Composition tax accepted under VAT scheme bars regular assessment on the same turnover and invalidates recovery notices.

A composition scheme under the Telangana VAT framework operates as a binding statutory arrangement once validly opted for and accepted, so tax paid at the composition rate on the same turnover creates a jurisdictional fact. On that basis, regular assessment for the same assessment periods is impermissible unless the composition arrangement is lawfully displaced. Where the turnover and composition payment are undisputed, the commentary states that consequential demand notices and garnishee recovery steps based on regular assessment are unsustainable, and issues about pre-assessment notice or service of assessment orders do not cure the core jurisdictional defect.

---

---

Issues: Whether, after the assessee had opted for and paid tax under the composition scheme, the authorities could resort to regular assessment for the same assessment periods and levy tax at a higher rate, and whether the consequential demand and garnishee notices were sustainable.

Analysis: Section 4(7)(d) of the Telangana Value Added Tax Act, 2005 and Rule 17(2) of the Telangana Value Added Tax Rules, 2005 permit a works contractor to opt for composition and pay tax at 5% of the consideration received or receivable, with the scheme operating as a statutory arrangement binding both sides once validly accepted. The decision accepted that payment and acceptance under the composition scheme create a binding statutory contract and that, where the turnover and composition payment were not disputed, the existence of composition tax payment constituted a jurisdictional fact. In that situation, regular assessment for the same period was held impermissible, and the issue of pre-assessment notice or service of assessment orders became immaterial to the core jurisdictional objection.

Conclusion: The authorities could not reopen the same periods for regular assessment after acceptance of composition tax, and the impugned demand and garnishee notices were unsustainable.

Final Conclusion: The writ petitions succeeded, and the impugned recovery steps founded on the regular assessments were quashed.

Ratio Decidendi: Once tax is validly paid and accepted under a composition scheme that operates as a statutory contract, the assessing authority cannot undertake regular assessment for the same period on the same turnover unless the composition arrangement itself is lawfully displaced.

---