ORDER
P. Venkatarama Reddi, J.
1. The petitioner questions the action of the respondent in collecting the compounding fee of Rs. 11,319 at the time of inspection of the business premises on July 3, 1984. The only contention raised by the learned counsel for the petitioner is that the maximum compounding fee which could have been collected is Rs. 1,000 at the relevant point of time and the respondent exceeded his jurisdiction in collecting an amount which works out to double the amount of notional tax payable on the value of goods in respect of which stock variations were found. The said amount was collected by the respondent purportedly Under Clause (a) of Section 32(1) of A.P. General Sales Tax Act, 1957 which reads as follows :
“(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 tax recoverable, whichever is greater, and
(b) in other cases a sum of money not exceeding three thousand rupees.”
A perusal of the notice issued by the respondent giving option to compound the offence makes it clear that the offence alleged against the petitioner was “incorrect maintenance of accounts” which falls within clause (c) of Section 30(1). There is nothing in the notice or the proceedings recorded by the respondent to indicate that there was failure to pay or the evasion of any tax recoverable under the Act, On the other hand, the specific irregularity pointed out against the petitioner is the incorrect maintenance of accounts. There is not a word about the failure to pay or evasion of the tax. It is not even noted in the order passed on July 3, 1984 that compounding fee was calculated at double the amount of tax, which the petitioner sought to evade. Under these circumstances, we find no warrant for collection of compounding fee of Rs. 11,319. Such collection is in patent contravention of the provisions of Section 32 of the said Act, which clothes the prescribed authority with the power to accept the compounding fee.
2. The learned Government Pleader has relied on a decision of this Court in Kaki Butchi Raju Son v. State of Andhra Pradesh . First of all, in that case, no dispute was raised as to the quantum of tax that could be collected, on the facts of that case. Secondly, though there are observations that the failure to maintain correct accounts is also one form of evasion of tax liability, ultimately the decision rests on the ratio that the inspecting authority arrived at the suppressed turnover which was otherwise taxable. But, there is no such finding in the instant case. What all the inspecting officer did was to note the value of the stock variations and nothing more. Moreover, that was a case in which the basic accounts were not maintained and there were slips which showed suppression of taxable turnover. It may be mentioned that tins case was distinguished in the case of Surya and Co. v. Special Assistant Commercial Tax Officer . There the dealer was found to be doing business without registration. Even in such a case, the learned Judges held that clause (b) applies and the maximum which could be collected as compounding fee would be Rs. 3,000 (Rs. 3,000 was substituted for the figure Rs. 1,000 by Act 18 of 1985). In the case of P. V. Raghavulu & Co. v. Special Assistant Commercial Tax Officer [1991] 81 STC 307, the Division Bench of this Court consisting of B.P. Jeevan Reddy, J. and Syed Shah Mohammed Quadri, J., observed as follows :
“It would be evident from a reading of the order of composition that the composition amount was collected not on the ground that a taxable transaction has taken place and that the tax payable in that behalf was being evaded, or was not paid, but on the ground that the petitioner had issued spurious sale bills in order to hoodwink the department, without actually transporting oil.”
The learned Judges held that the case falls Under Clause (b) but not Under Clause (a) and the amount of compounding fee could not have exceeded Rs. 1,000. The ratio of the said decision applies with greater force to the present case.
3. For the above reasons, we partly allow the writ petition with costs of Rs. 500 and direct the respondent to collect Rs. 1,000 towards compounding fee and refund the balance amount within a period of two months from the date of receipt of this order. It is open to the assessing authority to adjust the excess amount collected towards arrears of tax or tax payable in the current year.