Compounding under U.P. Trade Tax Act bars State Development Tax demand against a contractor, the HC held.

State Development Tax could not be levied on a contractor who had opted for compounding under section 7-D of the U.P. Trade Tax Act. Relying on an earlier Division Bench ruling, the HC held that such tax cannot be levied or realised from contractors covered by the compounding scheme, and the additional demand was therefore unsustainable for the relevant assessment year.

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Issues: Whether State Development Tax could be levied on a contractor who had opted for compounding under section 7-D of the U.P. Trade Tax Act.

Analysis: The petitioner had opted for compounding under section 7-D of the U.P. Trade Tax Act. The Court relied on an earlier Division Bench decision holding that State Development Tax cannot be levied and realized from contractors who have opted for compounding under that provision. Applying that view, the Court held that the additional demand of State Development Tax was unsustainable.

Conclusion: State Development Tax could not be levied on the petitioner for the relevant assessment year.

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