Compounding under sales tax law is strictly construed where the charge is wilful contravention, not tax evasion or non-payment.

A compounding order was treated as voluntary because the record did not show acceptable material of coercion or duress. In disputes under the Andhra Pradesh General Sales Tax Act, a charge of wilful contravention was distinguished from failure to pay tax or tax evasion, so composition was held to fall under the residuary compounding provision rather than the special provision for tax default or evasion. The penal composition scheme was construed strictly, preserving the separate operation of the residuary clause and limiting the compounding fee to the statutory ceiling for that class of offence; any excess amount was refundable.

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Issues: (i) Whether the compounding order was vitiated by coercion or duress; (ii) whether the offence charged fell under section 32(1)(a) or section 32(1)(b) of the Andhra Pradesh General Sales Tax Act, 1957, and consequently whether the compounding fee could exceed Rs. 3,000.

Issue (i): Whether the compounding order was vitiated by coercion or duress.

Analysis: The challenge on the ground of coercion was considered against the statement recorded at the time of inspection and the materials on record. In the absence of acceptable material showing that the offer to compound was involuntary, the plea of duress could not be accepted.

Conclusion: The plea of coercion or duress was rejected.

Issue (ii): Whether the offence charged fell under section 32(1)(a) or section 32(1)(b) of the Andhra Pradesh General Sales Tax Act, 1957, and consequently whether the compounding fee could exceed Rs. 3,000.

Analysis: Section 32(1)(a) applies only to compounding where the offence consists of failure to pay tax recoverable or evasion of tax, while section 32(1)(b) is the residuary provision covering other offences. The charge and the compounding notice referred to wilful contravention under section 30(1)(c), not to failure to pay tax or evasion of tax. Since section 30 is penal in nature, it was held to require strict construction, and the specific offence charged alone could be compounded. Reading section 32(1)(a) broadly so as to include every contravention would render clause (b) redundant.

Conclusion: The offence fell under section 32(1)(b), and the compounding fee could not exceed Rs. 3,000; the excess amount was refundable.

Final Conclusion: The writ petition succeeded only to the extent that the compounding fee was confined to the statutory ceiling under the residuary compounding provision, while the challenge based on coercion failed.

Ratio Decidendi: Where the charge is one of wilful contravention and not failure to pay or evasion of tax, composition falls under the residuary compounding clause and cannot exceed the maximum prescribed for that class of offence; penal provisions governing composition must be strictly construed.

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