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Issues: (i) Whether a dealer in gold ornaments could opt for compounding under Section 7(1)(a) only for some branches while paying tax under Section 5(1) for the remaining branches. (ii) Whether the Deputy Commissioner could revise the regular assessment under Section 35 even though the assessing officer had earlier issued a compounding approval in Form No.21A and demand in Form No.22, and whether such approval created any finality or contractual bar.
Issue (i): Whether a dealer in gold ornaments could opt for compounding under Section 7(1)(a) only for some branches while paying tax under Section 5(1) for the remaining branches.
Analysis: The scheme of compounding under Section 7(1)(a) is an alternative to tax under Section 5(1) and applies to the dealer's business as a whole, with turnover understood as the aggregate turnover of all places of business in the State. The provisos to Section 7(1)(a) also contemplate inclusion of branch turnover. A dealer engaged in gold and silver ornaments cannot split the same line of business by selecting compounding for some branches and regular assessment for others.
Conclusion: Partial compounding was impermissible and the assessee was liable to be assessed under Section 7(1)(a) for the entire jewellery turnover of all branches.
Issue (ii): Whether the Deputy Commissioner could revise the regular assessment under Section 35 even though the assessing officer had earlier issued a compounding approval in Form No.21A and demand in Form No.22, and whether such approval created any finality or contractual bar.
Analysis: The approval under Rule 30 and the consequential demand were only provisional and had to merge in the regular assessment. Once regular assessment was completed, the earlier compounding approval and demand did not survive independently. An erroneous approval that caused loss of revenue could therefore be corrected in revision, and the compounding option accepted by the officer did not amount to a contract immune from supervisory scrutiny under Section 35. The revision was also within limitation as it was directed against the regular assessment under Section 17(3).
Conclusion: The Deputy Commissioner had jurisdiction to revise the assessment, and the challenge based on limitation and finality failed.
Final Conclusion: The revision was maintainable, the assessment was rightly revised to bring the entire turnover within the compounding scheme, and the assessee's challenge failed.
Ratio Decidendi: Compounding under Section 7(1)(a) is an alternative mode of assessment for the dealer's entire eligible business turnover, and a provisional compounding approval does not attain finality so as to bar revisional correction of a regular assessment made in violation of the charging provisions.
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