Compounding does not block best judgment assessment, and estimated turnover can determine presumptive tax eligibility.

Compounding of an offence under the Kerala Value Added Tax Act did not bar best judgment assessment of suppressed turnover, because composition under Section 74(1) only protects the dealer from further penal or prosecution ings under Section 74(2). The assessing authority could therefore estimate the real turnover independently to protect revenue. Additions made beyond the detected suppression, including gross profit addition, were also upheld because the extent of estimation lies within the discretion of best judgment assessment and the adopted figure was not shown to be perverse. The turnover so determined governed eligibility for presumptive taxation, and the revision failed.

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Issues: (i) Whether compounding of the offence under the Kerala Value Added Tax Act, 2003 barred further assessment or estimation of turnover on detected suppression; (ii) Whether the additions made over and above the detected suppression, including gross profit addition, could be interfered with in the revision.

Issue (i): Whether compounding of the offence under the Kerala Value Added Tax Act, 2003 barred further assessment or estimation of turnover on detected suppression.

Analysis: Composition under Section 74(1) of the Kerala Value Added Tax Act, 2003 relieves the dealer only from further penal or prosecution proceedings as provided in Section 74(2). That relief does not extend to assessment proceedings. On detection of suppression, the assessing authority is entitled to resort to best judgment assessment to determine the real turnover and to protect the revenue. Such estimation is not penal in character and operates independently of compounding.

Conclusion: The bar arising from compounding did not prevent the authorities from making best judgment assessment and determining the turnover; this issue was answered against the assessee.

Issue (ii): Whether the additions made over and above the detected suppression, including gross profit addition, could be interfered with in the revision.

Analysis: The extent of addition after detection of suppression lies within the discretionary sphere of best judgment assessment and depends on the facts and circumstances. The turnover determined on such assessment is the turnover relevant for Section 6(5) of the Kerala Value Added Tax Act, 2003, and no separate exclusion can be claimed to retain presumptive tax eligibility. The gross profit addition adopted by the authorities was treated as part of the estimation process and was not shown to be perverse.

Conclusion: The additions, including the gross profit component, were not interfered with; this issue was also decided against the assessee.

Final Conclusion: The revision failed, and the assessment orders as modified in appeal were left undisturbed, with the dealer being assessed outside the presumptive tax regime on the turnover determined under best judgment assessment.

Ratio Decidendi: Compounding of an offence under the sales tax law does not preclude best judgment assessment, and the turnover so determined governs eligibility for presumptive taxation.

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