Compounding turnover outside the declared option can be taxed at the regular rate under Kerala VAT law.

Turnover not covered by a compounding declaration under the Kerala Value Added Tax Act may be taxed at the regular rate when it falls outside the option accepted by the Department. The compounding scheme under Section 8(c)(1) applies only to the turnover declared for compounding, so suppressed or undeclared turnover is not protected by that arrangement. On that basis, the assessing authority may invoke the regular rate under Section 6(1) for the uncovered turnover. The assessment order had already been considered on this footing, and no ground was shown for review. The levy at the regular rate was upheld and the review petitions were dismissed.

---

---

Issues: Whether tax on turnover not covered by the compounding declaration under the Kerala Value Added Tax Act could be levied at the regular rate and whether the assessment order calling for such levy required interference in review.

Analysis: The compounding scheme under Section 8(c)(1) operates on the basis of the turnover declared for compounding and the option accepted by the Department. Turnover that is not declared as part of that option, including suppressed turnover, falls outside the compounding arrangement. In such circumstances, the assessing authority is justified in applying the regular rate under Section 6(1) to the turnover not covered by the compounding declaration. The assessment order under review had already been considered on that basis, and no ground for review was made out.

Conclusion: The levy of tax at the regular rate on turnover not covered by the compounding declaration was upheld, and the review petitions were dismissed.

---