Compounded sales tax liability cannot be reduced for non-production periods when the statute fixes annual tax by capacity.

An assessee opting for compounded tax under section 7(1)(b) of the Kerala General Sales Tax Act, 1963 was not entitled to proportionate reduction for the period before commercial production commenced. The compounded levy was treated as an annual tax fixed by crushing machinery capacity, and the provision contained no substantive clause allowing reduction for non-production periods. The express proportional computation in section 7(1)(a) for gold and silver ornaments showed that such relief was deliberately omitted from clause (b). Rule 30 and Form No. 22 were held to be procedural only and could not confer a right to reduction. The full annual compounded tax liability was therefore upheld.

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Issues: Whether an assessee opting to pay tax at the compounded rate under section 7(1)(b) of the Kerala General Sales Tax Act, 1963 was entitled to proportionate reduction for the period in the financial year during which commercial production had not commenced.

Analysis: The compounded levy under section 7(1)(b) was held to be an annual tax fixed with reference to the crushing machinery capacity, and the provision contained no proviso granting proportionate relief for periods of non-production. The contrast with section 7(1)(a), where the Legislature expressly provided proportionate calculation in the case of gold and silver ornaments, showed that such relief was intentionally omitted in clause (b). Rule 30 and Form No. 22 were read as procedural provisions governing application and demand, and they did not create a substantive right to reduction of the compounded tax for part of the year. Since the option under section 7 was voluntarily exercised, the assessee could not later avoid the annual liability fixed under the compounding provision.

Conclusion: The assessee was not entitled to proportionate reduction, and the demand for the full compounded tax for the year was upheld.

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