ORDER
Motilal B. Naik, J.
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 irregularities :
Amount
(1) Purchase of Iron Angles and
sale of furniture made with
them in their business premises
have not been accounted for in
account books Rs. 1,54,750-00
(2) Sales of stainless steel jars
No. 12 are not accounted for
in account books Rs. 540-00
(3) Sales of Ring gas stoves No.2
are not accounted for in the
account books Rs. 1,320-00
———————–
Total 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 DR 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 turn over 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 the petitioner and the Special Government Pleader for Commercial Taxes, the following two questions have emerged before us for consideration, viz.,
(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 offence 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 offence?
6. Insofar as the first question is concerned, it is submitted by Sri K. Raji Reddy, Counsel for the petitioner that the officials of the Vigilance and Enforcement have no power to demand tax from the petitioner-firm inasmuch as when tax is demanded, there shall be an assessment order preceding the demand and also a notice requiring payment of the demanded amount. Learned Counsel further stated that the authorities prescribed under Section 28 of the Act have only power to inspect but have no power to assess the tax liability as they are not the assessing authorities within the meaning of Section 28 of the Act. Even otherwise, it is contended that before assessing the tax liability, an order has to be passed and notice requiring the payment of tax has to be preceded prior to issuance of demand notice. Counsel contended that the notice dated 25-11-1991 issued by the respondents is a demand notice and without there being an assessment order preceding the demand notice dated 25-11-1991, such notice is illegal and is liable to be set aside. In support of his contentions, learned Counsel has taken us to the following decisions of this Court reported in Annan Jewellers, Secunderabad v. Deputy Commercial Tax Officer, (1996) 22 APSTJ 135 and in Priyanka Wines, Hyderabad v. Asst. Commercial Tax Officer (INT), Abids, Division, (1998) 26 APSTJ 91.
7. Learned Special Government Pleader for Taxes, on the other hand, taken us to the other relevant rules which authorise certain authorities to complete the assessment also. It is contended that the Vigilance and Enforcement Wing Task Force has only unearthed the misdeeds indulged in by the petitioner-firm whereas the Special Assistant Commercial Tax Officer has proposed the tax liability of the petitioner through notice dated 25-11-1991 requiring the petitioner to file its objections, if any, on or before 30-11-1991. Learned Special Government Pleader further contended that the notice dated 25-11-1991 is not a demand notice at all but it is only issued seeking objections, if any, from the petitioner on the proposed action of the respondents to compound the offence and also indicating the quantum of the tax that is likely to be paid by the petitioner. Thus, learned Government Pleader has submitted that the notice dated 25-11-1991 is not at all a demand notice.
8. We have given our anxious consideration to the above contentions and have also carefully perused the decisions relied upon by the learned Counsel for the petitioner.
9. On a plain reading of the notice issued by the respondents to the petitioner-firm which is dated 25-11-1991, we cannot reach to the conclusion that the said notice is a demand notice. On the contrary, a careful reading of the notice discloses the proposed action of the respondents to levy a tax of Rs.11,198/- on the suppressed turnover on account of the sales made by the petitioner, and proposing to compound the offence committed by the petitioner. Through the said notice, the respondents asked the petitioner to furnish explanation or file objections, if any, by 30-11-1991. Surprisingly, the petitioner-firm instead of offering any explanation or filing any objections, through letter dated 26-11-1991 had voluntarily accepted to get the offence compounded and also accepted to pay the tax of Rs.11,198/- as proposed by the first respondent. Therefore, when the petitioner firm’s Managing Partner had volunteered to pay the tax of Rs.11,198/- as proposed by the first respondent and also offered to get the offence compounded by paying an amount of Rs.22,396/-, by any stretch of imagination, it cannot be said that the notice dated 25-11-1991 is a demand notice. When the notice dated 25-11-1991 is not a demand notice, the question of an assessment order preceding the demand notice does not arise at all.
10. The decisions cited by the learned Counsel for the petitioner have no bearing on the facts and circumstances of the case on hand. In the two decisions cited by the learned Counsel, demand notice was issued to the parties and without giving any opportunity to the parties, tax was sought to be collected. However, in the instant case, the notice dated 25-11-1991 was issued to the petitioner-firm proposing to levy a tax of Rs. 11,198/- on the suppressed sales made by it and also proposing to compound the offence. Through the said notice, time upto 30-11-1991 was given to the petitioner-firm for filing any explanation or objections, if any. However, the Managing Partner of the petitioner-firm has volunteered himself to pay the tax of Rs. 11,1987- and also to get the offence compounded by paying an amount of Rs.22,396/-. In this background, the decisions cited by the learned Counsel for the petitioner do not render any assistance to him.
11. For the above reasons, we are inclined to hold that the tax of Rs.11,198/-proposed by the respondents on the petitioner-firm pursuant to the inspection on 25-11-1991 is justified and we also hold that the notice dated 25-11-1991 is not a demand notice.
12. Coming to the second question as to whether the offence committed by the petitioner falls under Section 32(1)(a) or 32(1)(b) of the A.P. General Sales Tax Act, 1957, learned Counsel for the petitioner Sri K. Raji Reddy contended that the irregularities stated to have been committed by the petitioner-firm are that the purchase and sale of furniture items have not been accounted for in its accounts books. Counsel further contended that if at all these deficiencies are to be termed as irregularities, the offence would fall within the ambit of Section 32(1)(b) of the Act and the maximum compounding fee for such an offence is Rs.3,000/-. Learned Counsel stated that the respondents have sought to compound the offence of the petitioner by levying a fee of Rs.22,396/- which, by all means, is excessive and abnormal and that amount has to be scaled down to Rs.3,000/- as provided under Section 32(1)(b) of the Act, in support of his contention, Counsel has taken us to a decision reported in M/s. Sree Rama Trading Company, Proddatur v. Commercial Tax Officer (INT) No.1, Hyderabad, (1989) APSTJ 57.
13. For proper appreciation of the question involved, it is necessary to extract the provisions under Section 32 of the A.P. General Sales Tax Act, 1957 which are as under :
“32. Composition of offences :–(1) The prescribed authority may accept, from any person who has committed or is reasonably suspected of having committed an offence under this Act, by way of composition of such offence-
(a) where the offence consists of the failure to pay, or the evasion of, any tax recoverable under this Act, in addition to the tax so recoverable, a sum of money not exceeding (three thousand rupees) or double the amount of the tax recoverable whichever is greater; and
(b) in other cases a sum of money not exceeding three thousand rupees.
14. The question, therefore, is whether the case of the petitioner falls under Section 32(1)(b) of the Act as contended by the learned Counsel for the petitioner or under Section 32(1)(a) of the Act as contended by the learned Special Government Pleader.
15. The impugned notice dated 25-11-1991 issued to the petitioner by the first respondent makes it clear that the petitioner has fraudulently evaded taxes and wilfully failed to issue sale bills/cash memorandums. In the counter filed by the respondents, it is stated that the Vigilance and Enforcement District Task Force, Nellore, on inspection of the petitioner’s premises found one diary and two slips and on verifying the said material, it is found that though the petitioner-firm effected certain sales of furniture etc., to a tune of Rs.1,56,610/-, but the same have not been shown or accounted for in account books. Therefore, it is apparent that the petitioner-firm has wilfully made an attempt to evade payment of tax and in that process suppressed the turnover of Rs. 1,56,610/-. Thus, the action of the petitioner-firm in suppressing the turnover amount of Rs.1,56,610/- is only intended to evade payment of tax on the said amount and would tantamount to evasion of tax attracting the provisions of Section 32(l)(a) of the Act which contemplates that when the offence consists of failure to pay or the evasion of any tax recoverable under this Act, in addition to the tax recoverable, a sum of money not exceeding three thousand rupees or double the amount of the tax recoverable whichever is greater has to be collected.
16. As the petitioner-firm has wilfully suppressed the turnover amount of Rs.1,56,610/- thereby tried to evade payment of tax of Rs.11,198/-, the respondents authorities, in view of the voluntary confession of the Managing Partner of the petitioner-firm to get the offence compounded, are justified in collecting double the amount of tax recoverable which comes to Rs.22,396/-.
17. Having regard to the facts and circumstances of the case, we are inclined to hold that the offence committed by the petitioner-firm invariably falls under Section 32(1)(a) of the Andhra Pradesh General Sales Tax Act, 1957.
18. Learned Counsel for the petitioner, in support of his contention that the offence committed by the petitioner-firm falls under Section 32(1)(b) of the Act, has taken us to the decision of this Court cited (supra). In the said decision, the two violations pointed out in the notice issued by the Commercial Tax Officer (Int), Hyderabad to the petitioner therein, viz., (i) variation in stock of Groundnut Cake – 9312 Kgs; and (ii) improper maintenance of books, were discussed by the Division Bench and held that they really constitute one offence and would fall within the ambit of Section 32(1)(b) of the Act, as the offence does not fall under Section 32(1)(a) of the Act when no attempt is made by the petitioner therein to evade the tax. However, the facts of the present case are different. The intention of the petitioner-firm is only to evade payment of tax and towards that end, the turnover amount of Rs.1,56,610/-is suppressed and therefore, the respondents have rightly brought the offence of the petitioner-firm within the provisions under Section 32(1)(a) of the Act, and we see no illegality in the said action of the respondents.
19. Having regard to the above discussion, we are inclined to hold that the petitioner-firm is not entitled for any relief. The writ petition, therefore, fails and is accordingly dismissed. No costs.