Compounded tax under Kerala sales law may be fixed only after year-end, with demand and returns forming valid statutory procedure.

Compounding under the Kerala General Sales Tax Act for a bar hotel dealer is processed under Rule 30, where the application is first considered for grant or rejection and, if allowed, the compounded tax is fixed by reference to the accounting year's purchase turnover and prior sales turnover. Because the purchase turnover for the accounting year can be ascertained only after year-end, the final order allowing compounding may validly be issued only on completion of that year. The subsequent demand notice and annual return mechanism are part of the statutory process for determining and collecting the compounded tax and any shortfall, so the proceedings are within jurisdiction.

---

---

Issues: Whether the revenue recovery proceedings and demand issued in relation to compounding under the Kerala General Sales Tax law were without jurisdiction.

Analysis: Compounding for a bar hotel dealer under Section 7 of the Kerala General Sales Tax Act is processed under Rule 30 of the Kerala General Sales Tax Rules. The application is first considered for grant or rejection, and if allowed, the tax at the compounded rate is determined with reference to the purchase turnover of the accounting year and the sales turnover of the preceding years. Since purchase turnover for the accounting year can be ascertained only at the end of that year, the final order allowing compounding can be made only after completion of the accounting year. The subsequent demand notice and annual return mechanism under the Rules are part of the permissible statutory procedure for fixing and collecting the compounded tax and any shortfall.

Conclusion: The proceedings were held to be within jurisdiction and the challenge to them failed.

Ratio Decidendi: In compounding-based taxation under the Kerala General Sales Tax law, the final order allowing compounding and the consequential demand can validly be issued only in accordance with the statutory procedure completed at the end of the accounting year.

---