Compounding option under Tamil Nadu VAT cannot be withdrawn for reporting error where audited accounts show turnover below threshold.

Section 27 of the Tamil Nadu Value Added Tax Act, 2006 cannot be used to withdraw a dealer's valid compounding option merely because turnover was wrongly reported, where the audited accounts showed actual turnover below the statutory threshold and there was no suppression of sales or purchases. The Madras High Court accepted that the provision is meant to address escaped turnover or wrong assessment, not to unsettle a properly exercised compounding election. It also upheld consideration of audited material produced at the appellate stage, finding that Section 63(2) did not bar its acceptance when the document was genuine and no adverse finding had been recorded. The revised assessment was therefore unsustainable.

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Issues: Whether the reassessment made by withdrawing the assessee's option under the compounding scheme under Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006 was sustainable, and whether the appellate authority and Tribunal were justified in accepting the audited accounts and setting aside the revised assessment.

Analysis: The assessee had filed returns in Form K under the compounding provision, and the apparent crossing of the turnover limit was found to be due to an inadvertent reporting error. The audited statement placed before the appellate authority showed that the actual turnover for the relevant year was below the statutory threshold. The Court held that Section 27 of the Tamil Nadu Value Added Tax Act, 2006 is intended to deal with escaped turnover or wrong assessment, and not to withdraw a compounding option validly exercised where there was no allegation of suppression of purchases or sales. The Court also accepted the Tribunal's view that the audited statement had been produced at the appellate stage and that Section 63(2) did not bar its consideration when no adverse finding was recorded and the material was found genuine.

Conclusion: The revised assessment was held unsustainable, and the concurrent orders of the appellate authority and the Tribunal were upheld.

Final Conclusion: The revision failed on merits, as the assessee remained entitled to the compounding treatment and the reassessment could not be used to unsettle that position in the absence of suppression or a valid basis for revision.

Ratio Decidendi: Section 27 of the Tamil Nadu Value Added Tax Act, 2006 cannot be invoked to withdraw a dealer's compounding option merely because turnover was wrongly reported, where the actual turnover remained below the threshold and no suppression of turnover is established.

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