Composition scheme: tiles fixed into restaurant flooring were not goods in stock, making reassessment unsustainable.

Vitrified tiles bought from outside the State for flooring of a restaurant and fixed as part of the premises were treated as immovable property, not as goods in stock. On that basis, the composition-condition barring outside-State stock was not violated, because the items were not part of the dealer's trading inventory and were not sold in the course of business. Reassessment based on treating those tiles as stock was therefore described as an improper exercise of power, and the denial of composition benefit was held unsustainable.

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Issues: Whether vitrified tiles purchased from outside the State and fixed in the restaurant floor could be treated as "goods in stock" so as to deny the benefit of the composition scheme, and whether reassessment on that ground was sustainable.

Analysis: The composition scheme under Section 15(1) and the condition in Rule 135(2) prohibit a dealer from having goods in stock brought from outside the State on the date of opting for composition and from selling such goods thereafter. The materials in question were not part of the dealer's trading stock in the ordinary course of business; they were purchased for flooring of the restaurant and, once fixed, became part of the immovable property. Such items could not reasonably be treated as stock-in-trade of a restaurant dealer. Since there was no sale of those goods in business, the condition in Rule 135(2) was not violated, and reassessment on that basis was an improper exercise of power under Section 39(1).

Conclusion: The denial of composition benefit on the footing that the vitrified tiles were "goods in stock" was unsustainable. The reassessment notice and consequential orders were liable to be quashed, and the issue was answered in favour of the assessee.

Final Conclusion: The writ petitions succeeded, and the impugned reassessment action was set aside with costs.

Ratio Decidendi: Goods purchased for incorporation into the building premises and fixed as part of immovable property are not "goods in stock" for the purpose of a composition-condition restricting outside-State stock.

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