Compounding election under VAT law cannot be withdrawn later merely because business operations cease.

An assessee that has elected to pay tax by compounding under the Kerala Value Added Tax Act cannot later withdraw that election and seek exemption for subsequent periods merely because commercial production or sales have stopped. The text states that the compounding option had already been exercised and tax paid for the relevant year, and that the settled position prevents retraction of the election after demand is issued. The stoppage of operations did not create a fresh entitlement to exemption for the remaining quarters, so the exemption request was treated as not maintainable.

---

---

Issues: Whether an assessee who has opted to compound tax liability under the Kerala Value Added Tax Act can later withdraw that option and seek exemption for subsequent quarters when commercial production or sales have stopped.

Analysis: The petitioner had already compounded the liability and paid tax up to a specified quarter for the relevant financial year. The request for exemption for later quarters was examined in the light of the settled position that once an assessee elects payment by compounding and the demand is issued, the option cannot be withdrawn subsequently. On that principle, the stoppage of operations did not create a right to retract the earlier election or claim exemption for the remaining quarters.

Conclusion: The request for exemption was not maintainable and the issue was decided against the assessee.

Ratio Decidendi: An assessee who has elected to pay tax by compounding cannot later withdraw that election and claim exemption for subsequent periods merely because business operations have ceased.

---