JUDGMENT : A.M. Shaffique, J. Common questions have arisen for consideration in these appeals and hence are heard and decided together. WA No. 871/17 has been filed challenging judgment dated 9/3/2017 in WP(C) No.39547/2016 and WA No. 239/18 has been filed challenging judgment dated 26/7/2017 in WP(C) No.853/2011. 2. The short question that has arisen for consideration in the above appeals is concerning an issue relating to the Kerala Value Added Tax Act, 2003 (hereinafter referred to as KVAT Act). The appellants are assessees under the KVAT Act. During an assessment year, they opted for compounding and the quarterly compounding tax was also paid. However, according to the appellants, during the said assessment year, they were unable to carry on the business and therefore applied for withdrawing the compounding application. The same came to be rejected against which these appeals have been filed. 3. The learned Single Judge while deciding WP(C) No.39547/2016 arrived at a conclusion that in so far as compounding is a contract between the assessee and the department, it cannot be allowed to be withdrawn. The issue that was urged and decided by the learned Single Judge was whether the assessee could be absolved from the liability arising from the contract on the ground of the obligation being impossible of performance in terms of S.56 of the Indian Contract Act, 1872. It was found that the petitioner filed two returns for the month of April and May, 2017 and paid the first instalment of tax based on the compounding provision. He applied for withdrawal from the scheme as per Ext.P23(A) which was declined as per Ext.P24 order. 4. The main ground urged was that the appellant was unable to obtain a permit and D & O license in the particular year for operation of the quarry and consequently, he was unable to carry on the quarrying activity and therefore, it had become impossible for performance. Learned Single Judge found that the factual and legal position would indicate that there is subsequent supervening circumstance, which created an impossibility in performing the obligations under the contract and therefore such a contention does not merit consideration. Learned Single Judge found that the factual and legal position would indicate that there is subsequent supervening circumstance, which created an impossibility in performing the obligations under the contract and therefore such a contention does not merit consideration. It was also found that at best the obligation under the scheme which the petitioner voluntary opted is onerous and in Naihati Jute Mills Ltd. v. Khyaliram Jagannath ( AIR 1968 SC 522 ), the Apex Court held that courts cannot absolve parties from the performance of his part of the contract merely for the reason that the performance has become onerous on account of an unforeseen turn of events and the Court cannot modify the terms of the contract. 5. In WP(C) No.853/2011 against which WA No.239/18 has arisen, another learned Single Judge had occasion to consider a similar issue. In that case also, petitioner submitted an application for compounding u/s 8(b) of the KVAT Act and tax was paid upto the quarter ending 30/9/2010 for the financial year 2010-2011. This Court granted a stay of operation of the unit from 6/10/2010 onwards and thereafter there was no commercial production or sale. At that time, he requested for exemption from payment of tax which came to be rejected as per Ext.P5 order. Based on judgment in Raju Jacob v. Sales Tax Officer ( 2006 (1) KLT 788 ), it was held that once an assessee had opted for payment of tax by compounding, he cannot withdraw the option subsequently. 6. Heard the learned senior counsel appearing for the appellant in WA No.871/17, learned counsel appearing for the appellant in WA No. 239/18 and the learned Special Government Pleader appearing for the revenue. 7. The learned counsel for the appellants raised two specific contentions. The first contention is based on the wording in S.8(b), as it then was, which reads as under:- “8(b):-Any dealer producing granite metals with the aid of mechanized crushing machine, may, at his option, instead of paying tax in accordance with the provisions of the said sections, pay tax at the following rates namely:-.xxxxxx” 8. It is argued that the liability to pay tax arises only when there is either production of granite metals or manufacture of sand. When there is no production, the question of payment of tax does not arise at all. It is argued that the liability to pay tax arises only when there is either production of granite metals or manufacture of sand. When there is no production, the question of payment of tax does not arise at all. We do not think that this provision enables the appellants to take such a contention. Compounding application is filed in terms of S.8(b) and appellants do not have a case that they have not exercised their option. The option is exercised only to avoid compliance of other provisions under which they are obliged to pay tax in accordance with the statutory scheme. By availing the compounding facility, it shall be open for the assessee to pay a specified amount of tax alone depending upon the parameters specified in the sub section. Therefore, the words “dealer producing granite metals with the aid of mechanized crushing machine” does not give any indication that in the absence of any manufacturing activity, he is not under obligation to pay the compounded tax though he had opted for compounding. 9. The second contention is based on Rule 11 of the Kerala Value Added Tax Rules, 2005 (hereinafter referred to as KVAT Rules). As per Rule 11(1), every application for exercising option for payment of compounded tax u/s 8 shall be filed in the prescribed form before the assessing authority on or before 30th day of April every year. Along with the application, in the case of a metal crushing unit, it shall also file a statement showing the size of machine. Sub rule (2) indicates that “if the assessing authority is satisfied that the application is in order, it shall grant permission in a particular format”. Rule 11(2)(ii) further indicates that if the application filed is not in order, the assessing authority shall reject the same for reasons recording in writing after giving the dealer an opportunity of being heard. 10. The argument is that a mere filing of an application for compounding does not indicate that a permission for compounding in terms of R.11(2)(i) has been granted. Rule 11(2) (ii) further indicates that it shall be open for the assessing authority even to reject the application. 10. The argument is that a mere filing of an application for compounding does not indicate that a permission for compounding in terms of R.11(2)(i) has been granted. Rule 11(2) (ii) further indicates that it shall be open for the assessing authority even to reject the application. The argument is that in the cases on hand, no permission has been granted for compounding and therefore, it shall be open for the assessee to withdraw the request of compounding at any point of time before the grant of permission. 11. Learned special Government Pleader however argued that no such contention was urged before the learned Single Judge and before the learned Single Judge parties proceeded on the basis that there was an order of compounding. It is therefore submitted that it is not open for the appellants to raise contentions which had not been urged before the learned Single Judge. He also argued that even though no permission was granted to the assesses for payment of tax under the compounding scheme, still, when the assessee had opted for compounding and tax is paid in accordance with the compounding provision, there is no question of withdrawing from the compounding scheme and no exemption could be granted for payment of tax under the compounding scheme. 12. Raju Jacob (supra), was a case in which an assessee opted for payment of tax at the compounded rate as provided u/s 7(1)(a) of the Kerala General Sales Tax Act, 1963. The 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 S.7(1)(a) dealt with such dealers who were paying tax for 2001-2002 at the rate of 120% of the preceding year's tax. The assessee had no dispute regarding the payment of tax at 120%. However, an amendment was brought to S.7(1)(a) of the Act by the Kerala Finance Act, 2002 applicable for the year 2002-03 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. The assessee had no dispute regarding the payment of tax at 120%. However, an amendment was brought to S.7(1)(a) of the Act by the Kerala Finance Act, 2002 applicable for the year 2002-03 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. The second proviso to S.7(1)(a) which existed till 2001-2002 was deleted by the Finance Act, 2002 w.e.f 2002-03 as a consequence of which assessees who were paying tax at the compounded rate including for the year 2001-02, had to pay tax for 2003-03 at 200% of the compounded tax paid in the previous year. 13. Even under the KGST rules, there was a provision which enables the assessing officer to conduct necessary enquiry and to pass an order either granting or rejecting the application for compounding. The Division Bench observed that 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 and assessee was accordingly informed to pay the tax for the period from 01/04/2002 to 31/3/2003. Though demand was made, assessee could not pay the amount and he requested for terminating the compounding order issued for the period 2002-03 and to permit him to remit the tax as per the usual procedure. The assessee therefore challenged the provisions which imposed upon him liability to pay increased tax at 200%. It was held that once the assessee had voluntarily and with the full knowledge of the features of the alternate method of taxation, opted to be governed by it, he cannot be heard to question the validity of the provisions. But it is relevant to note that in Raju Jacob (supra), Division Bench specifically referred to an order passed by the assessing authority granting permission to pay compounded tax which is not the situation in the cases on hand. Therefore Raju Jacob (supra) has no application to the facts of the case. 14. Another judgment relied upon is WA No.948/2017 dated 13/6/2017 (Metro Aggregates and Sand (I) Pvt. Ltd v. Commercial Tax Officer). That was also a case where the assessee sought to withdraw the compounding facility on the ground that a stop memo was issued. Therefore Raju Jacob (supra) has no application to the facts of the case. 14. Another judgment relied upon is WA No.948/2017 dated 13/6/2017 (Metro Aggregates and Sand (I) Pvt. Ltd v. Commercial Tax Officer). That was also a case where the assessee sought to withdraw the compounding facility on the ground that a stop memo was issued. The Division Bench observed that “by virtue of the option exercised by the petitioner and the sanction given accordingly, it was obligatory for the assessee to have satisfied the tax in terms of the compounding provision.” This case also has no application to the facts of the present case as sanction has already been granted by the assessing authority. 15. The Special Government Pleader placed emphasis on the following judgments:- (i) State of Kerala v. T.S.Kalyanaraman (Laws (KER) 2009-2-45). In this case, a Division Bench of this Court was considering a revision filed by the State against an order of the Tribunal rejecting an application for review filed by the Revenue under the KGST Act. The short facts was that the assessee filed an application for payment of tax at compounded rate for the assessment year 2000-2001. The assessing officer did not pass any orders or issued Form 21A as required under the Act and the Rules. The assessee started remitting tax along with monthly returns in terms of the compounding application. Assessee paid the entire tax for the whole of the assessment year in terms of the compounding application. When the assessment was taken up, assessing officer noticed some deficiencies in payment of tax at compounded rate at the tax determined by the assessee for the year 1998-99 which constituted the basis for the payment of tax was incorrectly shown. At that stage, the assessee raised objections contending that he does not intend to proceed with the assessment at the compounded rate u/s 7(1)(a) and the assessment should be completed on the taxable turnover returned or to be determined by the officer. The assessing officer completed the assessment in terms of the compounding application u/s 7(1)(a) and issued assessment and demand notice demanding differential tax at compounded rate of interest. First appeal filed by the assessee was dismissed and in second appeal the Tribunal allowed the claim, against which the State filed a review petition which came to be dismissed. The assessing officer completed the assessment in terms of the compounding application u/s 7(1)(a) and issued assessment and demand notice demanding differential tax at compounded rate of interest. First appeal filed by the assessee was dismissed and in second appeal the Tribunal allowed the claim, against which the State filed a review petition which came to be dismissed. It was observed by the Division Bench that eventhough there is no time limit prescribed for passing orders on compounding application filed in Form 21, the right procedure for the assessing officer was to pass an order and inform the assessee his orders before due date for filing the first monthly return due for the year, i.e, before 10th May of the relevant year. It was however observed that since the application is not rejected, nothing bars the assessee from proceeding to file monthly returns and remit the tax at the rate shown in the compounding application. Division Bench observed that the conduct of the assessee obviously shows that the assessee insisted on the assessing officer to accept the compounding application and the assessing officer at no point of time had acted against the request of the assessee. It was further observed that “it is clear from the order that application for compounding was considered by the assessing officer while considering assessment and after correcting the mistake with regard to tax payable for 1998-99, the assessing officer in fact accepted the compounding application and allowed the claim of the assessee”. Further, it is observed that “it is seen that assessee has not withdrawn the application for compounding at any time and on the other hand, assessee acted upon the said application and remitted the tax for the whole year along with monthly returns strictly in terms of the application”. It is in the said circumstances, Division Bench held that the assessee is not entitled to back track and request the assessing officer to complete the assessment based on the turnover returned by the assessee. It is further held that, offer to pay tax at compounded rate gives an immunity to the assessee from inspection and other interference by the department in the course of his business. It is further held that, offer to pay tax at compounded rate gives an immunity to the assessee from inspection and other interference by the department in the course of his business. Regular assessees who are not covered by the scheme of payment of tax at compounded tax can be subject to inspection at any time during the year and in cases where tax is accepted based on application filed for compounding, the department has no right to inspect or harass the assessees. After availing the immunity in such forms, the assessee cannot after the closure of the year go back from the offer he had made for payment of tax at compounded rate. It is in that view of the matter, it was held that the Tribunal went wrong in holding that the assessee is entitled to back out from his offer to pay tax at compounded rate, which stands accepted by the officer while passing the assessment order. In this case, though it is held that submission of an application and payment of compounded tax pursuant to the same is an indication on the part of the assessee to commit himself to pay the compounded tax, he cannot withdraw from the said obligation after the assessment year. On facts, the judgment in T.S.Kalyanaraman (supra) is slightly different from the facts of the case in which we are dealing with in so far as in the cases on hand, though certain payments have been made, during the very same assessment year, the assessees have sought to withdraw their compounding application and sought exemption from payment of tax at compounded rate. (ii) Zodiac Regency v. Commissioner of Commercial Taxes ( 2011 (3) KLT 95 ). This is also a Division Bench judgment of this Court which had arisen under the KGST Act, 1963. The appellant challenged the assessment of turn over tax on the sale of liquor in his hotel at the compounded rate provided under Section 7(1)(a) of the KGST Act. Appellant applied for payment of tax at compounded rate which was 140% of the purchase value of liquor and his request was allowed by the Officer. Consequently, during 2006-07, he remitted tax at compounded rate and the same was accepted. Appellant applied for payment of tax at compounded rate which was 140% of the purchase value of liquor and his request was allowed by the Officer. Consequently, during 2006-07, he remitted tax at compounded rate and the same was accepted. When the assessment for the year 2006-07 was proposed by issuing notice on 1/3/2011, he requested for an option to withdraw from the compounding scheme for payment of tax granted and to revert back to payment of tax on the actual turnover based on the charging section, S.5(2) of the KGST Act. One of the challenge made was regarding acceptance of his compounding application. It was held that when a compounding application is submitted by the assessee and the assessee starts making payment of tax under the scheme of compounding, which is not objected by the assessing officer, the only presumption is that the officer accepted the offer. It was also held that in the case of an assessee who has paid tax under the compounding scheme after making an application, the assessment can be made only in terms of the compounding scheme. Payments made in such cases can be treated as payment of admitted tax over which later, assessee cannot raise a dispute. However, it was further observed that “we are of the view that once compounding application is filed and tax is paid in terms of the same, the same binds both the assessee and the department unless assessee recalls application before starting payment of tax in terms of the compounding scheme. In this case, the appellant not only applied for compounding, but paid tax in terms of the compounding application and even filed return based on the same. The appellant has, therefore, no right to withdraw from the compounding scheme or opt for regular assessment on the sales turnover.” 16. We do not think that the above judgment can be made applicable to the facts of the present case. One is that the appellant requested for an option to withdraw from the compounding scheme only after the period of assessment year when already the compounding application was accepted by the officer. Secondly, the portion in the judgment which was relied upon by the learned Special Government Pleader was only a general observation and had nothing to do with the facts of the case. Secondly, the portion in the judgment which was relied upon by the learned Special Government Pleader was only a general observation and had nothing to do with the facts of the case. Even otherwise, the observation is that when the compounding application is filed and the tax is paid, both the assessee and the department are bound by it “unless assessee recalls application before starting payment of tax in terms of the compounding scheme”. 17. But we are concerned with cases in which during the assessment year itself, the assessees have sought for withdrawing from the option exercised by them on the ground that the request for compounding had not been sanctioned. 18. It is true that the assessees had submitted compounding application and they had remitted quarterly tax as well. But before passing an order in terms of R.11(2) of the KVAT Rules, they sought to withdraw from the scheme of compounding. In such circumstance, the question would be whether the department is bound to permit withdrawal from the compounding. The learned Single Judge in the judgment dated 9/3/2017 in WP(C) No.39547/2016 proceeded on the basis that there was in fact an order of compounding sanctioned by the department. 19. One contention urged by the learned Special Government Pleader is that there is no specific pleading regarding the contentions now urged before the appellate Court. 20. In WP(C) No.39547/2016, in paragraph 29, it is stated as under:- “It is humbly submitted that Ext.P19 option exercised by the petitioner for compounding for the year 2016-17 has not been accepted by the 3rd respondent so far and no permission to pay tax under compounding scheme category is issued to the petitioner.” 21. A copy of Ext.P19 compounding application published in the website and downloaded by the petitioner on 5/12/2016 is produced as Ext.P22. Petitioner therefore contended that Ext.P22 would establish the fact that Ext.P19 application for compounding submitted by the petitioner is still under processing and the same has not been approved by the respondents. Ext.P22 would also show that the application status was “submit”. 22. In WP(C) No. 853/11, no such contention is seen urged. It is only stated that the writ petition proceeds on the basis that the compounding order had already been passed. In paragraph 2, it is stated as under:- “2. Ext.P22 would also show that the application status was “submit”. 22. In WP(C) No. 853/11, no such contention is seen urged. It is only stated that the writ petition proceeds on the basis that the compounding order had already been passed. In paragraph 2, it is stated as under:- “2. It is submitted that with respect to the sales tax due from the firm, the respondent compounded the tax liability as provided under Section 8(b) of the Kerala Value Added Tax Act, 2003 (hereinafter referred to as “the VAT Act”). As per Section 8(b)(iii), for each crushing machine of size exceeding 40.64 c.m x 4.0 c.m the tax to be paid is Rs.3/-lakhs per annum, The petitioner is having two machines having the above size. The petitioner is also having a primary crusher. The tax liability compounded will be 50% of the liability with respect to that of the secondary crushers. So the total liability compounded is Rs.8,40,000/-for the firm, for the financial year 2010-11. The compounded tax due per quarter is Rs.2,10,000/-. The petitioner paid the compounded tax for the first and second quarter. The return submitted for the quarter 1.7.2010 to 30.9.2010 is produced herewith and marked as Exhibit P2.” 23. The only contention urged is that in so far as there is no production, compounded tax is not payable and the petitioner cannot be compelled to remit tax for the quarter where there is no sale or production at all. However, during the course of argument, learned counsel submitted that he had sought for exemption during the currency of the assessment year itself and therefore he should be given exemption from payment of compounded tax. 24. In the counter affidavit filed on behalf of the 1st respondent, it is stated that for the financial year 2010-11, petitioner filed application on 12/5/2010 for payment of tax for the sale of granite metals at compounded rate u/s 8(b) of the KVAT Act. Subsequently, permission was granted on 31/5/2010 to pay tax at compounded rate considering the granite crushing machine size used by the assessee as stipulated under Section 8(b)(iii) of the KVAT Act thereby fixing compounded tax due as Rs. 8,48,400/-for the year 2010-2011 and allowed 4 quarterly instalments of Rs. 2,12,100/-each. No reply has been filed to the above counter affidavit. 25. 8,48,400/-for the year 2010-2011 and allowed 4 quarterly instalments of Rs. 2,12,100/-each. No reply has been filed to the above counter affidavit. 25. In so far as WA No.239/18 is concerned, an issue as projected in WA No.871/17 does not arise for consideration. This is an instance where compounding application has already been allowed as stated in the counter affidavit filed on behalf of the 1st respondent. Under such circumstances, the assessee will be under obligation to pay tax at compounded rate. The only question that may arise is whether he will be under obligation to pay tax at compounded rate even if he is unable to carry on the business activity. The facts of the present case would disclose that petitioner was having a licence to operate the quarrying unit. By virtue of an order passed in WP(C) No. 21465/2010, functioning of the unit had been stayed until further orders on 6/10/2010. Though the petitioner preferred an appeal, the same was disposed of with a direction to list the writ petition for final hearing. The matter was heard and reserved for judgment. It is in the said circumstances that he submitted an application on 6/10/2010 stating that the machineries are not working and no sale is taking place and therefore, he should be exempted from paying the quarterly tax at the compounded rate. This case according to us stands on a different footing from the facts disclosed in WP(C) No. 39547/2016. That was a case in which the petitioner initially proceeded on the basis that once option for paying tax at compounding rate have been exercised, it becomes a concluded contract and the question was whether the assessee could be absolved from the liability on the ground of the obligation being impossible of performance. On behalf of the Revenue, it was argued that, even at the time when the petitioner applied for compounding for the assessment year 2016-17, petitioner did not have a licence for the quarry or for the crusher unit, but still filed monthly returns for April and May 2017 and on 27/5/2016, first instalment of tax was paid under the compounding scheme. It was observed that the application for renewal of D & O license for quarry and crusher for the year 201415 was declined by the local authority in a meeting held on 22/4/2014. It was observed that the application for renewal of D & O license for quarry and crusher for the year 201415 was declined by the local authority in a meeting held on 22/4/2014. However, the said order came to be stayed by the Tribunal for Local Self Government Institutions. Petitioner preferred a writ petition as WP(C) No. 31093/14 in which an interim order was passed directing renewal of the quarrying permit. It was observed that the operations of the crusher could not have been carried out for the reason that there was no D & O license during 2014-15. For the subsequent year 2015-16 also, the D & O licence was declined. A writ petition was filed as WP(C) No. 10660/15 challenging the said order. An interim order was obtained by the petitioner and the Panchayat was directed not to interfere with the activities of the petitioner in the quarry and crushing unit. The permits issued by Mining and Geology Department for conducting quarry expired on 15/1/2016. Necessary environment clearance also had not been obtained. Petitioner submitted a fresh application for license for quarry and crusher unit for the year 2016-17. They also applied for D & O license. Proceeding on the basis that petitioner has deemed license, he applied for compounding of tax for the year 2016-17. Petitioner filed WP(C) No. 15530/2016 seeking for such licenses hoping that license would be issued in his favour. He was not successful in getting an interim order to operate the quarry. Hence, he was unable to carry on the business of quarry and crusher and there was no incidence of tax, ie., sale of minerals in the subject assessment year. It was found that even at the time when the petitioner applied for compounding, he did not have necessary license and therefore, there was no supervening subsequent event which was not in contemplation of the petitioner. Petitioner's contention was that eventhough he did not have a licence or permit at the time when he made a compounding application, he had a hope that the writ petition would be allowed in his favour. Learned Single Judge held that the dismissal of the writ petition cannot be claimed as a supervening event which absolved him from complying with the obligations as agreed upon under the compounding scheme. Ultimately it was held at paragraphs 29, 30 and 31 as under:- “29. Learned Single Judge held that the dismissal of the writ petition cannot be claimed as a supervening event which absolved him from complying with the obligations as agreed upon under the compounding scheme. Ultimately it was held at paragraphs 29, 30 and 31 as under:- “29. It is also to be noted that the petitioner had filed monthly returns and had also paid tax in accordance with the returns filed; which disclosed a turnover. Despite the petitioner having no license and permit, the petitioner had effected the sale in the course of the assessment year. It is also pertinent that the rejection of the D & O license by the respondent Panchayath had already occurred before the application was filed for compounding. The petitioner had made an application for compounding before 31.05.2016, since otherwise the petitioner would have lost the opportunity to compound. It cannot be said that the dismissal of the writ petition, filed for D & O license was never in the contemplation of the petitioner at that point of time. In fact, the chances being there for the dismissal, the petitioner could have opted to remain under the regular assessment, in which event, on denial of the license and permit, the petitioner could have filed NIL returns and there would have been no liability to tax. 30. The petitioner wanted the best of both worlds; the entitlement under the compounding scheme if the unit was permitted and a regular assessment if not permitted. The petitioner with eyes open, without any license or permit applied for compounding and on denial of the license seeks to turn around and plead frustration. Reiterating at the risk of repetition; there is no supervening impossibility occasioned by a subsequent event and it can only be said that the fond hope of the petitioner did not materialize. That is not a ground under Section 56 of the Contract Act. 31. The claim at best is that the obligation under the scheme, which the petitioner voluntarily opted, is onerous. Naihati Jute Mills Ltd.(supra) found that Courts cannot absolve a party from performance of a contract, merely for reason of the performance having become onerous by even an unforeseen turn of events. Here there is not even such an unforeseen turn of events. The Courts cannot alter or modify the terms of a contract. Naihati Jute Mills Ltd.(supra) found that Courts cannot absolve a party from performance of a contract, merely for reason of the performance having become onerous by even an unforeseen turn of events. Here there is not even such an unforeseen turn of events. The Courts cannot alter or modify the terms of a contract. The petitioner hence cannot be permitted to wriggle out of the obligation to pay the compounding tax. The writ petition would stand dismissed. No Costs.” 26. We are of the view that as far as the appellant in WA No.239/18 is concerned, he had encountered an unforeseen event on account of a stay granted by this Court in a writ petition as a result of which he was unable to operate the quarry. As far as the said appellant is concerned, though there was a concluded contract for compounding, by virtue of an order of stay granted by the High Court, he was unable to operate the quarry after the order of stay. In such circumstances, he can definitely plead frustration of contract in terms of S.56 of the Indian Contract Act. However, in respect of the period during which he had already paid tax, he should be permitted to file return for the assessment year 2010-11. However, he shall not be entitled for refund of any amount paid as compounded tax. 27. Now coming to the judgment in WP(C) No. 39547/2016, this is a case where there was no concluded contract as such to plead the effect of Section 56. The requirement under the statute especially Rule 11(2) of KVAT Rules clearly indicates that an application for compounding has to be sanctioned or rejected. Payment of advance tax under the compounding scheme by itself will not amount to sanctioning of the compounding application. Unless the compounding application is accepted by an order of sanction, it does not become a concluded contract. If there is no concluded contract between the parties, the application remains only as an offer which could be withdrawn at any time and the assessee can go for regular assessment. Viewed at a different angle, if after payment of quarterly tax the compounding application is rejected, necessarily, the assessee will have to file returns by producing the books of account. Viewed at a different angle, if after payment of quarterly tax the compounding application is rejected, necessarily, the assessee will have to file returns by producing the books of account. Therefore, payment of tax at compounded rate by itself cannot be a reason for concluding that there is a concluded contract between the parties. 28. It is true that the contention now urged has not been urged before the learned Single Judge. But specific pleading had been raised in that regard and even in the memorandum of appeal, a specific ground to that extent had been raised. Hence, in the interest of justice, it is only fair that the matter is decided rather than relegating the parties to seek for a review. 29. Taking into consideration the factual aspects involved in the matter and also on an evaluation of the legal aspects involved, we are of the view that the appellant ought to have been given an opportunity to withdraw the compounding application especially when no sanction had been issued during the assessment year. However, we take this view only on account of the fact that the request had been made during the assessment year. 30. In the result, the appeals are only to be allowed and an opportunity should be given to the appellants/petitioners to file regular return for the respective assessment years. However, we make it clear that the appellants shall not be entitled for refund of any amount paid towards compounded tax. Writ appeals are therefore allowed as under:- (i) In WA No.871/17, the judgment of the learned Single Judge is set aside. The appellant/petitioner shall be permitted to file regular return for the assessment year 2016-17. However, he will not be entitled for any refund for the compounded tax already remitted and regular assessment shall be made in accordance with the procedure prescribed. (ii) In WA No.239/18, the judgment of the learned Single Judge is set aside. The appellant/petitioner shall be permitted to file regular return for the assessment year 2010-11. However, he will not be entitled for any refund for the compounded tax already remitted and regular assessment shall be made in accordance with the procedure prescribed.