Compounded sales tax liability attracts additional sales tax, and demand notices were sustained without remand for assessment.

Compounded tax under section 7(1) of the Kerala General Sales Tax Act is only an alternative mode of discharging the tax otherwise payable under section 5(1), so additional sales tax under section 5D applies to that compounded liability. Although a demand over and above the tax admitted in the return would ordinarily require assessment with notice and opportunity of objection rather than form 14D alone, the Court upheld the notices because the liability was fully contested and conclusively determined on merits, leaving no need for remand or separate assessment proceedings.

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Issues: (i) Whether a dealer paying tax at the compounded rate under section 7(1) of the Kerala General Sales Tax Act, 1963 is liable to pay additional sales tax under section 5D of the same Act. (ii) Whether additional sales tax could be demanded by form 14D under rule 21(10) of the Kerala General Sales Tax Rules, 1963 without a prior provisional or regular assessment.

Issue (i): Whether a dealer paying tax at the compounded rate under section 7(1) of the Kerala General Sales Tax Act, 1963 is liable to pay additional sales tax under section 5D of the same Act.

Analysis: Section 7(1)(a) gives only an option to pay tax at a compounded rate instead of the normal tax payable under section 5(1) of the Act. The compounded payment is not an independent charging provision. It substitutes the tax otherwise payable under section 5(1), and the dealer continues to discharge that statutory liability through the compounding mechanism. Section 5D, which increases the tax payable under sections 5 and 5A by an additional sales tax, therefore applies to the compounded tax as well.

Conclusion: The dealer paying tax at the compounded rate under section 7(1) is liable to pay additional sales tax under section 5D.

Issue (ii): Whether additional sales tax could be demanded by form 14D under rule 21(10) of the Kerala General Sales Tax Rules, 1963 without a prior provisional or regular assessment.

Analysis: A demand over and above the tax admitted in the return cannot ordinarily be raised by issuing form 14D alone, and the proper course would be assessment with notice and opportunity of objection. However, the dispute in the present case was fully contested on merits and the liability under section 5D was conclusively determined by the Court itself, leaving no occasion for remand or separate assessment proceedings.

Conclusion: The demand notices were sustained and no remand for assessment was required.

Final Conclusion: The petitioner's challenge failed on both liability and procedure, and the demand for additional sales tax was upheld.

Ratio Decidendi: Compounded tax paid under section 7(1) is only a substituted mode of discharging the tax liability under section 5(1), so additional sales tax leviable on the tax payable under sections 5 and 5A also applies to such compounded tax.

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