Compounding Option Kerala VAT

[Binu Karuthedath]

Dear Sir

One of the Assessee is registered Kerala VAT and manufacturer of Ayurvedic Medicines as per the Drug License and also they have choose an option to pay Tax on MRP under section 8 for preceding year and issue invoice in the form 8H .Now assessee is decided that not opting compounding payment this year , is this right? is any problem to assessee from VAT

[Ganeshan Kalyani]

Sir, the provision of charging VAT on MRP is optional under KVAT. Your choice of either charging VAT on MRP or on Sale value should be communicated to the Department. In my view you can switch the option. Thanks.

[Binu Karuthedath]

Dear Sir

Thanks your reply

The assessee is applied for compounding application(Form 1B) by online .But Assissing authority is not issue compounding permission(FORM 1E) till the date. have any option to withdraw the application? . if possible what are the procedure

[Ganeshan Kalyani]

Sir you should meet the Authority to solve the issue once for all. Thanks.

AI Summary

Compounding option under Kerala VAT is discretionary; dealers may switch basis but must notify the tax department. The Kerala VAT option to charge tax on MRP is discretionary and a dealer may switch between charging VAT on MRP and on sale value, provided the choice is communicated to the department. An assessee who has applied online for compounding permission but has not received formal approval should consult the assessing authority to resolve the pending application or to pursue withdrawal and procedural clarification.