PROTECH APPLIANCES PVT LTD Vs. ASST COMMISSIONER

JUDGEMENT

(1.) Challenge is against Exts. P9 and P10 demand notices whereby the petitioner is directed to pay penal interest. The issue raised in the Original Petition is whether interest is payable only from the date of receipt of demand notices for payment of tax. Exts. P7 and P8 are the assessment orders so received by the petitioner demanding payment of tax. That is dated 31.3.1995. It was, according to the specific averments in the Original Petition, served on him only on 28.9.1995. Exts. P9 and P10 show that penal interest is demanded from 1.4.1993, on expiry of the assessment year in question. The petitioner submits that he is not liable to pay penal interest from the said date but only from the date of service of assessment order demanding tax. He received it only on 28.9.1995. In order to substantiate that notice was served on him only on 28.9.1995, he had produced Exts. P15 and P16 letters addressed to the Assistant Commissioner dated 13.12.1995 confirming the receipt of Exts. P7 and P8. In such circumstances penal interest cannot be demanded from any date earlier than 28.9.1995, the petitioner submits. In support of this the petitioner relies on the decision of the Supreme Court reported in Maruthi Wire Industries Pvt. Ltd. v. Sales Tax Officer (2001 STC Vol. 122 Page 410).

(2.) According to the respondent penal interest is to be levied on default of tax payable. The tax demanded is in respect of the year 1992-93 which was at any rate payable before 1.4.1993. So the petitioner is liable to pay interest on the tax accrued during the aforesaid year, atleast with effect from 1.4.1993.

(3.) What is demanded in Exts. P9 and P10 is penal interest. That can be only from the date of demand of tax. Penal interest arise only when the liability to pay tax is not honoured as held by the Supreme Court in the said decision as follows: