Compounding scheme under trade tax law bars separate State Development Tax levy absent express exclusion or override.

Section 7-D compounding under the U.P. Trade Tax Act was treated as a simplified alternative assessment method under which the agreed lump sum is payable in lieu of the tax otherwise chargeable. State Development Tax under section 3-H was a separate levy, but it was not expressly excluded from the composition amount or made payable over and above it. Because separate collection would defeat the purpose of the compounding scheme and reintroduce turnover-based assessment, State Development Tax could not be demanded in addition to the composition amount, and the impugned circular was invalid.

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Issues: Whether State Development Tax under section 3-H of the U.P. Trade Tax Act could be levied in addition to the composition amount fixed under the compounding scheme under section 7-D.

Analysis: The composition under section 7-D was treated as a simplified alternative method of assessment, where the agreed lump sum was payable in lieu of the tax otherwise chargeable. Section 3-H created a separate charge for State Development Tax, but it did not expressly override the compounding arrangement or state that the composition amount would be exclusive of such tax. The scheme itself did not carve out State Development Tax from the composition amount, and requiring separate levy would reintroduce the very turnover-based exercise that the compounding scheme was meant to avoid. The enabling provision in section 3-H(2) showed that the State Government could provide compounding for State Development Tax, but absent a contrary stipulation, the tax could not be demanded over and above the composition amount.

Conclusion: State Development Tax was not leviable in addition to the composition amount under the compounding scheme, and the impugned circular was invalid.

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