Retrospective sales tax compounding and circular binding effect remitted for fresh High Court consideration.

Retrospective application of section 7(b) of the Kerala General Sales Tax Act, 1963 was questioned in relation to dealers who had already opted for compounding for the relevant assessment year, along with the interaction between sections 7(a) and 7(b) and the binding nature of Circular No. 44 of 2006. No final adjudication was recorded on these substantive constitutional and statutory issues. The matter was remitted to the High Court for fresh consideration in accordance with law, with liberty to examine foundational facts if necessary before deciding the issues.

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Issues: Whether section 7(b) of the Kerala General Sales Tax Act, 1963, introduced with retrospective effect, could be applied to dealers who had already opted for compounding for the assessment year 2006-07; whether sections 7(a) and 7(b) operated in different spheres or the same sphere and, if the latter, whether the amended provision affected the distinction between the normal and alternate methods of taxation; and whether Circular No. 44 of 2006 dated 27.11.2006 was binding on the assessees.

Outcome: No final adjudication was recorded on the merits of the above questions. The matter was remitted to the High Court for fresh consideration in accordance with law, with liberty to examine foundational facts if necessary before deciding the constitutional and statutory issues.

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