Compounded tax under KVAT applies only after departmental acceptance of the application; otherwise regular assessment governs.

Compounded tax under the Kerala Value Added Tax Act applies to a metal crusher unit only after the dealer applies for that treatment and the department accepts the application and permits payment on that basis. Without such acceptance, the dealer remains under the regular assessment method under Section 6. As the assessee's application was not acted upon, liability could not be fastened under the compounded regime, and prior payment under the regular method negated the differential demand. The impugned notices demanding compounded tax were therefore unsustainable and were quashed in favour of the assessee.

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Issues: Whether, in the absence of acceptance of an application for payment of tax on compounded basis, the assessee could be fastened with liability to pay compounded tax and differential demand for the relevant assessment year.

Analysis: Section 8(b) of the Kerala Value Added Tax Act permits a metal crusher unit to pay tax on compounded basis in lieu of the regular method under Section 6, but only after the dealer applies for such treatment and the departmental authorities accept the application and permit payment on that basis. Until such acceptance, the dealer cannot be treated as having entered the compounded regime. The assessee's application was not acted upon by the department, and there was no acceptance within the statutory framework. In those circumstances, the assessee remained liable only under the regular method of assessment under Section 6, and the fact that tax had already been discharged on that basis negatived the impugned demand.

Conclusion: The demand for differential compounded tax was unsustainable and the impugned notices were quashed in favour of the assessee.

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