Compounded VAT election remains binding for the full year despite later business interruption, with limited relief on recovery.

A dealer who voluntarily elected the compounded tax scheme under Section 8(b) of the Kerala Value Added Tax Act was bound to continue that liability for the full assessment year once the option had been exercised and accepted. Subsequent interruption of business caused by a prohibitory order did not permit the dealer to resile from the statutory obligation or shift back to normal assessment under Section 6. The text also notes that, despite the continued tax liability, limited equitable relief may be granted on payment timing, including temporary suspension of recovery where hardship is shown.

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Issues: Whether a dealer who voluntarily opted to pay tax at the compounded rate under Section 8(b) of the Kerala Value Added Tax Act for the assessment year 2015-2016 could avoid that liability for the period after business operations were stopped by a prohibitory order, and whether the department could be directed to keep recovery in abeyance for a limited period.

Analysis: The option to pay tax at the compounded rate was exercised at the commencement of the assessment year and was voluntary, not coerced. By opting for Section 8(b), the petitioner undertook to pay tax at the specified compounded rate for the whole year in substitution of the normal assessment procedure under Section 6. Since the option was exercised and the tax was accepted by the department, the petitioner could not resile from the statutory obligation merely because a later prohibitory order affected business operations. At the same time, the hardship pleaded by the petitioner justified limited indulgence in the timing of payment and recovery.

Conclusion: The petitioner remained liable to pay tax under Section 8(b) of the Kerala Value Added Tax Act for the assessment year 2015-2016, but was granted time to discharge the liability by 31.03.2016, with recovery kept in abeyance till then.

Final Conclusion: The substantive tax liability under the compounded scheme was upheld, while limited time-bound relief was granted against immediate recovery.

Ratio Decidendi: A dealer who voluntarily elects the compounded tax scheme and has that election accepted cannot later avoid the annual liability because of subsequent business interruption, though equitable relief may be granted in the manner of payment.

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