Composite tax permission must be expressly granted; an undecided application and withdrawal restriction cannot create deemed approval.

Permission under the composite tax provision was a condition precedent to availing the scheme, and an assessee could not be treated as validly opted in merely because an application was filed within time and remained undecided. The amended rule restricting withdrawal of an application did not operate retrospectively and did not amount to deemed permission by the assessing authority. On that basis, the reassessment and its appellate affirmation were held unsustainable as they rested on an incorrect legal premise; the orders were set aside and the matter was remitted for fresh consideration in accordance with law.

---

---

Issues: Whether, in the absence of an express permission granted by the assessing officer, the assessee could be treated as having been validly allowed to pay composite tax under section 17(6) of the Karnataka Sales Tax Act, 1957, and whether the reassessment made on that basis was sustainable.

Analysis: The assessee had applied within time to opt for composite tax, but the application was not decided by the assessing officer. Rule 8B of the Karnataka Sales Tax Rules, 1957, as amended, did not operate retrospectively and, in any event, a restriction on withdrawal of an application could not be equated with grant of permission. Section 17(6)(ii) required permission from the assessing authority before the benefit could be availed. Since no such permission had been granted, the assumption that the assessee had opted into and been accepted under the composite tax scheme was unsustainable. The reassessment and the appellate affirmation proceeded on an erroneous legal premise and were therefore vitiated by error of law.

Conclusion: The challenge succeeded. The orders of the assessing officer and the appellate authorities were set aside and the matter was remitted to the assessing officer for fresh consideration in accordance with law.

Ratio Decidendi: Permission under the relevant composite tax provision is a condition precedent, and an unconsidered application or a rule restricting withdrawal does not amount to deemed permission.

---