Jurisdiction to levy compounding fee cannot rest with an unauthorised officer; impugned demand set aside

The Madras HC held that the first respondent lacked jurisdiction to impose and collect a compounding fee for release of detained goods. Earlier release of the goods under judicial directions did not confer any authority on that respondent to levy the fee, because any action for the alleged violation, including assessment or other lawful proceedings, lay with the assessing authority, namely the second respondent. As the first respondent was not empowered to demand the compounding fee, the impugned order was unsustainable and was set aside. The second respondent was left free to proceed in accordance with law.

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Issues: Whether the first respondent had jurisdiction to impose and collect compounding fee for release of the detained goods, and whether the impugned order directing payment of such fee was valid.

Analysis: The petitioner had challenged detention of goods and the consequential demand for compounding fee. The earlier release of the goods pursuant to judicial directions did not confer authority on the first respondent to levy or collect compounding fee. The power to proceed for any alleged violation and to make assessment or other lawful action rested with the assessing authority, namely the second respondent. In the absence of empowerment of the first respondent to impose and collect the compounding fee, the impugned order could not be sustained.

Conclusion: The impugned order was set aside and the writ petition was allowed. The second respondent was left free to proceed in accordance with law.

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