JUDGMENT : SAUMITRA DAYAL SINGH, J. 1. The present set of revisions have been filed by the applicants-assessee against the order dated 17.4.2008 passed by the Trade Tax Tribunal, Ghaziabad Bench-I, Ghaziabad in the second appeals filed by the both the applicants-assessee. Details of the same are as below: Sales/Trade Tax Revision No. Second Appeal No. Assessment Year 941 of 2008 237 of 2006 2002-03 (U.P.) 942 of 2008 225 of 2006 2002-03 (U.P.) 2. Since the facts and circumstances in the above noted revisions are similar and/or inter-connected, they were heard together and are being decided by a common order. 3. Heard Sri Praveen Kumar, learned counsel for the applicants-assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue. 4. For convenience, the facts obtaining in Sales/Trade Tax Revision No. 941 of 2008 are being noted. 5. Undisputedly, the assesee is engaged in the activity of running a brick kiln. It was also admitted to the benefits of compounding under Section 7-D of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the Act). In addition to the order passed under Section 7-D of the Act dated 26.02.2004 for the period 01.10.2001 to 30.09.2002, the Assessing Authority passed another order under Section 7(3) of the Act on 24.03.2005 and subjected the assessee to tax on 586 tonnes of coal treating the same to have been sold by the assessee. Thus, a tax of Rs. 70,320/- was imposed on the assessee. The first appeal filed by the assessee also came to be dismissed by order dated 26.04.2006. By the impugned order, the Tribunal has also rejected the appeal filed by the assessee. 6. Both the revisions have been pressed on the following question of law: "Whether in face of the entire tax liability of the assessee having been compounded and in absence of any material to establish sale of coal, the Assessing Officer could impose any tax liability on the assessee on the presumed sale of coal." 7. Relying on the provisions of Section 7-D of the Act read with the compounding scheme which contain the directions issued by the State Government under Section 7-D of the Act vide the communication dated 08.03.2001, learned counsel for the assessee submits, the State Government had offered compounding of tax liability on bricks, tiles, etc. Relying on the provisions of Section 7-D of the Act read with the compounding scheme which contain the directions issued by the State Government under Section 7-D of the Act vide the communication dated 08.03.2001, learned counsel for the assessee submits, the State Government had offered compounding of tax liability on bricks, tiles, etc. manufactured and sold by the assessee along with the liability of tax on purchase of sand, coal, wood and sawdust. The assessee opted and was admitted to the benefit of compounding by order dated 26.02.2004. No condition was imposed in the directions issued by the State Government in the order dated 26.02.2004 to limit the extent of compounding on purchase of coal up to any quantity. Therefore, the entire quantity of coal purchased by the assessee as may have been used in the manufacture of bricks etc. stood compounded in view of the provisions of Section 7-D of the Act and the compounding scheme, noted above. 8. Therefore, it is his submission, once the entire liability of tax on the purchase of coal stood compounded, there survive no jurisdiction or occasion for the Assessing Officer to pass an assessment order and to thus subject the assessee to tax on an assumed sale of coal. In this regard, it has been further clarified that there is no allegation or evidence or finding of the assessee having engaged in the activity of trading in coal. Thus, it has to be accepted that the only activity in which the assessee engaged himself was that of running a brick kiln. With respect to that, in view of the mandatory directions issued by the State Government, no liability of tax could be fixed on the assessee on the basis of an assumption that it had made excess consumption of coal. The extent to which the liability to tax on the purchase of coal had been compounded is not limited to any quantity based on the capacity of the brick kiln operated by the assessee. 9. Therefore, it has been submitted, the assessment of tax liability made on the assessee under Section 7(3) of the Act is both without jurisdiction or authority and otherwise wholly illegal and arbitrary. 10. Learned Standing Counsel, on the other hand, submits that the right of the assessee to seek compounding was not absolute or unlimited. 9. Therefore, it has been submitted, the assessment of tax liability made on the assessee under Section 7(3) of the Act is both without jurisdiction or authority and otherwise wholly illegal and arbitrary. 10. Learned Standing Counsel, on the other hand, submits that the right of the assessee to seek compounding was not absolute or unlimited. The Commissioner of Sales Tax, vide the circular dated 19.04.1993, had clearly specified the terms and the extent to which the liability of tax on coal purchased by a brick kiln may be compounded. Thereby, the Commissioner had specified different quantities of coal for different capacities of the brick kiln found in existence. Insofar as the assessee's brick kiln had 23 poye and 26 poye respectively, the total quantity of coal that assessee could have purchased without incurring any liability to pay tax was 543 tonnes. Inasmuch as the assessee had admittedly purchased 433.25 tonnes of coal in the present year and he had a further opening balance of 700 tonnes, the assessee had available 1133.25 tonnes of coal. Since the assessee disclosed the closing stock of only 30 tonnes of coal, he had clearly sold the balance coal. 11. Since the compounding offered to the assessee was only with respect to the running of the brick kiln and not with respect to the trading activity, the Assessing Authority had rightly subjected the assessee to assessment with respect to the balance quantity of coal sold by him. 12. Having heard learned counsel for the parties and having perused the record, in the first place, under Section 7-D of the Act, the alternative method of assessment of tax liability by way of composition is subject to the direction of the State Government. As to the directions that are applicable to the present case, clearly under Clause (1) of the composition scheme dated 08.03.2001 as circulated by communication dated 12.03.2001 issued by the Commissioner of the Trade Tax, U.P., the State Government had issued directions for composition of the entire liability of tax on purchase of bricks, tiles etc., manufactured in the brick kiln and also the entire liability of tax that may have otherwise existed on the purchase of sand, coal, wood and sawdust. A perusal of the various clauses of the scheme only reveals that the State Government issued directions quantifying the composition in money to be paid by individual brick kiln in lieu of its liability that otherwise existed. That calculation was based on the number of poye found existing in such brick kiln. However, there is no upper limit of production (of bricks) or purchase of items (such as coal) for which the composition was offered. 13. Learned Standing Counsel has not been able to point out any scheme from the clause that may have limited the extent of the composition of tax liability offered with respect to the purchased items such as coal, sand, wood, and sawdust with relation to the production actually conducted for the production capacity of the brick kiln. 14. Under Section 7-D of the Act, subject to the directions issued by the State Government, the Assessing Authority is competent to agree and accept the composition money at fixed rates. In the present case, the Assessing Authority passed an order under Section 7-D of the Act (a copy of which has been annexed with the revision application). It also does not disclose any limitation placed by the Assessing Authority while passing that order to limit the composition offered in respect to liability on the purchase of coal. It only provides for computation of the composition liability in terms of the scheme dated 08.03.2001, noted above. Therefore, it appears that the Assessing Authority had compounded the entire liability of tax on the purchase of entire quantities of coal without any stipulation of limitation as to the quantities which are required for running the brick kiln of the capacity disclosed by the assessee. The order under Section 7-D of the Act and composition of tax liability thereunder is in the nature of an alternative to regular assessment. Also, once accepted, it creates a binding contract between the assessee and the revenue. Therefore, the revenue cannot claim contrary to the order under Section 7-D of the Act. 15. As for the directions issued by the Commissioner, referred to by the learned Standing Counsel, in the first place, it is seen that those are only in the nature of circular issued by the Commissioner. Therefore, the revenue cannot claim contrary to the order under Section 7-D of the Act. 15. As for the directions issued by the Commissioner, referred to by the learned Standing Counsel, in the first place, it is seen that those are only in the nature of circular issued by the Commissioner. Under the provisions of Section 7-D of the Act and other provisions of the Act, the composition money may be offered and accepted only under the directions issued by the State Government. The State Government is the only delegate that the legislature has recognized for the purpose of issuing directions. The Commissioner does not have any jurisdiction to himself issue directions to quantify or to limit the extent of composition. Otherwise, he may issue directions only for the purposes of carrying out the purpose of the Act. Insofar as the direction, referred to, is clearly outside the scope of the composition scheme insofar as it introduced a completely new concept with respect to the consumption of coal, is found to be in conflict with the directions issued by the State Government. While the scheme provides for the composition of tax liability of entire quantities of coal purchased without any reference of limitation qua the production capacity of the individual brick kiln, the circular of the Commissioner seeks to introduce the stipulation and limit the composition without any authority of law. It is neither binding on the assessee nor it can be enforced against the terms of the composition scheme. 16. The acceptance of the application for composition of the tax liability creates a contract between the revenue and the assessee. Thereafter, both parties are equally bound by it. Neither the assessee nor the revenue authority can be permitted to claim payment of composition money in relation to or proportionate to his actual turnover for the period in question. Thus, whether the actual turnover of the assessee in question goes down or is nil or whether it increases manifold, after the composition application has been accepted for any period (such as the present), the actual turnover figure is rendered extraneous consideration. Also, acceptance of the composition application displaces the requirement of regular assessment proceedings. It has been so reasoned and held (on both counts), by a Full Bench of this Court in Bhaduria Gram Sewa Sansthan V. Assistant Commissioner, Sales Tax, 2006 UPTC 538. 17. Also, acceptance of the composition application displaces the requirement of regular assessment proceedings. It has been so reasoned and held (on both counts), by a Full Bench of this Court in Bhaduria Gram Sewa Sansthan V. Assistant Commissioner, Sales Tax, 2006 UPTC 538. 17. Even otherwise, the aforesaid circular issued by the Commissioner is found to have been issued with reference to the season 1992-93. No other circular or document has been brought to the knowledge of the Court therefrom, it may be inferred that the said circular was enforced or had been applied in the subsequent years as well, including A.Y. 2002-03. 18. What remains to be considered is whether there was any material to draw an inference of sale of coal made by the assessee outside its books of accounts during A.Y. 2002-03. In this regard, a perusal of the three orders, in this case reveal, other than the circular of the Commissioner dated 19.04.1993, there is no material, whatsoever, to infer that the assessee had engaged in an activity of trading in coal. Thus, there is no evidence that the assessee violated the terms of the composition scheme. Second, no exemplar or other evidence had been entertained by the Assessing Officer to reach a conclusion that during the period in question, the average consumption of coal in brick kilns of similar capacity was much less than that disclosed by the assessee. In this background, it assumes relevance that the order passed under Section 7-D of the Act had never been set aside or revised, in any manner. 19. Thus, there is a complete absence of any evidence or material to reach a conclusion that the assessee had engaged in trading in coal and he was liable to tax on such quantities of coal sold by him. The finding of the authorities is found to be wholly based on surmises and conjectures and not on any cogent material or evidence. 20. In view of the above, the question of law, framed above, is answered in negative i.e. in favour of the applicants-assessee and against the revenue. 21. Accordingly, both the revisions are allowed.