhra Pradesh General Sales Tax Act, 1957. (ii) Whether the amount remitted through the cash challan in one writ petition was shown to have been paid under coercion.

Issue (i): Whether tax and penalty could be collected from the dealers without any assessment and without notice or opportunity of hearing under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The collection of tax and five times penalty was made on the basis of an inspection and recorded statement, but no assessment had been made. A demand for tax and penalty without assessment was held to be without authority of law. The attempt to justify the collection by referring to the provision for composition of offences was rejected because the amounts were not demanded as composition and, in any event, the five times penalty claimed could not be supported under that provision.

Conclusion: The demand and collection of tax and penalty were illegal and unsustainable.

Issue (ii): Whether the amount remitted through the cash challan in one writ petition was shown to have been paid under coercion.

Analysis: The explanation for the cash payment was not found convincing. The original challan was with the petitioner, the contemporaneous letter made no grievance about that payment, and the circumstances indicated a voluntary deposit rather than coercion.

Conclusion: The cash payment was not accepted as having been made under coercion.

Final Conclusion: The petitions succeeded in challenging the unauthorized demands, while the separately deposited cash amount was not treated as an involuntary recovery. The respondents were left free to proceed in accordance with law.

Ratio Decidendi: Tax or penalty cannot be collected from a dealer without a lawful assessment or other statutory authority, and a composition provision cannot be used to sustain a demand that is not made under that provision.

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