K.S. Radhakrishnan, Ag. C.J.

This appeal arises out of the judgment in O.P.No.37852 of 2002 which was disposed of along with certain other original petitions. Learned single judge disposed of batch of cases by common judgment dated 16.12.2002 and the judgment is reported in Prakash Jewellery and another v. State of Kerala (2004 (12) KTR 543). Writ Appeal Nos.1690 and 1708 of 2003 were filed against the common judgment and those appears were dismissed by this court on 25.11.2005. Counsel for the appellant however submitted that the facts of this case stand on a different footing and addressed elaborate arguments.

2. Assessee in this case having opted for payment of tax at the compounded rate as provided under Section 7(1)(a) of the Kerala General Salestax Act, 1963 wanted to withdraw the option under Section 5 of the Act. Assessee is a dealer in gold ornaments. Gold and silver ornaments are taxable at the point of first sale in the State by virtue of Section 5(10) read with relevant entry in the first Schedule to the Act. They are also liable to pay purchase tax under section 5A on the purchase turnover of bullion and old gold ornaments which are used in the manufacture of new ornaments. Instead of payment of salestax on the sales turnover, assessee opted for payment of tax at the compounded rate as provide under Section 7(1)(a) of the Act. Section enables payment of tax at the compounded rate. Tax at the compounded rate payable every year is based on the liability for the previous year and there has been progressive increase in payment of tax at compounded rate for every year as provided by the relevant Finance Act. Tax payable by the dealers in gold jewellery at the compounded rate for the financial year 2001-2002 was 150% of the tax payable by a dealer as conceded in the return and accounts for the immediately preceding year. Second proviso to Section 7(1)(a) had dealt with those dealers who were paying tax for 2001-2002 at the rate of 120% of the preceding year’s tax.

3. Assessee had not raised any dispute with regard to the payment of tax at the 120%. Amendment was brought to Section 7(1)(a) of the Act by the Kerala Finance Act, 2002 applicable for the year 2002-2003 by enhancing the compounding fee payable under the main Section 7(1)(a) from 150% to 200% of the tax paid for the preceding year. Second proviso to Section 7(1)(a) which existed till 2001-2002 was deleted by the Finance Act 2002 with effect from 2002-2003. Assessees who were paying tax at the compounded rate including for the year 2001-2002 have to pay tax for 2002-2003 at 20% of the compounded tax paid in the previous year.

4. Assessee on the strength of the above mentioned statutory provision submitted an application for payment of tax under Section 7(1) in the statutory form No.21A. Assessee declared that the details furnished by him are true and correct and therefore he is not liable to pay tax at the rate. Rule 30 of the Kerala General Salestax Rules stipulates that every dealer who is eligible to pay tax at compounded rate under Section 7 of the Act and who desires to exercise the options provided for under the said Section may apply to the assessing authority concerned for permission to pay tax at the rates specified therein in Form 21 on or before the first day of May of the year to which the option relates. Sub rule (2) states that on receipt of the application, the assessing authority shall conduct necessary enquiries and shall pass such order granting or rejecting the application, as the case may be. The assessing authority in exercise of the powers conferred under sub-rule (2) of Rule 30 granted permission to pay the tax at the rates specified in Form 21. Assessee was informed that permission was granted for payment of tax for the period from 1.4.2002 to 31.3.2003.

5. Assessing authority in exercise of the powers conferred under sub-rule (3) of Rule 30 served on the assessee notice of provisional assessment and demand for payment of tax unde