Composition scheme election cannot be withdrawn later; clarificatory rule barring withdrawal applied to the dispute.

A dealer who voluntarily elects composition under section 17(6) of the Karnataka Sales Tax Act cannot later withdraw that election and seek regular assessment under section 5B once the scheme has been chosen and acted upon. The Karnataka HC treated the later request to shift out of composition as impermissible because the statute did not contemplate a right of retraction after a conscious election. It also held that the amendment to rule 8B(1), which expressly barred withdrawal, was clarificatory of the existing legal position rather than a new restriction, and therefore applied to the dispute.

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Issues: (i) Whether a dealer who has opted for composition under section 17(6) of the Karnataka Sales Tax Act, 1957 can subsequently withdraw from that option and seek assessment under section 5B; (ii) Whether the amendment to rule 8B(1) of the Karnataka Sales Tax Rules, 1956, inserting a bar on withdrawal, is prospective only or clarificatory and applicable to the dispute.

Issue (i): Whether a dealer who has opted for composition under section 17(6) of the Karnataka Sales Tax Act, 1957 can subsequently withdraw from that option and seek assessment under section 5B.

Analysis: The composition option under section 17(6) was a voluntary election made with full knowledge of the scheme and its benefits. The statute did not contemplate a right to retract after the option had been exercised and acted upon. The Court treated the assessee's later request to shift to regular assessment as impermissible, and relied on the binding view that a dealer who consciously opts for composition cannot later bifurcate the contract or seek to abandon the scheme merely because it later appears less beneficial.

Conclusion: The assessee had no right to withdraw from the composition scheme after opting for it; the issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether the amendment to rule 8B(1) of the Karnataka Sales Tax Rules, 1956, inserting a bar on withdrawal, is prospective only or clarificatory and applicable to the dispute.

Analysis: The amendment was treated as clarificatory of the existing statutory position under section 17(6), rather than as creating a new disability. The Court held that the rule-making change merely made explicit what was already implicit in the composition provision, namely that once permission for composition is granted and acted upon, withdrawal is not contemplated. On that basis, the amendment was applied to the dispute and was not confined to future cases only.

Conclusion: Rule 8B(1) was held to be clarificatory and applicable to the case; the issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: The revisional order restoring the original assessment was upheld, and the appeal failed in its entirety.

Ratio Decidendi: A dealer who voluntarily elects composition under section 17(6) cannot later withdraw from that election, and a subsequent amendment clarifying that withdrawal is barred operates as an interpretive clarification of the existing scheme.

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