Compounding option under sales tax law can be exercised before final assessment if done within a reasonable time.

Section 7 of the Tamil Nadu General Sales Tax Act was held not to prescribe any time-limit for opting for compounding, and earlier Division Bench rulings were followed to hold that the option could be exercised any time before final assessment, provided it was done within a reasonable time. Rule 15(1) of the Tamil Nadu General Sales Tax Rules was not treated as fixing a mandatory earlier filing deadline. On that basis, the assessee was held entitled to assessment under section 7, and the Tribunal's contrary view was set aside.

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Issues: Whether the assessee could claim the benefit of compounding under section 7 of the Tamil Nadu General Sales Tax Act, 1959, when the option was exercised only at the stage of final assessment and after the time mentioned in rule 15(1) of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: Section 7 of the Act does not itself prescribe any time-limit for exercising the option for compounding. The earlier Division Bench decisions held that, after deletion of sub-rule (4-B) of rule 15, the assessee could exercise the option at any time before final assessment, provided it was done within a reasonable time. Those decisions were preferred over the later contrary view, and the Tribunal's approach that rule 15(1) compelled an earlier filing date was not accepted.

Conclusion: The assessee was entitled to the benefit of assessment under section 7, and the Tribunal's order was set aside.

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