EVERSHINE PLASTICS Vs. ASSISTANT COMMISSIONER (ASSESSMENT) AND ANR

JUDGEMENT

(1.) Main question to be considered in this case is whether an assessee can be charged with penal interest under Section 23(3) of the Kerala General Sales Tax Act 1963 (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. Section 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 1984-85 showing the entire turnover ; but, claimed exemption under S.R.O. No. 968 of 1980. 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 turnover and levy of additional tax. The Appellate Tribunal held that since the assessee was entitled to tax exemption under S.R.O. No. 968 of 1980, the assessing authority should not have computed total tax due on the sales turnover of the assessee and rejected the contention of the Revenue that the assessing authority is entitled to compute the tax on the entire turnover which is otherwise taxable and then adjust the tax so computed against the exemption due to the assessee. By exhibit P2 judgment in tax revision case against exhibit 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 [1989] 74 STC 16 (Ker) was pronounced only in the year 1989. Exhibit P2 judgment was also pronounced on August 11, 1989. Before declaration of law by this Court for the year 1987-88, petitioner filed return disclosing the entire turnover 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 exhibit P3 demanding balance tax and surcharge. The assessment was made on March 13, 1991 after exhibit P2 judgment even though return was filed when the 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 turnover tax when exemption under S.R.O. No. 968 of 1980 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 exhibits P4 and P5, it was paid by the assessee. Thereafter, by exhibits 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.