EVERSHINE PLASTICS Vs. ASSISTANT COMMISSIONER ASSESSMENT SALES TAX OFFICE SPECIAL CIRCLE KANNUR DISTRICT

JUDGEMENT

(1.) Main question to be considered in this case is whether an assessee can be charged with penal interest under S.23(3) of the Kerala General Sales Tax Act (hereinafter referred to as 'the Act') when he files return in time disclosing full particulars along with tax as per return on the basis of his bona fide calculations and pays difference tax in later on demand, when assessments were made on the basis of subsequent pronouncement of the Courts. S.23(3) of the Act reads as follows:

(2.) Petitioner herein is a firm registered under the Small Scales Department and engaged in the manufacture of PVC pipe and filed a return for the assessment year 184-85 showing the entire turn over but, claimed exemption under S. R. O. No. 968/80. Petitioner also produced certificate issued by the District Industries Centre certifying that petitioner is entitled for exemption. The assessing authority accepted the claim for exemption but did not accept the calculation of the petitioner regarding the estimation of taxable turn over and levy of additional tax. The appellate tribunal held that since the assessee was entitled to tax exemption under S. R. O. No. 968/80, the assessing authority should not have computed total tax due on the sales turn over of the assessee and rejected the contention of the Revenue that the assessing authority is entitled to compute the tax on the entire turn over which is otherwise taxable and then adjust the tax so computed against the exemption due to the assessee. By Ext. P2 judgment in Tax Revision Case against Ext. P1 decision of the Appellate Tribunal this Court accepted the view of the assessing authority and set aside the Tribunal's order. This Court held as follows:

(3.) The decision in K. P. Paper Products' case (74 STC 16) was pronounced only in the year 1989. Ext. P2 judgment was also pronounced on 11.8.1989. Before declaration of law by this Court for the year 1987-88, petitioner filed return disclosing the entire turn over and full particulars with tax as per the return. The assessing authority accepted the return and did not make any demands. But, assessments were completed by Ext. P3 demanding balance tax and surcharge. The assessment was made on 13.3.1991 after Ext. P2 judgment even though return was filed when appellate tribunal's judgment was holding the field. In petitioner's own case for the year 1984-85 the appellate tribunal in the order explained about the mode of calculation of turn over tax when exemption under S. R. O. No. 968/80 is to be calculated and return was filed and calculations were made in accordance with the above decision. When assessment was made and tax and surcharge were demanded by Exts. P4 and P5, it was paid by the assessee. Thereafter, by Exts. P6 and P7 demands were made for penal interest on the amount of tax and surcharge for delayed payment. It is the contention of the petitioner that he has disclosed all the particulars and has filed true return and paid the tax as per the return and no penal interest is leviable because assessments were made subsequently on the basis of a later pronouncement of the Court of law. According to the Revenue penal interest should be paid from the due dates when tax should have been paid, irrespective of the reasons.