Compounding scheme bars reassessment for the same tax liability once the assessee has opted in and paid compounded tax.

An assessee that had opted for the compounding scheme under the U.P. VAT regime and paid tax accordingly could not be subjected to reassessment under Section 29(7) for the same liability. The court reasoned that acceptance of compounding, followed by payment of compounded tax, removed the foundation for reopening the assessment, so the reassessment machinery under Section 29 was inapplicable. On that basis, the reassessment proceeding was held to be without jurisdiction and the reassessment order was quashed in favour of the assessee.

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Issues: Whether reassessment could be initiated under Section 29(7) of the U.P. Value Added Tax Act, 2008 after the assessee had accepted the compounding scheme and paid tax accordingly.

Analysis: The assessee had accepted the compounding scheme under the VAT regime and paid the compounded tax. The respondents did not dispute that, once the compounding scheme was accepted and tax paid under it, the reassessment machinery under Section 29 was not applicable. In that situation, the very foundation for reopening the assessment failed, and the reassessment proceeding could not be sustained.

Conclusion: Reassessment under Section 29(7) was not maintainable in the facts of the case and the impugned reassessment order was without jurisdiction, in favour of the assessee.

Final Conclusion: The writ petition succeeded and the reassessment order was quashed.

Ratio Decidendi: Where an assessee has opted for and complied with the compounding scheme, the reassessment power under Section 29(7) cannot be invoked against the assessee in respect of the same liability.

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