Binding election under a compounding tax scheme cannot be withdrawn later; technical form defects do not defeat liability.

A valid election to pay tax under the compounding scheme under the Kerala General Sales Tax Act became binding once accepted by the assessing authority, and the assessee could not later withdraw from that option in the absence of an enabling provision. The absence of a prescribed form under section 7(15) was treated as a technical defect that did not nullify the election or the liability to pay the compounded tax. Default in payment did not require mandatory cancellation of the permission, because the authority retained discretion in enforcement. The challenge to recovery under the compounding arrangement therefore failed.

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Issues: (i) whether an assessee who had opted to pay tax under section 7(14) of the Kerala General Sales Tax Act, 1963 could later retract from that option and insist on regular assessment; (ii) whether the absence of a prescribed form under section 7(15) disabled payment under the compounding scheme or invalidated the liability; and (iii) whether default in payment at the compounded rate compelled the assessing authority to cancel the permission and assess the dealer in the normal manner.

Issue (i): whether an assessee who had opted to pay tax under section 7(14) of the Kerala General Sales Tax Act, 1963 could later retract from that option and insist on regular assessment.

Analysis: The option under section 7(14) was treated as a binding election once accepted by the assessing authority. The statutory scheme contained no provision enabling an assessee, after agreeing to compound tax, to resile from that course and claim assessment as if no such election had been made. A subsequent change of mind based on later difficulty did not undo the legal effect of the option already exercised and accepted.

Conclusion: The assessee could not retract from the validly exercised option, and the liability under the compounding scheme remained enforceable.

Issue (ii): whether the absence of a prescribed form under section 7(15) disabled payment under the compounding scheme or invalidated the liability.

Analysis: Section 7(15) contemplated an application in the prescribed form and monthly payment in the prescribed manner, but the absence of a prescribed form was held to be only a technical obstacle. The amount payable under the compounding scheme was definite, being a fixed percentage of the rental amount, and the assessee knew the consequences of the election. Non-prescription of a form did not nullify the option or the obligation to pay.

Conclusion: The absence of a prescribed form did not absolve the assessee from paying tax under section 7(14).

Issue (iii): whether default in payment at the compounded rate compelled the assessing authority to cancel the permission and assess the dealer in the normal manner.

Analysis: The cancellation clause in the permission order conferred power on the assessing authority to cancel the permission on default, but it did not make cancellation mandatory in every case. The authority retained discretion to choose the mode of enforcement. The assessee could not insist on cancellation as a matter of right in order to avoid payment under the compounding arrangement.

Conclusion: Cancellation was discretionary, not obligatory, and the revenue recovery action was sustainable.

Final Conclusion: The challenge to the recovery of tax under the compounding arrangement failed, and the petition was dismissed.

Ratio Decidendi: An assessee who validly opts for a statutory compounding scheme cannot unilaterally withdraw from that election in the absence of an enabling provision, and technical defects such as the non-prescription of a form do not defeat the substantive liability created by the election and accepted by the authority.

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