1. The judgment of the lower Appellate Court is clearly wrong. There is no provision in the Madras General Sales Tax Act (IX of 1939) which empowers the Deputy Commercial Tax Officer to pass an order under section 16 of the Act stating that an assessee guilty of an offence should pay a particular sum by way of composition. In the present case, he seems to have passed such an order. The only authority vested in him under section 16 of the Act - and it seems to me that the section is incapable of being misunderstood - is to accept by way of composition of any offence a sum of money not exceeding a particular sum. An order under that provision directing the assessee to pay a specified sum would be absolutely ineffective. A guilty assessee might offer to pay a sum and the officer might forbear for the time being from launching a prosecution; but the officer cannot insist upon the assessee paying the sum so offered. It is always open to the authorities to prosecute the offender. There can be no agreement to compound between the officer and offender under this statutory provision. It only provides for actual compounding. That no contractual relationship is created under the provisions of this section is pointed out by a ruling of a Bench of this Court in State of Andhra (Now Andhra Pradesh) v. Bellamkonda Venkata Subbiah (1957 8 S.T.C. 309). In that case, upon which reliance is placed for the Government, it was held by their Lordships that where there has, in fact, been compounding under section 16, the record of such an act is a proceeding against which an appeal would lie under the provisions of section 11 of the Act. It was not noticed in that case that though technically an appeal might lie, such an appeal would be clearly unarguable, because there can be compounding only on actual payment of a sum acceptable to the officer and when a person has paid such a sum and has had thereby the benefit of the compounding, it would be idle for him to appeal to a higher authority and contend that he should have been allowed to pay less. If he had not paid the sum, there would have been no compounding. If he had paid the sum and compounding followed, he could not be aggrieved. The compounding contemplated by the section is to be the result of a voluntary payment made by the offending assessee which is accepted by the officer concerned. In the present case, the learned Subordinate Judge seems to have thought that there was an offer made by the assessee to pay a particular sum by way of compounding and as the offer was accepted by the Deputy Commercial Tax Officer, there was a contract. This view is in the teeth of the pronouncement of their Lordships in the above case.
2. The result of the foregoing reasoning, it is not disputed, is that this appeal should be allowed and the suit of the plaintiff decreed with costs throughout. Leave asked for but refused.