Voluntary compounding and admitted liability barred later challenge to tax proceedings under Article 226

A taxpayer who had accepted the notice, filed a written admission of liability, paid the compounding fee and tax dues, and showed no contemporaneous protest could not later avoid the compounding proceedings by alleging duress or want of jurisdiction. The Karnataka HC held that the record disclosed voluntary participation in the statutory compounding scheme, and once compounding was effected the matter stood closed. It further noted that no demonstrated ground for interference under Article 226 was shown, especially where an alternative statutory remedy was available. The writ petition was dismissed and quashing was refused.

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Issues: Whether the petitioner could successfully challenge the demand and compounding proceedings on the ground that the payments and admission were made under duress and without jurisdiction, despite having accepted the notice, admitted liability, and compounded the offence.

Analysis: The proceedings were initiated by notice after inspection and the petitioner participated by filing a statement and a written admission of liability. The record showed payment of the compounding fee, Value Added Tax, and Entry Tax, and there was nothing to indicate protest or coercion at the time of payment. The petitioner had subjected itself to compounding under the statutory scheme, and once compounding was effected, the matter stood closed. The Court also noted that the challenge was not supported by any demonstrated violation warranting interference under Article 226, particularly when an alternative statutory remedy was available.

Conclusion: The challenge failed. The petitioner was not entitled to quashing of the proceedings, and the writ petition was dismissed.

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