Compounded levy option under VAT law can be validly exercised by filing the return and paying tax accordingly.

Where a works contractor opted to pay tax at the compounded rate under the Tamil Nadu VAT Act, filing the return in the prescribed form and paying tax accordingly was sufficient to exercise that option because the statute did not require any separate form or special procedure. The assessment treating the option as unexercised was therefore unsustainable. The writ petitions were also maintainable despite an appellate remedy, because the challenge raised a jurisdictional error and a pure question of law falling within the recognised exception to alternate remedy under Article 226. The matter required reconsideration on the basis that the returns were filed under the compounded levy option.

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Issues: (i) whether filing the return in the prescribed form and paying tax at the compounded rate amounted to exercise of the option under section 6 of the Tamil Nadu Value Added Tax Act, 2006 in the absence of any separate prescribed form or procedure; and (ii) whether the writ petitions were maintainable despite the availability of an appellate remedy.

Issue (i): whether filing the return in the prescribed form and paying tax at the compounded rate amounted to exercise of the option under section 6 of the Tamil Nadu Value Added Tax Act, 2006 in the absence of any separate prescribed form or procedure

Analysis: Section 6 permits a works contractor to opt for payment of tax at the compounded rate and requires the option to be intimated along with the first monthly return, but the Act does not prescribe any separate form or special mode for exercising that option. The return filed in Form-L, coupled with payment of tax at 2%, disclosed the dealer's election to be taxed under the compounded scheme. In the absence of a statutory requirement for a separate written option, the filing of the return and payment of compounded tax could not be disregarded as ineffective.

Conclusion: The option under section 6(1) was validly exercised by filing the return and paying tax at the compounded rate, and the contrary assessment was unsustainable.

Issue (ii): whether the writ petitions were maintainable despite the availability of an appellate remedy

Analysis: The challenge went to the very jurisdiction of the assessing authority to treat the returns as not amounting to an exercise of the statutory option. A jurisdictional error falls within a recognised exception to the rule of alternate remedy. The controversy was also a pure question of law and did not require factual adjudication by the appellate authority. On that basis, the writ petitions could be entertained under Article 226 of the Constitution of India.

Conclusion: The writ petitions were maintainable notwithstanding the statutory appeal remedy.

Final Conclusion: The assessment orders and the dismissal of the writ petitions could not be sustained, and the matter required reconsideration by treating the returns as having been filed under the compounded levy option.

Ratio Decidendi: Where the statute prescribes no separate mode or form for exercising an option to pay tax at a compounded rate, filing the return and paying tax in that manner constitutes valid exercise of the option; a jurisdictional challenge to such treatment falls within the exceptions to the rule of alternate remedy under Article 226 of the Constitution of India.

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