JUDGMENT : Heard Sri. Harisankar V. Menon, learned counsel for the petitioner, and Smt. Jasmine M.M., learned Government Pleader, for the respondents. 2. The present writ petition has been filed making a challenge to the orders in Exts.P8 and P9 issued by the 1st respondent under the provisions of Section 7 of the Kerala General Sales Tax Act, 1963 (“Act”, for short) for the financial years 2022-23 and 2023-24, whereby the petitioner's applications for compounding of turnover tax for the said years have been decided and the tax liability of Rs.1,19,96,211/- and Rs.1,49,95,264/-, respectively, have been calculated under the compounding scheme as provided under Section 7 of the Act and the Rules made thereunder. 3. The petitioner is the proprietor of M/s.KBC Green Park Hotel, Edat, Payyannur, Kannur District, a bar attached hotel. The petitioner is an assessee under the provisions of the Act. Under Section 5(2) of the Act, turnover tax @ 10% is required to be paid by a bar attached hotel on the sale of Indian Made Foreign Liquor. 4. Section 7 of the Act provides for payment of tax at compounded rate, which reads as under : “7. The petitioner is an assessee under the provisions of the Act. Under Section 5(2) of the Act, turnover tax @ 10% is required to be paid by a bar attached hotel on the sale of Indian Made Foreign Liquor. 4. Section 7 of the Act provides for payment of tax at compounded rate, which reads as under : “7. Payment of tax at compounded rates: – (1) Notwithstanding anything contained in subsection (2) of section 5, any bar attached hotel, not being a star hotel of and above four star hotel, heritage hotel or club, may, at its option, instead of paying turnover tax on foreign liquor in accordance with the said subsection, pay turnover tax on the turnover of foreign liquor calculated at the rates in clauses (a) or (b) of items (i) and (ii), respectively, whichever is higher,- (i) in respect of a bar attached hotel of and below two star, (a) at one hundred and forty per cent of the purchase value of such liquor, in the case of those situated within the area of a municipal corporation or a municipal council or a cantonment, and at one hundred and thirty five per cent of the purchase value of such liquor, in the case of those situated in any other place; or (b) at one hundred and fifteen per cent of the highest turnover tax payable by it as conceded in the return or accounts or the turnover tax paid for any of the previous consecutive three years; and (ii) in respect of a bar attached hotel of three stars, (a) at one hundred and eighty per cent of the purchase value of such liquor, in the case of those situated within the area of a municipal corporation or a municipal council or a cantonment, and at one hundred and seventy per cent of the purchase value of such liquor, in the case of those situated in any other place; or (b) at one hundred and twenty five per cent of the highest turnover tax payable by it as conceded in the return or accounts or the turnover tax paid for any of the previous consecutive three years.” 5. Rule 30 of the Kerala General Sales Tax Rules, 1963 (“Rules”, for short) provides that every dealer eligible to pay turnover tax at compounded rate under Section 7, may apply to the assessing authority for permission to pay turnover tax at the rates specified therein in Form-21 on or before 30th April of the year to which the option relates to. It also provides that if the application is in order, the assessing authority shall grant permission in Form-22 and if the application filed is not in order, the assessing authority shall reject the application for reasons to be recorded in writing, after giving the dealer an opportunity of being heard. For ready reference, Rule 30 of the Rules is extracted hereunder : “30. Payment of tax at compounded rates:- (1) Every dealer eligible to pay turnover tax at compounded rate under section 7, who desires to exercise the option provided for under the said section may apply to the assessing authority concerned for permission to pay turnover tax at the rates specified therein in Form No.21 on or before the 30th day of April of the year to which the option relates or along with the application for registration under the Act, whichever is later. Provided that the assessing authority may admit an application filed after the prescribed date for good and sufficient reasons to be recorded in writing. Provided further that the application relating to the year 2005-06 shall be filed within fifteen days from the date on which the Kerala General Sales Tax (Amendment) Rules, 2005 is published. (2) (i) If the assessing authority is satisfied that the application filed is in order, it shall grant the permission in Form No.22 (ii) If the application filed is not in order, the assessing authority shall reject the application, for reasons to be recorded in writing, after giving the dealer an opportunity of being heard. (iii) The dealer to whom permission is granted under sub-rule (2) shall submit along with the monthly return in Form No. 9 a statement of purchases of liquor made during the month, showing invoice number and date, particulars of goods, quantity and value, along with photocopies of the purchase bill/invoices.” 6. (iii) The dealer to whom permission is granted under sub-rule (2) shall submit along with the monthly return in Form No. 9 a statement of purchases of liquor made during the month, showing invoice number and date, particulars of goods, quantity and value, along with photocopies of the purchase bill/invoices.” 6. From a reading of Section 7 of the Act, bar attached hotels have to pay tax at the rate prescribed thereunder with reference to the purchase turnover of liquor or the average of the tax paid for the previous consecutive three years. 7. The petitioner had been paying tax under the provisions of Section 5(2) of the Act on the basis of the turnover achieved by it till 31.3.2022. The petitioner applied for making payment of tax at compounded rate for the financial years 2022-23 and 2023-24. Those applications have been accepted and the petitioner has been permitted to make payment of tax at compounded rate under Section 7 of the Act and tax has been assessed at Rs.1,19,96,211/- and 1,49,95,264/-, respectively, vide the impugned Exts.P8 and P9 orders. 8. Sri. Harisankar V. Menon, learned counsel for the petitioner, submits that the assessing authority had considered the turnover for the previous three years, i.e. 2019-20, 2020-21 and 2021-22, and taken the highest turnover, i.e. for the year 2020-21, where the petitioner had effected parcel sales. In the said year, out of the total turnover of Rs.17,70,34,210/-, turnover of only Rs.1,49,05,168/- was the sales effected through the bar hotel taxable at 10% and the balance of Rs.16,21,29,042/- was sales effected through parcel sales from designated counters (retail sale/take away), pursuant to the orders issued by the Government in Exts.P1, P2 and P3. The parcel sales effected from the bar attached hotels were exigible for 5% of the turnover tax in view of notification issued in Ext.P4. 9. Learned counsel for the petitioner, therefore, submits that the turnover of the parcel sales could not have been considered while calculating tax at compounded rate and turnover of the year where there was no parcel sales should have been considered for calculating turnover tax at the compounded rate. 9. Learned counsel for the petitioner, therefore, submits that the turnover of the parcel sales could not have been considered while calculating tax at compounded rate and turnover of the year where there was no parcel sales should have been considered for calculating turnover tax at the compounded rate. Learned counsel for the petitioner also submits that the petitioner was not afforded an opportunity of hearing before the impugned orders in Exts.P8 and P9 came to be passed and, therefore, the impugned orders are in violation of Rule 30 of the Rules referred to above. 10. Learned counsel for the petitioner has also placed reliance on the judgment of this Court in the case of M/s.Joy Alukkas Traders (I) Pvt. Ltd. v. State of Kerala [ 2010(1) KHC 844 (DB)] to submit that the petitioner should have been afforded an opportunity to point out that the assessing officer cannot take into account the turnover of parcel sales of Indian Made Foreign Liquor effected in the premises of the petitioner, which is a bar attached hotel. 11. Smt. Jasmine M.M., learned Government Pleader, has disputed the aforesaid argument of the petitioner's counsel and submits that the petitioner had opted for compounding payment of turnover tax under Section 7 of the Act by filing applications for the financial years 2022-23 and 2023-24, voluntarily. The assessing authority has to take the higher turnover of the previous three consecutive years for calculating the tax. The petitioner cannot dispute that the parcel sales also found the part of the total turnover. It will not make any difference on the parcel sales, if the Government has granted rebate on payment of tax from 10% to 5% to the bar attached hotels. What is to be considered is the highest turnover of the previous three consecutive years for compounding the tax under Section 7 and rate of tax is irrelevant. 12. It will not make any difference on the parcel sales, if the Government has granted rebate on payment of tax from 10% to 5% to the bar attached hotels. What is to be considered is the highest turnover of the previous three consecutive years for compounding the tax under Section 7 and rate of tax is irrelevant. 12. It is submitted that Explanation-III to Section 5(2) of the Act, which reads “for the purposes of this sub-Section, bar attached hotel shall mean a hotel, restaurant, club or any other place, which is licensed under the Foreign Liquor Rules, to serve Foreign Liquor......”, would mean that if FL-3 licence has been granted under the Foreign Liquor Rules to serve foreign liquor and the petitioner had effected sales of the foreign liquor, the said sales or parcel sales of foreign liquor cannot be exempted from total turnover for calculating tax at compounded rate under Section 7. 13. As per clause (b) of Section 7(ii) “total tax payable or tax paid by a bar attached hotel” is the basis for calculation of compounded tax. Whether tax is paid on the parcel sales or retail sales of liquor by a bar attached hotel is irrelevant as Section 7 does not stipulate such an exemption. 14. Smt. Jasmine M.M. also submits that opportunity of hearing as provided under Rule 30 of the Rules is only when an application is not complete and, therefore, before rejecting the application, an opportunity of hearing is to be provided to the assessee. There is no requirement for any hearing when the applications are admitted and there is no infirmity in the applications. Therefore, it is submitted that there is no force in the contention of the learned counsel for the petitioner. 15. I have considered the submissions. An assessee opts voluntarily for payment of compounded rate of tax under Section 7 of the Act. Section 7(ii)(b) contemplates payment of turnover tax at 125% of the highest turnover tax payable by a bar attached hotel as conceded in the return of the turnover tax paid for any of the previous consecutive three years. The Section does not exempt parcel sales of foreign liquor by a bar attached hotel. 16. Section 7(ii)(b) contemplates payment of turnover tax at 125% of the highest turnover tax payable by a bar attached hotel as conceded in the return of the turnover tax paid for any of the previous consecutive three years. The Section does not exempt parcel sales of foreign liquor by a bar attached hotel. 16. This Court in the case of Kalyan Tourists Home v. State of Kerala [(2018) 52 GSTR 161 : 2017 (2) KLT 761 ] has held that the assessee once applied for payment of tax at compounded rate and the application is not rejected, then, it is for the assessing authority to calculate tax at compounded rate under the relevant clause (a) or (b) of Section 7(1)(i) of the Act. When an assessee opts out for regular assessment and goes for compounding payment of tax under Section 7, the payment of tax at compounded rate would be governed by the provisions of Section 7. The petitioner does not have an opportunity to opt among the different limbs of Section 7. Therefore, if one were to pay tax at compounded rate under Section 7, everything depends upon the turnover or the total amount that would be generated as revenue through the taxes from the assessee for the relevant period to decide as to whether it is clause (a) or (b) of Section 7(1) (i). Paragraph No.2 of the said judgment, which is relevant for the purpose of this decision, is extracted hereunder : “2. The assessee applied for payment of tax at compounded rate. That application was not rejected. Obviously therefore, the learned counsel for the assessee is justified in saying that the compounding as was offered, was accepted. But, in the same breath, the assessee would contend through its learned counsel that what has been offered is not merely the option to pay tax at compounded rate, but to pay such compounded rate of tax dependent on Clause (a) and not Clause (b) of Section 7(1)(i) of the Act. This, in our view, is wholly misplaced. It is trite law as has been laid down through different decisions that the concept of option under Section 7 is to opt out of regular assessment, which is governed by Section 5 of the Act. This, in our view, is wholly misplaced. It is trite law as has been laid down through different decisions that the concept of option under Section 7 is to opt out of regular assessment, which is governed by Section 5 of the Act. Once the option is exercised and the assessee opts to pay tax at compounded rate, the payment of tax at compounded rate would be governed by the provisions of Section 7. There is no provision or opportunity to opt among the different limbs of Section 7. Therefore, if one were to pay tax at compounded rate under Section 7, everything depends upon the turnover or the total amount that would be generated as revenue through the taxes from the assessee for the relevant period to decide as to whether it is Clause (a) or (b) of Section 7(1)(i) that would apply. Decisions of the Honourable Supreme Court of India in Bhima Jewellery (M/s.) v. Asstt. Commissioner (Assessment), Kerala and Another [2014] 71 VST 110 (SC) : [2014] KHC 5346; Raju Jacob v. Sales Tax Officer [2007] 6 VST 515 (Ker): [2006] KHC 246; Koothattukulam Liquors v. Deputy Commissioner of Sales Tax [2014] 72 VST 353 (SC): [2015] 12 SCC 794 and Annie George, Proprietrix v. The State of Kerala [2009] 20 VST 796 (Ker) : [2006] KHC 1701 do not go away from the principle that we have stated herein to that effect. While Koothattukulam Liquors [2014] 72 VST 353 (SC): [2015] 12 SCC 794 dealt with a case of payment of tax at compounded rate on the basis of excise duty component, other decisions, particularly Bhima Jewellery [2014] 71 VST 110 (SC) : [2014] KHC 5346 deal with the quality of the contract of compounding and specifically state that compounding option once exercised results in the crystallisation of a bilateral contract as between the assessee and the State, that tied down both of them to be regulated by compounding mechanism, the situation to which they get tied down by that process is that the assessee cannot be compelled by the State to submit itself to regular assessment under Section 5, and this is dependent upon the assessee's offer that he would pay tax at compounded rate in terms of Section 7. The offer and acceptance as between the State and the assessee is to opt out of Section 5 which provides for regular assessment and falls under the canopy of payment of tax at compounded rate, which is governed by Section 7. This, and only this, is the contract between the State and the assessee on the basis of the compounding system. Once that event happens, the liability to pay tax at compounded rate will stand governed by the different provisions contained in Section 7 of the Act. In this view of the matter, no argument can be countenanced to say that rate of tax and the question whether the assessee would be able to opt as between Clauses (a) and (b) of Section 7(1)(i), is also within the bargain on which the compounding is accepted. So much so, the stand of the Revenue that the assessee/revision petitioner had to pay the particular amounts demanded by the assessing authority under Section 7 does not stand.” In view of the aforesaid, I find no substance in the present writ petition and the same is hereby dismissed. Pending interlocutory application, if any, in the present writ petition stands dismissed.