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Andhra Pradesh High Court
Judges : MOTILAL B.NAIK, Y.V.NARAYANA
Bharat Metals, Chirala, rep.by its PARTNER, K.SRINIVASA RAO PETITIONER - Appellant
Versus
Special Assistant Commercial Tax Officer, Chirala - Respondent
Decided On : 07-06-88
ANDHRA PRADESH GENERAL SALES TAX ACT, 1957 - SECTION 32(1)(A) AND 32(1)(B) - OFFENCE OF EVADING TAX - COMPOUNDING OF OFFENCE - INTERPRETATION AND APPLICATION - COURT'S ANALYSIS AND CONCLUSION:
Fact of the Case:
The petitioner, a registered dealer engaged in the business of manufacturing and selling steel utensils and metal furniture, was inspected by the respondents on 25-11-1991. The inspection revealed certain irregularities, including unaccounted purchases and sales, resulting in suppressed turnover. The petitioner voluntarily agreed to pay the tax of Rs. 11,198/- and a compounding fee of Rs. 22,396/- to get the offence compounded.
Finding of the Court:
The court held that the petitioner's offense fell under Section 32(1)(a) of the Andhra Pradesh General Sales Tax Act, 1957, which deals with the failure to pay or evasion of tax, rather than Section 32(1)(b), which covers other offenses. The court found that the petitioner had willfully suppressed the turnover amount of Rs. 1,56,610/- to evade payment of tax, justifying the respondents' collection of double the amount of tax recoverable as compounding fee.
Issues: 1. Whether the tax of Rs. 11,198/- levied by the respondents from the petitioner-firm pursuant to the inspection on 25-11-1991 is illegal and not being preceded by assessment order and notice? 2. Whether the offense committed by the petitioner falls under section 32(1)(a) or 32(1)(b) of the Andhra Pradesh General Sales Tax Act, 1957, enabling the respondents to compound the offense?
Ratio Decidendi: 1. The notice issued by the respondents to the petitioner-firm on 25-11-1991 was not a demand notice but a proposal to levy tax and compound the offense. The petitioner-firm voluntarily accepted the proposal and paid the tax and compounding fee. 2. The petitioner's offense of suppressing turnover to evade tax fell under Section 32(1)(a) of the Act, which allows for compounding of the offense by collecting double the amount of tax recoverable.
Final Decision: The court dismissed the writ petition filed by the petitioner, upholding the respondents' actions in levying the tax and compounding fee.
( 1 ) PETITIONER is a registered dealer engaged in the business of manufacture and sale of steel utensils, metal furniture, etc. On 25-11-1991, the place of business of the petitioner was inspected by the respondents and found certain rough figures in a diary relating to reconciliation of accounts with the petitioner s supplier M/s Aprey Enterprises, Hyderabad. The respondents also noticed payments of Rs. 1,15,000/- (Rs. 60,000/- + Rs. 55,000/-), Rs. 30,289/ - and Rs. 5,000/- appearing in the diary against the dates 3-5-1991,23-7-1991 and 7-9-1991.
( 2 ) ACCORDING to the petitioner, the respondents forced the Managing Partner of the petitioner-firm to give statement as if the purchases were made in the month of October, 1991 and payments made by the petitioner were unaccounted though made in the month of October, 1991 and the petitioner sold the resultant furniture made out of such purchases of iron and steel for rs. 1,54,750/- and as first seller, he is liable to pay tax.
( 3 ) PURSUANT to the inspection of the business premises of the petitioner by the respondents, the respondents issued a notice dated 25-11-1991 to the petitioner requiring the petitioner to pay a tax of Rs. 11,198/- and to offer his explanation if any, on the question of irregularities noticed by them and further indicating that the department is willing to compound the offence if the petitioner desires to do so. Though the petitioner paid the tax of rs. 11,198/- along with the compounding fee of Rs. 22,396/-, this writ petition is filed invoking the extraordinary jurisdiction of this court under Article 226 of the Constitution of India seeking a mandamus or any other appropriate direction declaring the action of the respondents in collecting Rs. 11,198/- towards tax without passing any assessment order and also collection of an amount of Rs. 22,396/- towards compounding fee as illegal, arbitrary and a further direction is also sought directing the respondents to refund the said amount or in the alternative to declare the collection of fees to the extent of rs. 19,396/- as excessive and direct the respondents to refund the same.
( 4 ) IN the counter filed by the respondents, it has been indicated that the Deputy Commercial Tax Officer, Vigilance and Enforcement Department, nellore inspected the business premises of the petitioner-firm M/s Bharat metals, Chirala on 25-11-1991 and recovered one diary and two slips. On verification of the said material, it is noticed that the petitioner has committed the following irregularitips: (1) Purchase of Iron angles and sale of furniture made with them in their business premises have not been accounted for in account books (2) Sales of stainless steel jars No. 12 are not accounted for in account books (3) Sales of Ring gas stoves No. 2 are not accounted for in the account books total : amount Rs. 1,54,750-00, Rs. 540-00, Rs. 1,320-00, Rs. 1,56,610-00. It is further averred in the counter that on the basis of the irregularities noticed, the Special Assistant Commercial Tax Officer (DS) issued a notice in D. R. No. 31/91-92 dated 25-11-1991 requiring the petitioner to file objections if any. However, the Managing Partner of the petitioner firm in turn gave a consent letter on 26-11-1991 willing to pay the tax of Rs. 11,198/- due on the suppressed turnover of Rs. 1,56,610/-and also an amount of rs. 22,396/- to get the offence compounded. This offer of the petitioner s managing Partner was accepted by the respondents and the first respondent issued the proceedings accordingly on 26-11-1991. The respondents have pleaded that since the petitioner-firm has accepted the offer to pay the tax of Rs. 11,198 /- and compounding fee of Rs. 22,396/- and in fact paid the amount it is not open for the petitioner-firm to question the same by way of this writ petition and sought dismissal of the writ petition.
( 5 ) ON an elaborate hearing of Sri K. Raji Reddy, learned Counsel for thepetitioner and the Special Governm
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