Composition tax scheme cannot be imposed after withdrawal; assessment must follow return-based tax liability

A composition scheme for entertainment tax was treated as an elective method of payment, not a compulsory mode of assessment. Once the scheme stood withdrawn from 22 May 1999, the assessee could not be required to continue under the composition arrangement merely because the formal cancellation order was issued later. For the relevant period, the assessee had filed returns and paid tax on that basis, so the assessing authority had to assess liability by reference to those returns rather than the monthly composition amount. The Tax Board's order was sustained, and the revision petitions failed because no question of law arose.

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Issues: Whether, after cancellation of the composition scheme with effect from 22 May 1999, the assessee could be compelled to continue paying entertainment tax under the composition method for the subsequent period, and whether the assessment had to be made on the basis of returns filed by the assessee.

Analysis: The composition scheme was held to be a matter of election for the assessee and not a compulsory mode of assessment. Once the scheme stood revoked with effect from 22 May 1999, there was no legal basis to insist that the assessee remain under the composition arrangement merely because the formal cancellation order was passed later. The assessee had collected and paid tax on the return basis for the relevant period, and the assessing authority could not ignore the returns and proceed on the monthly composition amount as the tax liability.

Conclusion: The assessee could not be compelled to pay entertainment tax under the composition scheme for the period after 22 May 1999, and assessment had to proceed on the basis of returns filed.

Final Conclusion: The revision petitions failed because no question of law arose from the Tax Board's order, which was sustained.

Ratio Decidendi: A composition scheme for tax payment, once withdrawn, cannot be imposed compulsorily on the assessee for the period thereafter, and the assessment must follow the legally applicable return-based method.

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