Compounded sales tax under Section 7 still permits assessment-based recomputation and inclusion of assessed tax in later calculations.

A dealer opting for compounding under Section 7 of the Kerala General Sales Tax Act remains within the statutory return and assessment framework for the limited purpose of correctly determining compounded liability. The expression "tax paid" in Section 7(b) is broad enough to include assessed tax, so prior year assessment or reassessment can be taken into account when computing later compounded tax. The purchase-value calculation for liquor must reflect the correct value of liquor sold in the relevant year, using opening stock and purchases while excluding closing stock from the base.

---

---

Issues: (i) Whether a dealer who opts for payment of tax at compounded rates under Section 7 of the Kerala General Sales Tax Act, 1963 can be subjected to assessment or recomputation under the statutory assessment machinery. (ii) Whether the expression "tax paid" in Section 7(b) includes assessed tax and whether the compounded tax computation can take account of prior year assessment revisions and the correct purchase value of liquor sold.

Issue (i): Whether a dealer who opts for payment of tax at compounded rates under Section 7 of the Kerala General Sales Tax Act, 1963 can be subjected to assessment or recomputation under the statutory assessment machinery.

Analysis: The option under Section 7 operates in lieu of tax otherwise payable under Section 5, but it does not eliminate the statutory scheme of returns and assessment. The Rules require monthly and annual returns, and Section 17 remains the procedure by which the assessing authority may determine the correct liability. The earlier compounding permission is provisional for computation purposes, and the Department is not barred from modifying the computation within limitation when the statutory basis for the compounded amount changes.

Conclusion: Yes. A dealer opting for compounding can still be subjected to assessment-based recomputation for the purpose of determining the correct compounded tax liability.

Issue (ii): Whether the expression "tax paid" in Section 7(b) includes assessed tax and whether the compounded tax computation can take account of prior year assessment revisions and the correct purchase value of liquor sold.

Analysis: Section 7(b) uses the words "turnover tax paid" in addition to tax conceded in returns or accounts, and the provision is broad enough to include assessed tax. Prior year assessment or reassessment that enhances tax liability can therefore be taken into account for computing the later year's compounded tax. For the purchase-value component, the correct computation requires the opening stock and purchases of the relevant year to be considered together, with the closing stock excluded from the value on which the percentage is applied.

Conclusion: Yes. Assessed tax is includible for Section 7(b) purposes, and the compounded tax computation must be made on the correct purchase value of liquor sold in the relevant year.

Final Conclusion: The proceedings initiated by the assessing authority were upheld, the contrary view of the Single Judge was set aside, and the connected writ matter was sent back for fresh consideration in light of the declared legal position.

Ratio Decidendi: A dealer who elects compounding under Section 7 remains within the statutory assessment framework for the limited purpose of correctly determining compounded liability, and prior assessed tax can be used where the statute refers to tax paid for computing the compounded rate.

---