JACOB KURIAN Vs. STATE OF KERALA AND ORS.

JUDGEMENT

(1.) THE question that arises for consideration in this original petition is as to whether an Assessee under the General Sales Tax Act, 1125 is liable to pay penal interest under Section 23(3) of the Kerala General Sales Tax Act. 1963 (hereinafter referred to as 'the K.G.S.T. Act, 1963') which came into force on 1st April 1963, for the arrears of sales tax due from him for the period when the former Act was in force.

(2.) PETITIONER is the son of late Sri A.C. Jacob who was an Assessee to sales tax on the file of the Sales Tax Officer, Kottayam. For the assessment year 1957 -58, the Sales Tax Officer, by Ext. P -1 order dated 31st March 1959, made a best judgment assessment. Against that order the Assessee filed an appeal before the Appellate Assistant Commissioner and by Ext. P -2 order the appellate authority set aside Ext. P -1 assessment order and remanded the matter for fresh assessment after giving an opportunity to the Assessee to produce his books of accounts. Thereafter, the Sales Tax Officer passed Ext. P -3 assessment order dated 16th May 1972. The appeal filed before the Appellate Assistant Commissioner was dismissed by Ext. P -4 order dated 29th November 1972. The Assessee filed a second appeal before the Sales Tax. Appellate Tribunal and the Tribunal by Ext. P -5 order again remanded the matter to the Sales Tax Officer with certain directions. In the meanwhile, the Assessee died and notices were issued to his legal heirs including the Petitioner. Thereafter, by Ext. P -6 order dated 28th July 1978 the Sales Tax Officer passed the assessment order fixing the taxable turnover at Rs. 4,96,000. The sales tax due thereon was assessed as Rs. 28,190 with surcharge of Rs. 679.75. His appeal against Ext. P -6 order was dismissed by Ext. P -7 order. The second appeal filed before, the Tribunal was also dismissed by Ext. P -8 order dated 11th February 1985. Thereafter the Petitioner filed T.R.C. No. 177 of 1985 before this Court which was also dismissed on 22nd January 1986. Thus, the assessment under Ext. P -6 fixing the tax liability at Rs. 27,190 and surcharge of Rs. 679.75 became final. Thereafter the Petitioner paid an amount of Rs. 9,593 towards the tax due. The balance due from him is Rs. 17,597 towards sales tax and Rs. 679.75 towards surcharge. A demand notice (Ext. P -9) under Section 7 of the Revenue Recovery Act, dated 7th December 1985, was served on the Petitioner demanding an amount of Rs. 44,626.55. Over and above the amount of sales tax and surcharge, Ext. P -9 included an amount of Rs. 27,849.80 towards penal interest under Section 23(3) of the K.G.S.T. Act, 1963. Petitioner has challenged Ext. P -9 demand notice contending that he is not liable for payment of penal interest claimed therein as the assessment was for the period when the General Sales Tax Act, 1125 was in force which contained no provision similar to that of Section 23(3) of the K.G.S.T. Act, 1963. The Petitioner has challenged Ext. P -9 demand notice on various grounds.

(3.) THE main question that arises for consideration is as to whether for arrears of tax which accrued during the period when the 1125 Act was in force, the sales tax authorities are entitled to recover penal interest as provided for under Section 23(3) of the K.G.S.T. Act, 1963. Admittedly, the assessment year in question is 1957 -58 when the General Sales Tax Act, 1125 was in force, though the final assessment order was passed by the Sales Tax Officer only by Ext. P -6 dated 28th July 1978, after the coming into force of the K.G.S.T. Act, 1963. This question will depend upon Section 61 of the K.G.S.T. Act, 1963 which is the repealing provision. Section 61 of the K.G.S.T. Act, 1963 reads as follows: