ORDER Huluvadi G. Ramesh, J.— Petitioner is a civil works contractor registered under the Karnataka Value Added Tax Act of 2003. He, having opted for composition of tax as per Section 15(1)(b) of the KVAT Act of 2003, filed returns in form VAT 120 for the tax period from April 2006 to March 2007 and paid tax at 4% on the total consideration relating to works contract executed. On verification of books of accounts, the 1st Respondent having found that the Petitioner had purchased construction machinery during the year 2005-2006 from outside the State which is held in stock during 2006-2007, stating that he is not eligible for composition assessment for the year 2006-2007 as per Rule 135(2) and Section 144(1) of the KVAT Rules 2005, cancelled the composition assessment and passed the reassessment order as per Section 39(1) of the Act on 15.7.2010 levying the tax @ 12.5% acting under Section 3 of the Act and also levied penalty under Section 72(2) of the Act stating that Petitioner had under-stated his tax liability by more than 5% and also demanded interest as per Section 36(1) of the Act. The Petitioner approached for rectification of the assessment order dated 15.7.2010 as per the amended provisions of Section 15(5)(a) of the Act stating that, by works contract he is eligible for composition assessment even if he purchases the goods from outside the State and therefore, the reassessment order levying tax @ 12.5% be rectified and the composition assessment be restored. The 1st Respondent has rejected the request by issuing an endorsement, dated 1.12.2010 stating that there was no mistake in the assessment order passed. Hence, this petition seeking to read down Rule 135(2) r/w 144(1) of the KVAT Rules 2005 stating that, it is inconsistent with the provisions of Section 15(5)(a) of the Act and, also to issue writ of certiorari declaring the previsions of Section 72(2) of the Act relating to levy of penalty and also Section 36(1) of the Act relating to levy of interest as unconstitutional. 2. Heard. 3. 2. Heard. 3. The scheme under Section 135 of the KVAT Rules, 2005 provides for a composition acting under Section 15 of the Act where a dealer could opt to pay tax by way of composition instead of general assessment for which, he must have made an application for registration under the Act and he shall not have any goods in stock which are brought from outside the State on the date he opts to pay tax by way of composition, and shall not sell any goods brought from outside the State after such date. 4. In the case on hand what is not in dispute is, Petitioner opted, for composition scheme having registered under the KVAT Act. Apart from Rule 135(2) of the KVAT Rules, 2005, there are several other conditions which impose a restriction on opting for composition. In the category of general assessment order if there is no option for composition scheme, the dealer may have to pay the tax @ 12.5%. But, once he opts for composition scheme, the tax would be @ 4%. The endorsement issued by the Assessing Officer in not considering the case of the Petitioner would might be on the ground that, after auditing the books of accounts maintained, it was found that certain of the goods which were brought from outside the State have been sold by the Petitioner, as such, it has formed an opinion that he is not entitled to opt for a composition scheme since there is escape of tax and accordingly, imposed tax @ 12.5% and also imposed penalty and interest thereon, which the Petitioner is challenging and also seeking to read down the rules provided. 5. In the case on hand, Petitioner has disposed of the machinery said to have been used for the purpose of civil works which is in the form of capital asset and it is not his regular business of selling the machinery to some third parties as a dealer and, he sold the machinery which was brought for execution of the works of civil contract. As per the definition whether it falls within the stock in trade or it forms the capital asset is one aspect. 6. As per the definition whether it falls within the stock in trade or it forms the capital asset is one aspect. 6. According to Section 15 of the KVAT Act of 2003 which provides for composition of tax, the total turn over does not exceed an amount as may be notified by the Government which shall not exceed rupees fifty lakh and, who is not a dealer executing works contract and also that he shall not obtain goods from outside the State or outside the territory of India. The Petitioner has paid the tax @ 4% under the composition scheme on the machinery sold, but on such reassessment order being passed by the Respondent-authority after verification of books of accounts, it was found that the machinery sold were brought from outside the State and having treated them as stock in trade, the Respondent-authority has assessed and imposed the tax @ 12.5% stating that it is in violation of condition. 7. On going through the provisions of Rules 135(2) and also 144(1) of the KVAT Rules, 2005, I am of the opinion that these provisions cannot be treated as arbitrary since they only provides for an alternative scheme to be opted by the dealer. A scheme is provided under Section 4 of the VAT Act of 2003 by way of general assessment or an option is provided under Section 15 of the Act to go for composition in certain cases, and these are the two contingencies specified. Even Rule 135 provides for a detailed scheme of composition under certain contingencies. In the case on hand, there is no scope for reading down the above provisions, which do provide for an alternative scheme. 8. Section 72 of the Act provides for imposition of penalties and Section 36 of the Act provides for interest on penalty and these provisions are to be invoked only in the case of such default on the part of the Assessee. 9. It is only a matter of interpretation that needs to be reconsidered at the hands of the Assessing Authority or the Appellate Authority. 9. It is only a matter of interpretation that needs to be reconsidered at the hands of the Assessing Authority or the Appellate Authority. Having gone through these provisions which are assailed by the Petitioner as arbitrary, since in the contingencies explained the provisions of law or the rules framed therein are found to be an alternative provision and not a mandatory provision and, these provisions could be invoked in the happening of such contingencies, the same cannot be treated as arbitrary to be read down from the statute. 10. The Petitioner sought to dispose of only certain of the machinery which were purchased from outside the State and which were used in the execution of works contract. The only question that is to be considered by the Assessing Authority is, whether the machinery held by him is to be treated as a capital asset or as a stock-in-trade and whether these capital assets if sold, attract tax @ 12.5% if in the usual course it is not treated as a stock-in-trade and imported from outside the State or whether the sale of machinery after execution of the works contract amounts to sale of machinery to treat the same as stock in trade to attract tax only @ 4% and not 12.5%. 11. According to the Petitioner, the machinery is still said to be with him as a part of the capital asset and not as stock-in-trade. The reassessment order passed at Annexure A and the endorsement issued at Annexure A1 in not considering the request of the Petitioner for rectification needs to be interfered with, as the orders have been passed based on their own assessment treating the capital assets as stock-in-trade proposing to impose tax at 12.5% and also opining that they are the goods imported from outside and that the Petitioner is not entitled for a composition scheme. 12. Accordingly, the impugned reassessment order as well as the endorsement issued by the Respondent-authority rejecting rectification of the order are quashed. The matter is remanded to the 1st Respondent to consider whether the capital asset would form part of the stock-in-trade or not, after affording sufficient opportunity to the Petitioner. 13. Petitions are allowed in part. 14. Petitioner to approach the Respondent-authority within one month from the date of receipt of this order.