Compounding fee limits in sales tax matters cannot be extended to mere account-maintenance lapses without a finding of tax evasion.

A compounding fee collected for incorrect maintenance of accounts could not be justified under the higher composition limit reserved for tax evasion cases. Because the notice and record showed only an account-maintenance irregularity, with no finding of suppressed turnover, failure to pay tax, or other evasion, the statutory power of composition could not support the excess collection. The amount was therefore unauthorised beyond the applicable limit, and only the permissible sum of Rs. 1,000 could be retained, with refund of the balance.

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Issues: Whether the compounding fee collected from the dealer was authorised under section 32(1) of the A.P. General Sales Tax Act, 1957, and whether the higher amount collected could be sustained when the notice alleged only incorrect maintenance of accounts.

Analysis: The notice and proceedings showed that the alleged offence was incorrect maintenance of accounts, which fell under section 30(1)(c), and there was no finding of failure to pay tax or evasion of tax recoverable under the Act. The material on record did not show that the inspecting authority had found suppressed taxable turnover or that the composition amount was calculated on that basis. In such circumstances, the case did not fall under the higher compounding limit applicable to evasion cases under section 32(1)(a), and the collection of an amount beyond the applicable limit was contrary to the statutory power of composition.

Conclusion: The excess compounding fee was unauthorised, and the amount could be retained only to the extent of Rs. 1,000, with refund of the balance.

Final Conclusion: Relief was granted to the assessee against the excessive collection of compounding fee, while limited adjustment rights were preserved for the revenue.

Ratio Decidendi: Where the recorded irregularity is only incorrect maintenance of accounts and there is no finding of tax evasion or failure to pay tax, the higher composition amount reserved for evasion cases cannot be levied.

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