(1) This batch of writ petitions raise a common question of law, viz., whether a revision lies to the Deputy Commissioner under Section 33 of the Madras General Sales-tax Act 1959 and the Board of Revenue under Sec. 35, against a notice by way of composition under Section 46 of the Act.
(2) The petitioners are alleged to have committed various offences, such as, failure to send a return as required under Rule 9(1), failure to maintain true and correct accounts and records as required under Section 40, failure to send an advance estimate of turnover as required under Section 13, contravention of restriction or conditions notified under Section 17 (Section 18), wilful submission of untrue return punishable under Section 15(2)(a) and the like composition of the offences aforesaid as provided in Section 46 of the Act. Under the section, the prescribed authority may accept, from any person who has committed or reasonably suspected of having committed an offence against this Act, a certain sum specified in the section, by way of composition of such offence. In these cases, the Commercial tax Officer, the Joint Commercial tax Officer or the Deputy Commercial tax Officer as the case may be, issued notice called the compounding notice to the petitioners intimating them that, in the opinion of the officer, the petitioners committed the offence punishable under Section 45 of the Act, and that, before they were prosecuted, the said officer was willing, under the power conferred on him by law, to give them the option of compounding the offence by payment of the amount mentioned therein with the time mentioned therein.
(3) The question for consideration is whether the petitioners can question the legality of the levy of the compounding fee or even the quantum thereof, by filing a revision to the Deputy Commissioner of Commercial taxes under Section 33 or the Board of Revenue under 35 of the Act.
(4) Section 33 of the Act says that any person objecting to an order passed or proceeding recorded under this Act for which an appeal has not been provided for in Section 31, may within a period of 30 days from the date on which a copy of the order or proceeding was served on him file an application for revision of such order or proceeding to the Deputy Commissioner. Section 35 of the Act confers similar powers of revision on the Board of Revenue.
(5) The Department has taken up the stand that there is no provision for an appeal against a compounding notice much less a revision, under the Act. The notice of composition is neither an order nor a proceeding under the Act and therefore revision is not entertainable. According to the department, once a sum of money for compounding an offence was offered and the amount was paid, there could not be any question of the dealer being aggrieved so as to question the compounding notice. Of course, if the offer is not accepted by the dealer, he is liable for prosecution.
(6) Learned counsel for the petitioner contends that such a stand is neither just nor reasonable. The petitioners have a real grievance against such a notice arbitrarily demanding the payment of the sum under Section 46 of the Act. Learned counsel says that in some cases the amount is uncalled for, unwarranted or unjust, in some cases the compounding notice is defective, in some other cases the levy of the maximum compounding fee is not called for and in other cases excess fees have been levied. Learned counsel Sri Chandrasekhara Sastry submits that in one case the petitioner was levied a penalty for suppression of turnover, that in the appeal the penalty was set aside, that before he succeeded in the appeal the officer concerned levied a compounding fee of Rs. 1000, and that after he succeeded in the appeal, he wanted to file a revision against the levy of Rs. 1000. He was not allowed to file a revision. According to learned counsel, under Section 33 of the Act there is a provision for revision because composition is a proceeding recorded in writing.
(7) Justice Venkataramana Rao, while interpreting the word 'proceeding' in the Stamp Act, in Ramanathan Chettiar, In re : AIR1942Mad390 , observed-
'The words 'suit or proceeding' have been interpreted in various senses in different statutes according to the intent and scope of the statute, sometimes in a narrow sense and sometimes in a wide sense.........In its narrow sense, it (proceeding) is a step in any action or in an independent proceeding analogous to an action by which a litigation is initiated'.
Therefore the meaning to be attributed to the word 'proceeding' would depend upon the scope of the enactment wherein the expression is used and with reference to the particular context wherein it occurs. Krishnaswami Nayudu J. in Ganga Naicken v. Sundaram Aiyar : AIR1956Mad597 , has observed-
'A 'proceeding' may in some enactment mean an action or that which initiates an action and in other enactments it may also mean a step in an action..........the word, 'any proceeding' in S. 89 of the Judicature Act, 1873, was understood to be equivalent to 'any action' and not any step in an action. But in the rules of the Supreme Court, Order 64 Rule 13, 'proceeding' is used as meaning a step in an action......... 'Any other proceeding in the action' in the rules of the Supreme Court, Order 26, Rule 1 mean any proceeding with a view to continuing the action i.e. a step forward, not one backward'.
In Kochadai Naidu v. Nagayasami Naidu, : AIR1961Mad247 , Ramachandra Iyer J. (as he then was) was dealing with a petition for transfer of some criminal proceedings to a civil Court to be tried along with a suit in the civil Court. The learned Judge considered the dictionary meanings of the word 'proceeding'. The word 'proceeding' is defined in the Shorter Oxford Dictionary as 'doing, a legal action or process, any act done or by the authority of the Court of law'. In 'Words and Phrases' Permanent Edition, Volume 34, a number of meanings taken from American decisions are given for the word 'proceeding'. There it is said that the term 'proceeding' is a very comprehensive term and generally speaking means a prescribed course of action for enforcing a leal right and hence it necessarily embraces the requisite steps by which a judicial action in invoked (page 142). The learned Judge observed at page 346 of the report (Mad LJ) = (at pp. 249-250 of AIR), that the term 'proceeding' was not a technical expression with a definite meaning attached to it, but one the ambit of whose meaning would be governed by statute.
(8) Section 46 of the Act authorities the prescribed authority to accept from a dealer who has committed an offence or has reasonably suspected of having committed an offence certain amount by way of composition of such offence. Rule 53 of the Madras General Sales tax Rules 1959 says that the Deputy Commercial tax Officer, the joint Commercial tax Officer and the Commercial tax Officer may exercise the powers specified in Section 46 of the Act, subject to the control and direction of the Deputy Commissioner of Commercial taxes and the Board of Revenue. The compounding officer has to inform the dealer the basis of the accusation against him and satisfy him that an offence has been committed or there is reason for suspicion that he has committed the offence, leaving to the dealer the choice and the option either to face a prosecution, if one should be launched, or to offer to compound the offence. Therefore, in revision, there is scope for further discussion and consideration whether the officer concerned was right in thinking that an offence has been committed or whether there is basis for any reasonable suspicion of the offence having been committed under the Act. Mere suspicion will not do. It must be a reasonable suspicion, a suspicion will not do. it must be a reasonable suspicion, a suspicion which any reasonable man will entertain on the given facts. Sometimes dealers may be made to consent to compositions even in cases where there obviously cannot be an offence under the Act, as for instance, petty and insignificant non-conformance to the provisions of the rules of the Act, or trifling defects in the keeping of accounts or the submissions of returns. That is why the rules provide for control by the Deputy Commissioner of Commercial taxes and the Board of Revenue. Control must necessarily mean superintendence over the action of the officers below by higher officers, to see whether the action taken by them is in accordance with the provisions of the Act.
(9) Learned counsel for the Department cited the decision in Fida Ali Sheik Ali v. State of Bombay, 1952 3 STC 58 (S. T. Tri. Bom), where the Tribunal has observed that, where in compounding an offence under Section 26 of the Bombay Sales-tax Act, 1946, no order as such was passed by the sales-tax authorities, and all that preceded the payment amounted to negotiations, no appeal or revision could lie to the Tribunal. But I must point out that in the same case, the Tribunal has also observed thus at pages 60-61:-
'.......whatever name be given to the amount imposed by the Collector of sales-tax under Section 26, it is in its nature penalty. We consider it necessary that before deciding on a prosecution or fixing the amount of money to be demanded as the price of dropping it, the Collector should give the party concerned an opportunity of being heard, which would minimise complaints and help the Collector to fix reasonable amounts by way of composition'.
(10) In this connection, learned counsel Sri Chandrasekhara Sastry cited the decision in State of Andhra v. B. Venkatasubbiah, 1957 8 STC 309 = AIR 1957 A.P. 462, where it is observed that the closing of a case by composition under Section 16 of the Madras General Sales-tax Act 1939 (which is equivalent to the present Section 46), against a dealer who has rendered himself liable to prosecution for violating the mandatory provisions of the Act is proceeding recorded by the prescribed authority within the meaning of Section 11 of the Act, as amended by the Madras General sales-tax (Andhra Amendment) Act 1954, and an appeal would therefore lie against on order of composition under Section 16. That case was distinguished by learned counsel for the State in that the dealer paid the compounding fee and allowed the officer to close the records and then filed an appeal. But I do not see any difference between a dealer paying the amount under the notice and then preferring an appeal or revision and a dealer filing a revision straightway against the compounding notice. The principle seems to be that the very action of calling upon a dealer by the notice is a proceeding under the Act. It is a step in aid or action taken by the concerned authority in the whole process of assessing a dealer on his turnover. I am, therefore, of the view that composition under the old Section 46, which has now been amended by Act 15 of 1964, gives rise to a revision under Section 33 or Section 35 as the case may be. In fact, sub-section (3) of the amended Section 46 is to the effect that where the prescribed authority passes an order refusing to allow composition, it should recorded in writing the reasons therefor. I am, therefore, of the opinion that even under the old Section 46, a dealer will have right of revision, as composition can only be held to be a proceeding recorded under the Act. It therefore follows that a revision will lie to the Deputy Commissioner under Section 33 and to the Board of Revenue under S. 35 of the Act. My view is strengthened on account of the fact that, under Rule 53 of the rules the prescribed authority exercises the powers specified in Section 46 of the Act subject to the control and directions of the Deputy Commissioner and the Board of Revenue. Such control and direction can effectively be done only in revisions to them.
(11) In the result, the writ petitions are allowed. Rule Nisi will be made absolute. There will be no order as to costs.
(12) Petitions allowed.