Compounding election under sales tax law bars reassessment reopening where the accepted option remains operative.

Where a dealer validly exercises the statutory option to pay tax by compounding under section 7C of the Tamil Nadu General Sales Tax Act, 1959 and the compounding order remains in force, section 16 cannot be invoked to reopen the assessment as an ordinary sale or to displace that election. The court treated the accepted compounding arrangement as binding in the facts of the case and followed Devendran & Company as the governing precedent. The revised assessment notice was therefore unsustainable and was quashed.

---

---

Issues: Whether the notice for revised assessment issued under section 16 of the Tamil Nadu General Sales Tax Act, 1959 could be sustained where the dealer had opted for compounding under section 7C of the Act and filed the prescribed return.

Analysis: The petitioner had exercised the statutory option to pay tax at the compounding rate under section 7C and had filed the prescribed form. Once that option was accepted and a compounding order was in force, the transaction could not be reopened as an ordinary sale by invoking section 16. The power of reassessment under section 16 was held not to extend to withdrawing or revising the compounding arrangement in the facts of the case, and the earlier binding decision in Devendran & Company was treated as governing the issue.

Conclusion: The notice for revised assessment was unsustainable and was set aside in favour of the assessee.

Final Conclusion: Reassessment proceedings could not be used to undo a validly accepted compounding election under section 7C, and the impugned notice was quashed.

Ratio Decidendi: Where a dealer has validly exercised the statutory option to pay tax by compounding and that option remains in force, section 16 of the Tamil Nadu General Sales Tax Act, 1959 cannot be invoked to reopen the assessment so as to displace the compounding order.

---