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of <h1>Compounding u/s89 based on company's written admission and payment equal to tax demand upheld</h1> Whether the Superintendent had jurisdiction to compound under s.89: HC held delegation valid under Rule 3 of the Rules (notification delegating ... Compounding of offence involved u/s 85(1)(n) of the Assam Value Added Tax Act, 2003 - power of Superintendent of Taxes to compound an offence under the provision of Section 89 of the Act - seeking refund of the money deposited as security by the petitioner - non-compliance of the provisions of Rule 41(9) of the Assam VAT Rules, 2005 - HELD THAT:- A perusal of the provision of Rule 3 of the Rules of 2005 would reflect that it is permissible that the Commissioner, by way of issuance of a notification in the Official Gazette to delegate the power to be exercised by the different officers under Section 3 of the Act. It is stated at the Bar that such notifications have been issued from time to time in the Gazette, the initial notification was so issued under the provisions of sub-Section (9) of Section 3 of the Rules of 2003 vide a notification bearing No. CTS-2/2005/172 dated 28-04-2005 delegating the powers under various provisions of the Act including the that Section 89, conferred upon the Commissioner, to the Superintendent of Taxes, including the respondent No. 3. The said notification was superseded by similar notification bearing No. CTS-1/2009/Pt./43 dated 19-06-2009 delegating amongst others to the respondent No. 3 w.e.f. 18-05-2009 powers of the Commissioner under various provisions of the Act of 2003 including the power of compounding offences under Section 89 of the Act of 2003. The respondent No. 3 cannot be held to have passed the order dated 29-12-2012 compounding the offence alleged against the petitioner/ Company, on acceptance of the composition amount offered by it in the matter, to be an act done without jurisdiction. The provision of sub-Section (2) of Section 89 mandates that the Commissioner shall not compound an offence under this section and or pass an order for payment of composition money unless the person concerned admitted in writing that he had committed an offence. A perusal of the communication dated 29-12-2012 issued by the Vice President of the petitioner/ Company would go to reveal that the Company had accepted the commission of an offence of producing forged documents by it in connection with vehicles in question and also of offering an amount of Rs. 8,99,196/- being equivalent to the tax amount, as composition money, with a further request to accept the same and for dropping the prosecution. The order dated 29-12-2012 being in acceptance of such offer made by the petitioner/ Company issued by the respondent No. 3, this Court finds that the provision of Section 89 of the act of 2003 was complied with by the respondent No. 3 before issuing the order dated 29-12-2012. The compounding of the offence being so effected in exercise of the power under Section 89 of the Act of 2003 by the respondent No. 3 basing on the delegation of the power so made upon him by the Commissioner of Taxes and the composition amount being equivalent to the tax amount as demanded from the petitioner/ Company vide notice dated 19-12-2012, this Court is of the considered view that the no error was committed by the Superintendent of Taxes in compounding of offence and issuing order dated 29-12-2012. The petitioner/ Company having deposited the amount involved as composition money, the subsequent contentions raised by the petitioner/ Company after depositing of such amount on 31-12-2012 without any reservation or protest would not mandate acceptance by this Court. The order dated 29-12-2012 issued by the respondent No. 3 compounding offence as alleged against the petitioner vide notice dated 19-12-2012, would not mandate any interference - Petition dismissed. Issues: Whether the Superintendent of Taxes, Khanapara Check Post, had jurisdiction under Section 89 of the Assam Value Added Tax Act, 2003 (by virtue of delegation under Rule 3 of the Assam VAT Rules, 2005) to accept composition money and compound the offence alleged under Section 85(1)(n) of the Act.Analysis: The court examined the statutory scheme permitting compounding under Section 89 and the Rule 3 power of the Commissioner to delegate powers by notification. The record showed that the petitioner’s authorised representative admitted the offence in writing and offered Rs. 8,99,196 as composition money. Notifications delegating the Commissioner’s powers (including the power to compound under Section 89) to the Superintendent of Taxes were found to have been issued. The deposit challan and the Superintendent’s order recorded acceptance of the amount as 'composition money.' The court rejected the petitioner’s contention that the deposited sum was only a security deposit and found the statutory preconditions for compounding (including written admission) satisfied.Conclusion: The Superintendent of Taxes lawfully exercised delegated jurisdiction to accept composition money and compound the offence; the petition challenging the order is dismissed and the compounding order is upheld against the petitioner (i.e., decision is against the assessee).
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