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2022 (6) TMI 201 - HC - VAT and Sales TaxComputation of compounding fee on the royalty amount - sand mining contract - Section 7-D of The U.P. Trade Tax Act, 1948 - HELD THAT:- In the matters of compounding of tax liability under Section 7-D of the Act, the Court has consistently interpreted the statutory provision in the manner as may allow the same to be treated as contractual. Remarkably, the actual turnover does not become the basis of determination of the tax liability. Upon agreement reached between the parties, a lump sum is accepted in lieu of the actual tax liability that may otherwise arise. In the present facts, the compounding scheme does not itself specify the rate of compounding fee to be 22% of the royalty amount for the entire period during which such scheme remained in force. It only provided, in the event of the applicant being admitted to that scheme of compounding, he may remain compelled to such benefit for all subsequent periods during which the scheme may remained in force. As to the amount of compounding fee to be calculated at the percentage rate of royalty, the State did not commit to maintain @ 22%. In fact, by virtue of the proviso to Section 7-D of the Act, the State retained the power to vary that rate. The Tribunal has not committed any error in rejecting the claim made by the applicant. Unless there was an enabling statutory provision or other law or unless there was a specific clause in the Compounding Scheme, the claim made by the present applicant would remain without basis. Revision dismissed.
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