Composition tax option can be exercised through the return; reassessment must follow the prescribed scrutiny procedure.

Filing a return claiming composition tax and remitting tax at the prescribed rate was treated as a valid exercise of the option under Section 7-C because neither the Act nor the Rules required any separate declaration or special form. The article also states that reassessment based on scrutiny or revision had to comply strictly with the prescribed random-selection procedure under Rule 15(5-B); absent such compliance, reopening was not sustainable. Section 16-AA was described as applicable only to escaped turnover cases where Section 7-C permission had been granted, and not where the department proceeded on the mistaken footing that no Section 7-C option had been exercised.

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Issues: (i) Whether the assessee had exercised the option to pay tax under Section 7-C of the Tamil Nadu General Sales Tax Act, 1959 by filing the return and remitting tax at the prescribed rate. (ii) Whether the reassessment could be reopened without compliance with Rule 15(5-B) of the Tamil Nadu General Sales Tax Rules and whether Section 16-AA of the Tamil Nadu General Sales Tax Act, 1959 could be invoked on the facts.

Issue (i): Whether the assessee had exercised the option to pay tax under Section 7-C of the Tamil Nadu General Sales Tax Act, 1959 by filing the return and remitting tax at the prescribed rate.

Analysis: The assessee filed the return for the relevant assessment year claiming the benefit of Section 7-C and paid tax at 2%, which was accepted in the assessment. The Act and the Rules did not prescribe any separate form, letter, or special mode for exercising the option. Where the statutory scheme does not require a separate declaration, the filing of the return with the claim for composition payment constitutes the exercise of option.

Conclusion: The option under Section 7-C was validly exercised and the contrary finding was unsustainable, in favour of the assessee.

Issue (ii): Whether the reassessment could be reopened without compliance with Rule 15(5-B) of the Tamil Nadu General Sales Tax Rules and whether Section 16-AA of the Tamil Nadu General Sales Tax Act, 1959 could be invoked on the facts.

Analysis: The original assessment itself was stated to be subject to random selection for detailed scrutiny under Section 12(1-A). Revision on that basis required adherence to the procedure under Rule 15(5-B), including selection through the prescribed random sampling method. The record did not disclose compliance with that procedure. Further, Section 16-AA applied only to escaped turnover in cases where tax under Section 7-C had been permitted, and not to a case where the department wrongly proceeded on the premise that the assessee had not opted for Section 7-C and sought to shift the matter to regular assessment under Section 3-B.

Conclusion: The reassessment proceedings were not sustainable and the invocation of Section 16-AA was rejected, in favour of the assessee.

Final Conclusion: The impugned assessment proceedings were quashed and the writ petition succeeded on both issues.

Ratio Decidendi: Where the statutory scheme prescribes no separate mode for exercising an option under a composition provision, the option is validly exercised through the return claiming that benefit; and a reassessment can be sustained only if the prescribed statutory procedure for scrutiny or revision is strictly followed.

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