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TMI Blog2009 (5) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tax based on the returns so filed. However, the assessing officer issued orders on form 21 application filed by the petitioner only vide annexure A order dated October 15, 2007. The said order along with demand notice in form No. 22 was served on the petitioner on November 2, 2007. After service of the said proceedings and demand notice, the petitioner wrote a letter to the assessing officer on November 12, 2007 stating among other things that in the changed circumstances the petitioner will not be able to pay the tax at compounded rate as demanded by the assessing officer. In the said letter produced as annexure C, the petitioner has offered to pay turnover tax at compounded rate at 135 per cent of the purchase value of Indian-made fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n form 21. The Government Pleader on the other hand contended that there is no time-limit for passing orders on compounding application filed and so long as the petitioner's application for compounding was not withdrawn by him, the officer was bound to pass orders thereon and the order passed on October 15, 2007 is binding on the assessee. He further referred to annexure C issued by the assessee on November 12, 2007 and contended that the assessee has never withdrawn the compounding application and he pressed for the compounding facility but with the deviation with regard to the tax payable, which the officer was not free to grant. Therefore, according to him, once an application for compounding is accepted, tax in accordance with the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to serve demand notice in form 22. Therefore, this objection raised by the assessee to challenge the validity of the order is rejected as not maintainable. As already stated, the main question to be considered is whether belated proceedings issued as annexure A on October 15, 2007 on the compounding application filed by the assessee is tenable or not. The learned senior counsel appearing for the assessee contended that the scheme of payment of tax under compounding scheme and the requirement of filing of application in form 21 before the assessing officer as provided under rule 31 makes it clear that the assessing officer should complete the enquiry and pass orders on application for compounding before due date for filing first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the order is issued. It is pertinent to note that the tax at compounded rate in terms of demand for the later month should be paid on or before 10th of the succeeding month along with monthly return. Form 22 obviously indicates that an assessee who has made an application for compounding can wait for payment of tax until orders are issued on his application for compounding and demand notice accompanying thereto is issued in form 22. Going by proviso to rule 30(1) providing for filing of belated application for compounding and going by the time granted for payment of tax based on orders on compounding application provided in form 22, it is clear that the Legislature expects filing of belated application for compounding and passing of or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Government Pleader because rule 21(7) providing for filing of monthly returns requires an assessee opting to pay tax under section 7 also to file regular returns and remit the tax thereon. In other words, even an assessee opting to pay tax under compounded rate is bound to file monthly returns, declare details of turnover, taxable turnover, etc., in terms of the return. A combined reading of the provisions on compounding and the filing of return indicates that an assessee who has opted to pay tax at compounding scheme is bound to file monthly returns like any other dealer but needs to start paying tax only after order and demand notice on compounding application are received by him. However, as and when orders are passed in the compou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of arrears provided therein and for delay in payment of monthly tax in accordance with the compounding scheme for the later months, i.e., after service of annexure A. Even though we have held that the application for compounding can be filed with delay and the orders can be passed on compounding application, if pending, at any time during the year, we are of the view that these are exceptional cases and in the normal course, the officer is bound to pass orders on or before due date for furnishing of first monthly return of the year. Since the application for compounding was admittedly filed by the assessee on due date in this case and the officer has not attributed anything on the assessee for the delay in passing orders thereon a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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