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TMI Blog2014 (12) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... his, therefore, necessarily means that the error sought to be rectified is that committed by the assessing officer and is not an error on account of a wrong declaration made by the assessee - there are no substance in the contentions raised. Referring to the provisions of Section 25, counsel contended that the assessment under this Section has to be based only on turn over and that in a case of compounding the said power under Section 25 cannot be invoked - Held that:- This contention also cannot be accepted. We have already seen that the assessing officer has found that the compounding allowed was vitiated for the reason that the turn over based on which compounding was allowed as conceded by the assessee was wrong and hence compounding itself is erroneous. Once it is so found, the entire turn over of the assessee has to be treated as escaped turn over. In such a situation, the entire turn over has to be treated as escaped turn over available for assessment and if so the power under Section 25 can be invoked. The assessee had other legal contentions which were not considered by the Tribunal as according to the Tribunal the fundamental issue to be decided was if the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake or irregularity is noticed that also has to be rectified or regularised while remaining within the compounding scheme itself. Thus the position of law as enunciated in the above Rulings being very clear we find it difficult to sustain the order under challenge as legally valid. The compounding scheme of payment of tax was accepted by both the parties and a deviation from the above by assessing the dealer under Section 25 of the KVATAct in the given circumstances of the case is not tenable. If a mistake or irregularity or adoption of a different rate than the one stipulated under the statute is noticed it has to be cured but still remaining within the compounding scheme only. Such a situation cannot bestow the assessing authority with the power to take the assessment outside the scheme of compounding. On the above reasoning we allow the appeal by setting aside the order passed by the assessing authority under Section 25 of the KVAT Act. However we make it clear that the assessing authority shall be at liberty to rectify or otherwise cure any defect or anomaly in the compounding proceedings already passed so as to ensure compliance with the statute itself. The appeal is therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order and demand the tax escaped under the compounding scheme in regular assessment or later by revising assessment under Section 19(1). The power of the Deputy Commissioner under Section 35, of course, can be exercised in respect of any order passed by the assessing officer which is prejudicial to the interest of the revenue. Therefore, the approval granted in Form No.21A and the demand 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 scrutinizing 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed by the Tribunal is concerned, reading of the judgment itself shows that the compounding allowed therein was not vitiated for reasons such as in this case and it was, therefore, that this Court decided the case in favour of the assessee. Thus, on facts, the judgment in case of Zodiac Regency is clearly distinguishable and, in our view, principles applicable in so far as this case are those laid down in Joy Alukkas case and STR922011. 10. Relying on the judgment of this Court in Prakash Jewellery and another v. State of Kerala [2004 (12) KTR543, counsel for the respondent assessee contended that even if the assessment is to be revised, the same can be only in terms of the powers under Section 66 of the KVAT Act and an assessment under Section 25 is illegal. We are unable to agree. First of all, the facts of the case in Prakash Jewellery (supra) show that after accepting the application for compounding and permitting remittance of tax on that basis, change had occurred on account of the Finance Act that was introduced. Subsequently it was in that context that this Court held that the power of the assessing officer is under Section 35 of the KGST Act and that it should be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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