Compounded tax scheme cannot be cancelled for same-year turnover discrepancy when liability depends on prior years' turnover.

A dealer's permission to pay tax on a compounded basis under the Kerala Value Added Tax Act could not be cancelled merely because of an alleged turnover discrepancy in the same assessment year. Liability under the compounded scheme was computed with reference to the turnover of the previous three consecutive years under Section 8(f), so the turnover of the year in which compounding was chosen was not the basis for determining tax payable for that year. On that reasoning, the alleged suppression did not justify cancellation, and the permission was held unsustainable.

---

---

Issues: Whether permission granted to a dealer to pay tax on compounded basis could be cancelled on the basis of an alleged discrepancy in turnover for the very assessment year in which compounding was opted for.

Analysis: The dealer's liability under the compounded scheme was determined with reference to the turnover of the previous three consecutive years, as contemplated by Section 8(f) of the Kerala Value Added Tax Act. The alleged suppression or discrepancy for the assessment year in which compounding was availed would not affect the tax payable on compounded basis for that year, because the turnover of that very year was not the basis of computation. The foundation for cancelling the earlier permission was therefore legally unsustainable.

Conclusion: The cancellation of the permission to pay tax on compounded basis could not be sustained and the issue is decided in favour of the assessee.

---