Revenue cannot accept Section 7 compounding after assessment year expires; taxpayer's Section 5 tax election remains valid

SC dismissed the petition and upheld the HC. The HC had held that the revenue could not accept an application for compounding under Section 7 after the relevant assessment year had expired and thereafter complete an assessment on that basis. The Court found the taxpayer had validly chosen to pay tax under Section 5 of the KGST Act and the department erred in proceeding under Section 7; the impugned orders were held lawful and the petition failed.

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Delay condoned. The Court held that "the assessee has only opted to pay the tax in accordance with the legal provisions i.e. Section 5 of the Kerala General Sales Tax Act, 1963" and therefore the department was not justified in proceeding to assess him under Section 7 of the Act. On this basis the Court concluded there was no legality in the impugned judgment and order passed by the High Court in the writ appeal. The petition was dismissed and pending application(s), if any, were disposed of.

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