1999 (8) TMI 938 - HC - VAT and Sales Tax

High Court rules excessive compounding fee illegal under A.P. Sales Tax Act

Puvvada Puniaha and Sons Versus Deputy Commercial Tax Officer, (Intelligence), Guntur

Puvvada Puniaha and Sons Versus Deputy Commercial Tax Officer, (Intelligence), Guntur - [2000] 117 STC 271 (AP) Issues:1. Excessive compounding fee collected during inspection of business premises.2. Interpretation of relevant provisions of A.P. General Sales Tax Act, 1957.3. Comparison with previous court decisions on similar cases.Analysis:1. The petitioner challenged the respondent's action of collecting a compounding fee of Rs. 11,319 during the inspection of business premises, contending that it exceeded the maximum permissible amount. The respondent purportedly collected the amount under section 32(1)(a) of the A.P. General Sales Tax Act, 1957. However, the notice issued to the petitioner indicated an offense of 'incorrect maintenance of accounts,' falling under a different clause of section 30(1), not related to failure to pay or evasion of tax. The High Court found that the collection of the excessive fee was in contravention of the Act, as there was no indication of tax evasion or non-payment in the proceedings. The prescribed authority was only empowered to accept the compounding fee, not an amount exceeding the statutory limit.2. The court compared the present case with previous judgments to determine the correct interpretation of the relevant provisions. In a previous case, it was held that failure to maintain correct accounts could be a form of tax evasion, justifying the collection of a higher compounding fee. However, in the current case, the inspecting officer only noted stock variations without establishing tax evasion or non-payment. Another case distinguished from the present one involved a dealer conducting business without registration, where the court held that a lower compounding fee was applicable under a different clause. The court referred to these precedents to conclude that the excessive compounding fee collected from the petitioner was unjustified under the law.3. Consequently, the High Court partially allowed the writ petition, directing the respondent to refund the excess amount collected and retain only Rs. 1,000 as the compounding fee, as per the statutory limit. The court also allowed the adjusting of the excess amount against any arrears of tax or current tax liabilities. This decision was based on the interpretation of relevant legal provisions and the comparison with previous court judgments on similar cases, emphasizing the correct application of the law in determining the permissible compounding fee in tax-related offenses.