Dealer-specific compounding liability cannot exclude transferred stock from taxable turnover when a later operator separately compounds.

Under the brick kiln compounding scheme, liability is dealer-specific and cannot be avoided by relying on another firm's separate compounding arrangement for a later season. Stock remaining with the assessee at the close of one season and carried into the next was not excluded from taxable turnover merely because the business was later operated by a different entity. On the facts, the Revenue was justified in treating the transfer of such stock as a sale and taxing it in the assessee's hands, and the tax demand was upheld.

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Issues: Whether stock transferred by the assessee to another brick kiln operator could be excluded from the compounding liability and treated as outside the assessee's taxable turnover for the relevant assessment year.

Analysis: The dispute arose under the compounding scheme applicable to brick kiln operators. The assessee had accepted compounding for one season and claimed that its business had been taken over by another firm for the next season. The Court held that compounding is individual to the dealer and that stock remaining with the assessee at the close of one season and carried into the next could not escape tax merely because a different firm had separately opted for compounding. On the facts, the Revenue was justified in treating the transfer of such stock as a sale and in taxing it in the assessee's hands.

Conclusion: The question of law was answered against the assessee and the tax demand was upheld.

Final Conclusion: The revision failed because the assessee could not avoid tax on the disputed stock by relying on the transferee firm's compounding arrangement.

Ratio Decidendi: Under a compounding scheme, liability is dealer-specific, and stock retained or transferred by the assessee cannot be excluded from tax merely because a different entity has separately accepted compounding for a subsequent period.

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