TaxTMI 
TaxTMI 
2009 (11) TMI 960
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....e at Ernakulam and three branches in the State at Kottayam, Angamaly and Thodupuzha. The assessee holds single registration under the K.G.S.T.Act with branch certificate for each of the three branches. During the assessment year 2003- 04, the assessee made an application before the assessing officer in Form No.21 for payment of tax at compounded rate as provided under Section 7(1)(a) of the K.G.S.T.Act for two branches located at Kottayam and Angamaly. Even though the scheme for payment of tax under compounding rate under Section 7(1)(a) is in lieu of tax payable under Section 5(1) by the dealer for his total turnover which would include turnover of head office and all branches in the State, the assessing officer, without noticing the statutory scheme, ordered the assessee to pay tax under the compounding scheme only for the two branches applied for by them. Approval for payment of tax under Section 7(1)(a) was granted by the assessing officer by issuing Form No.21A based on which assessee started remitting tax. Since the compounding scheme for payment of tax was granted only for two branches, the assessee started filing regular returns and remitting tax thereon for the business ca....
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....und of limitation. So far as the challenge against the order on merits, the Tribunal concurred with the findings of the Deputy Commissioner because, according to them, the partial compounding is not permissible under Setion 7(1)(a) and assessee's request for the same is impermissible under Section 7(1)(a) read with Section 5(1) of the Act. It is against these findings of the Tribunal, the assessee has filed this revision. 5. The first question to be considered is whether the partial compounding applied for by the assessee and approved by the assessing officer is permissible under the provisions of Section 7(1)(a) of the Act which are extracted herein below for easy reference:- "7. Payment of tax at compounded rates:- (1) Notwithstanding anything contained in Sub- section(1) of Section 5, (a) any dealer in gold or silver ornaments or wares may, at his option, instead of paying tax in accordance with the provisions of that sub-section, pay tax at two hundred percent of the tax payable by him as conceded in the return or accounts for the or the tax paid for the immediate preceding year whichever is higher. Explanation.-- For the purpose of this clause "tax payable as concede....
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....7 (1)(a) will apply for only business in gold and silver ornaments and wares. In other words, in the same line of business, viz., gold and silver ornaments, the assessee cannot opt to pay tax under compounding scheme for some branches and pay tax on the turnover for the other branches under Section 5(1) of the K.G.S.T.Act. Under the second and third provisos to Section 7(1), compounding is to be done by including the turnover of branches maintained where business carried on is in gold and silver ornaments and wares. Therefore, the assessing officer clearly committed violation of statutory provisions by allowing payment of tax at compounded rate under Section 7(1)(a) in respect of gold business in two branches and by permitting payment of tax under Section 5(1) on the turnover of gold and silver ornaments in the head office and another branch. The assessee, who is engaged only in the business of gold and silver ornaments and wares, is liable to be assessed under Section 7(1)(a) for the entire turnover covering the head office and all the branches in the State. However, if the assessee is engaged in the other line of business, i.e., business other than in gold and silver ornaments an....
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....emand notice issued under Form No.22 also could be corrected by initiating proceedings under Section 35 if the Deputy Commissioner is of the view that approval granted and the demand tax are detrimental to the interest of the revenue. However, failure or omission on the part of the Deputy Commissioner in interfering at that stage does not bar him from scrutinising the correctness of the regular assessment completed under Section 17(3). We have already found that the monthly payment of tax based on the approval for compounding granted by the assessing officer in Form No.21A and the demand notice issued under Form No.22 are only provisional and the same should find acceptance in a regular assessment. When a regular assessment is completed by the assessing officer, his earlier orders issued in Form No.21A and Form No.22 for payment of tax under compounding scheme do not survive any longer because the final assessment supersedes all those proceedings. No purpose will be served by modifying those orders which have lost significance once assessments are made. Therefore, we are of the view that the Deputy Commissioner is competent to revise an assessment prejudicial to the interest of th....