2015 (5) TMI 1209 - HC - VAT and Sales Tax

Court quashes unauthorized compounding of offense, stresses legal principles

The Supreme Industries Ltd Versus The Deputy Commercial Tax Officer, Lingareddypalayam

The High Court held that the respondent, not being an assessing authority, lacked jurisdiction to compound the offense related to the detention of ... Jurisdiction - power of assessing officer to levy of compounding fee - Agreeing of petitioner for levy of compounding fee - release of detained goods on payment of tax - non-application of mind - principles of natural justice - HELD THAT:- Following the decision in the case of M/S. TRISTAR KITCHENS (P) LTD. VERSUS THE DEPUTY COMMERCIAL TAX OFFICER, THE ASSISTANT COMMISSIONER (CT) , CHENNAI [2015 (3) TMI 1375 - MADRAS HIGH COURT], this Court is constrained to set aside the impugned order - petition allowed. Issues: Jurisdiction of assessing authority to compound offense, Principles of natural justice violationJurisdiction of Assessing Authority:The petitioner, a Limited Company, imported plastic raw materials and faced interception by the respondent during transit, leading to a detention order and subsequent release upon payment of tax. The petitioner contended that the respondent, not being an assessing authority, lacked jurisdiction to compound the offense. The petitioner argued that the impugned proceedings were conducted without jurisdiction, power, and in violation of natural justice principles. Citing a previous case, the petitioner emphasized that the respondent's actions were beyond their legal authority. The High Court, considering these arguments, allowed the Writ Petition, setting aside the impugned order dated 24.04.2015. The Court clarified that the concerned authority could initiate proceedings afresh if deemed necessary, indicating a recognition of the lack of jurisdiction in the initial order.Principles of Natural Justice Violation:The petitioner raised concerns regarding the respondent's actions as a non-assessing authority attempting to compound the offense without proper authorization. The petitioner highlighted the necessity for their consent before compounding could occur, emphasizing the procedural irregularities and lack of legal basis in the impugned order. By referencing a previous case where a similar order was set aside, the petitioner underscored the consistent violation of principles of natural justice in such matters. The High Court, in alignment with the petitioner's contentions, granted relief by quashing the impugned order and allowing the concerned authority to pursue appropriate actions within the bounds of the law. The Court's decision reflected a commitment to upholding legal principles and ensuring fair treatment in matters of jurisdiction and procedural adherence.