JACOB KURIAN Vs. STATE OF KERALA

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 S.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 1-4-1963, 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. P1 order dated 31-3-1959, made a best judgment assessment. Against that order the assessee filed an appeal before the Appellate Assistant Commissioner and by Ext. P2 order the Appellate Authority set aside Ext. P1 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. P3 assessment order dated 16-5-1972. The appeal filed before the Appellate Assistant Commissioner was dismissed by Ext. P4 order dated 29-11-1972. The assessee filed a second appeal before the Sales Tax Appellate Tribunal and the Tribunal by Ext. P5 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. P6 order dated 28-7-1978 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. P6 order was dismissed by Ext. P7 order. The second appeal filed before the Tribunal was also dismissed by Ext. P8 order dated 11-2-1985. Thereafter the petitioner filed T.R.C.No.177 of 1985 before this Court which was also dismissed on 22-1-1986. Thus, the assessment under Ext. P6 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 17, 597/- towards sales tax and Rs.679.75 towards surcharge. A demand notice (Ext. P9) under S.7 of the Revenue Recovery Act, dated 7-12-1985,was served on the petitioner demanding an amount of Rs.44,626.55. Over and above the amount of sales tax and surcharge, Ext. P9 included an amount of Rs.27,849.80 towards penal interest under S.23(3) of the K.G.S.T. Act, 1963. Petitioner has challenged Ext. P9 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 S.23(3) of the K.G.S.T. Act, 1963. The petitioner has challenged Ext. P9 demand notice on various grounds.

(3.) Petitioner has raised various grounds challenging the validity of Ext. P9 notice, At the time when the matter came up for hearing before us, counsel for the petitioner raised a contention that he is not liable to pay penal interest under S.23(3) of the K.G.S.T. Act, 1963 as the assessment was for a period when the 1125 Act was in force. Though this point was not as such raised in the Original Petition, being a pure question of law and no further investigation of facts is necessary for deciding that question, we allowed the petitioner to raise that contention. Accordingly counsel for the petitioner as also the Special Government Pleader for Taxes Sri. T. Karunakaran Nambiar were heard on this question as well.