Composition scheme protection bars regular assessment unless lawful cancellation is made on statutory grounds by the empowered authority.

Acceptance of a composition application under the U.P. Trade Tax compounding scheme displaced ordinary assessment for the agreed period, and could be revoked only on the scheme's specified ground of concealment or wrong particulars by the empowered authority. The cancellation was invalid because no concealment, misrepresentation, or furnishing of wrong details was established, and the order was passed by an authority lacking power under the scheme. Since the compounding arrangement remained in force, assessment proceedings under Section 21 could not be sustained. The writ petition was allowed and both the cancellation and assessment orders were set aside.

---

---

Issues: (i) Whether the order cancelling the compounding arrangement under the electrical contract scheme was sustainable when no concealment, misrepresentation, or furnishing of wrong details was established and the cancellation was made by an authority lacking power under the scheme; (ii) Whether assessment proceedings under Section 21 could be initiated after acceptance of the compounding application under Section 7-D.

Issue (i): Whether the order cancelling the compounding arrangement under the electrical contract scheme was sustainable when no concealment, misrepresentation, or furnishing of wrong details was established and the cancellation was made by an authority lacking power under the scheme?

Analysis: Section 7-D of the U.P. Trade Tax Act operates notwithstanding the other provisions of the Act and permits acceptance of composition money in lieu of tax payable. The electrical compounding scheme provided that cancellation could be ordered only by the Commissioner of Trade Tax where concealment or wrong details in the application or affidavit were found. The petitioner had disclosed and filed the contract with the compounding application, and the authority had accepted it after examining the contract. The later cancellation was founded only on a different inference about the nature of the contract and was passed by the Deputy Commissioner (Assessment), who was not the authority empowered under the scheme. There was thus no basis to treat the case as one of concealment, misrepresentation, or reviewable error.

Conclusion: The cancellation order was without jurisdiction and could not stand.

Issue (ii): Whether assessment proceedings under Section 21 could be initiated after acceptance of the compounding application under Section 7-D?

Analysis: Once composition under Section 7-D is accepted, it overrides the ordinary assessment regime and substitutes the regular assessment process for the agreed period. The compounding arrangement remained valid until lawfully cancelled, and the notice and assessment under Section 21 were issued while the compounding order was still in force. In those circumstances, the assessment proceedings could not be sustained.

Conclusion: The proceedings and assessment under Section 21 were invalid.

Final Conclusion: The writ petition succeeded and the impugned cancellation and assessment orders were set aside, leaving the petitioner entitled to the benefit of the accepted compounding arrangement.

Ratio Decidendi: Acceptance of a composition application under the statutory compounding scheme excludes regular assessment unless the agreement is lawfully cancelled on the specific statutory ground of concealment or furnishing of wrong particulars by the authority empowered under the scheme.

---