Plain meaning of a taxing proviso limits compounding fee; completed composition cannot be reopened on later law changes.

A taxpayer who voluntarily sought compounding, accepted the composition order, and paid the demanded amount could not reopen the completed proceedings by relying on a later declaration of law. However, the proviso to section 74(1)(a) had to be applied according to its plain text: where it fixed the maximum compounding fee for a single offence spread over multiple return periods in a financial year, the higher figure in the main clause could not be imported into the proviso. The composition order was therefore sustained in principle, but the fee was reduced to the statutory ceiling.

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Issues: (i) Whether the petitioner could avoid liability to pay the compounding fee fixed in the compounding order by relying on a later declaration of law; and (ii) whether the compounding fee payable under the proviso to section 74(1)(a) could be reduced to the statutory maximum prescribed therein.

Issue (i): Whether the petitioner could avoid liability to pay the compounding fee fixed in the compounding order by relying on a later declaration of law.

Analysis: The petitioner had voluntarily sought compounding after a penalty proposal was issued, accepted the modified proposal, and paid the amounts demanded under the composition order. By doing so, the petitioner obtained the statutory benefit of immunity from penalty and prosecution flowing from composition of the offence. Having accepted and acted upon the compounding order, the petitioner could not subsequently challenge the proposal on the basis of a later judgment declaring the law differently. The petitioner was therefore precluded from reopening the completed composition proceedings.

Conclusion: The challenge on this ground failed and was rejected.

Issue (ii): Whether the compounding fee payable under the proviso to section 74(1)(a) could be reduced to the statutory maximum prescribed therein.

Analysis: The proviso to section 74(1)(a) expressly fixed the maximum compounding fee collectible against a single offence spread over several return periods in a financial year at two lakh rupees. The Court held that a taxing statute must be applied as written and that it was not open to read into the proviso the higher figure contained in the main clause. The legislative history also showed that despite amendments enhancing the principal amount, the proviso was left untouched. The composition order, to the extent it fixed the fee at eight lakh rupees, was therefore legally unsustainable.

Conclusion: The petitioner succeeded on this issue and the compounding fee was limited to two lakh rupees.

Final Conclusion: The composition order was upheld in principle, but the quantum of compounding fee was curtailed to the statutory ceiling fixed by the proviso, resulting in only partial relief to the petitioner.

Ratio Decidendi: An express proviso in a taxing statute must be given full effect according to its plain language, and the Court cannot rewrite it by importing the figure from the main provision.

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