Compounding under trade tax law cannot follow a final regular assessment for the same liability.

After a regular assessment under Section 7(3) of the U.P. Trade Tax Act, 1948 is completed and attains finality, the assessing authority cannot thereafter entertain or decide a compounding application under Section 7D for the same liability. The article explains that regular assessment and compounding are alternative methods of determining the same tax liability, and the statutory scheme does not permit parallel or duplicative determination for the same assessment year once liability has been finally fixed. The legal question was answered in favour of the assessee and against the revenue.

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Issues: Whether, after completion of assessment under Section 7(3) of the U.P. Trade Tax Act, 1948, the assessing authority retained jurisdiction to pass an order under Section 7D of that Act on an application for compounding.

Analysis: The assessment under Section 7(3) determines the tax liability under the regular mode of assessment. Compounding under Section 7D is an alternative method of determining the same liability on a contractual basis and can operate only before the liability has already been finally fixed by regular assessment. Once the regular assessment order was passed and attained finality, the compounding application ceased to survive. No provision of the scheme or the Act permitted parallel or duplicative determination of the same liability by both methods for the same assessment year.

Conclusion: The assessing authority had no surviving jurisdiction to pass the order under Section 7D after completion of the regular assessment; the question of law was answered in favour of the assessee and against the revenue.

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