Binding composition option under earlier trade tax scheme barred retrospective 6% levy on imported goods under later VAT composition rules.

A composition option accepted under the earlier trade tax scheme was treated as a binding assessment method for the covered period, fixing the assessee's tax liability for that year. Because the assessee had not opted into the later U.P. VAT Act, 2008 composition scheme for the relevant assessment year, the conditions of that later scheme, including the 6% levy on imported goods beyond the prescribed limit, could not be applied retrospectively. A composition already governed by the earlier enactment could not be altered by importing conditions from a different scheme, and the additional demand was therefore unlawful and set aside.

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Issues: Whether the petitioner, having opted for composition under the earlier trade tax composition scheme, could be subjected to additional tax at 6% on imported goods under the later VAT composition scheme for the same assessment year.

Analysis: The composition arrangement under the earlier scheme was treated as an agreed and binding method of assessment, fixing the tax liability for the period covered by the option accepted by the department. The petitioner had not opted into the later composition scheme under the U.P. VAT Act, 2008 for the relevant assessment year. The later scheme, including the condition imposing tax on imported goods beyond the prescribed limit, could not be applied retrospectively to an existing composition already governed by the earlier scheme. A composition accepted under the earlier enactment could not be altered unilaterally by importing conditions from a different scheme.

Conclusion: The levy of 6% tax under the composition scheme framed under the U.P. VAT Act, 2008 was illegal as applied to the petitioner, and the impugned demand on that score was set aside in favour of the assessee.

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