Compounding assessment cannot be reopened under escaped-turnover powers once the statutory tax option has been validly accepted.

A dealer who validly exercised the statutory compounding option under section 7C of the Tamil Nadu General Sales Tax Act and was assessed on that basis could not have the assessment reopened under section 16 merely to change the mode of taxation. Section 16 is directed to escaped turnover or turnover assessed at a lower rate in the statutory sense, and it does not permit reopening simply to withdraw the benefit of an accepted compounding assessment. The prior authority relied on was distinguished because it did not concern an assessment already completed under the compounding scheme. The reopening was therefore impermissible and the assessee succeeded.

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Issues: Whether the assessing authority could invoke section 16 of the Tamil Nadu General Sales Tax Act, 1959 to reopen an assessment after the dealer had exercised the compounding option under section 7C and the compounding order had been accepted.

Analysis: The dealer had opted to pay tax at the compounding rate under section 7C, filed the prescribed return and was subjected to tax on the entire contract value at the compounded rate. On those facts, the transaction could not be re-characterised so as to withdraw the benefit of the option already exercised. The power under section 16 is meant to deal with turnover that has escaped assessment or been assessed at a lower rate in the statutory sense, and it does not authorise reopening merely to undo a valid compounding assessment. The earlier authority relied upon by the respondent did not apply to a case where the dealer had already been assessed under the compounding scheme.

Conclusion: The invocation of section 16 to revise the compounding assessment was impermissible and the challenge succeeded in favour of the assessee.

Ratio Decidendi: Where a dealer has validly exercised the statutory compounding option and been assessed accordingly, section 16 cannot be used to reopen the assessment merely to substitute a different mode of taxation.

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