Compounded tax liability under Kerala sales tax law follows statutory computation, and balance demand remains valid despite audit objection.

An assessee who opts for compounding under Section 7 of the Kerala General Sales Tax Act, 1963 cannot later choose between the alternative limbs of Section 7(1)(i); the applicable clause depends on the statutory computation of turnover for the relevant period, and the compounded liability arises by operation of law. On that basis, if the full amount due has not been paid, the assessing authority remains competent to demand the balance without a fresh assessment order. An audit objection does not oust jurisdiction, because it only points out a statutory shortfall already payable under the compounding scheme. The balance demand was therefore valid, and the objections to jurisdiction and misrepresentation failed.

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Issues: Whether an assessee who has opted to pay tax at compounded rate under Section 7 of the Kerala General Sales Tax Act, 1963 can choose between the alternative limbs of Section 7(1)(i), and whether a demand for balance tax raised after audit objection was without jurisdiction.

Analysis: The option under Section 7 is only an option to come out of regular assessment under Section 5 and to be governed by the compounding scheme under Section 7. Once that option is exercised and accepted, the assessee cannot claim a further choice between clauses (a) and (b) of Section 7(1)(i). Which clause applies depends on the statutory computation of the revenue for the relevant period, not on the assessee's preference. The liability under the compounded scheme arises by operation of law and does not depend upon a fresh assessment order. If, on proper application of Section 7(1), the full amount due has not been paid, the assessing authority is competent to demand the balance. Audit objection by the Accountant General did not divest the authority of jurisdiction, since it merely pointed out the deficit in payment of tax already due under the statute.

Conclusion: The demand for the balance amount was valid and the assessee had no right to choose between clauses (a) and (b) of Section 7(1)(i). The objections based on jurisdiction and misrepresentation were rejected.

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