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2018 (5) TMI 1183 - HC - VAT and Sales TaxCompounding of offences - legality of Ext.P15 order that cancelled Ext.P6 order, by which, the petitioners in these writ petitions were permitted to compound an offence that was alleged against them under Section 67 of the KVAT Act - Section 74 of the KVAT Act - Held that: - upon an option being exercised by an assessee, to compound an offence, the assessing authority or other officer authorised by the Government under the said Section, has a discretion to accept the offer of compounding from an assessee. On the offer of the assessee being accepted, a binding contract comes into existence between the assessee on the one hand and Department on the other, by which, the assessee is obliged to pay an amount by way of compounding fee over and in addition to the tax payable under the Act. Once the said amounts are paid, no further penal or prosecution proceedings can be taken against the assessee in respect of the offence. The tenor of the aforesaid provision, therefore, is that once an offer is made by an assessee for compounding an offence, and the assessee satisfies the pre-requisites for compounding the offence by paying the tax amount determined as payable together with the applicable compounding fee, the acceptance of the offer of the assessee, by the Department, brings into existence a binding contract, closing the penalty proceedings by accepting the amounts due from the assessee, and from the said binding contract, neither party is permitted to resile. On a perusal of Section 56 of the KVAT Act, it is clear that the exercise of suo motu power of revision by the Deputy Commissioner, is expressly made subject to the provisions of the Act. This would mean that the Deputy Commissioner, in the exercise of his power under Section 56 of the KVAT Act, would necessarily be bound by the statutory scheme of finality envisaged in respect of orders passed under Section 74 of the KVAT Act. Petition allowed.
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