BENHUR LIQUORS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) Petitioner is an assessee to sales tax on the files of the first respondent. The assessment of the petitioner for the year 1992-93 was completed as per an assessment order. Since the petitioner had committed default in payment of the tax due as per the said assessment order, first respondent initiated the machinery under the Revenue Recovery Act and the second respondent issued a revenue recovery notice (exhibit P1) under Section 7 of the said Act demanding a sum of Rs. 3,39,315 which comprises Rs. 1,72,076 as sales tax, Rs. 67,747 as surcharge and Rs. 99,492 as penal interest. Petitioner then approached the Government and obtained instalment facility as per (exhibit P2) order dated June 26, 1995. It is stated in the said communication that the revenue recovery proceedings against the petitioner is temporarily stayed subject to the petitioner pays 40 per cent of the demand on or before August 30, 1995 and the balance amount to be paid in six monthly instalments commencing from September 30, 1995. Pursuant to the said direction the petitioner had remitted Rs. 1,35,000 on August 30, 1995 evidenced by exhibit P3 and also paid the instalments; Rs. 34,000 on October 6, 1995 (exhibit P4), Rs. 75,000 by way of cheque (exhibit P5), Rs. 33,500 on January 8, 1996 (exhibit P6), Rs. 35,000 on February 2, 1996 (exhibit P7) and Rs. 26,015 on February 28,1996 (exhibit P8). According to the petitioner the entire amount due as per exhibit P1 has thus been paid. However, the petitioner has filed this writ petition seeking for a declaration that no interest can be levied from the petitioner after exhibit P2 order by the third respondent and during the period of operation of the stay order and instalment payments and the amendment made to Section 23(3) of the Kerala General Sales Tax Act, 1963 (for short, "the KGST Act") deleting the relevant part from the section by Finance Act, 1994 is void and unconstitutional. Petitioner also seeks for a declaration that Sub-section (3A) of Section 23 of the KGST Act as amended by the Finance Act, 1994 is void. Other reliefs are also sought for.

(2.) A counter-affidavit is filed on behalf of the first respondent. It is stated therein that Section 23(3A) of the KGST Act came into force with effect from July 29, 1994 that the petitioner was assessed for an amount of Rs. 3,39,315 for the assessment period 1992-93 and since the petitioner had failed to pay the tax due for the said year, petitioner is liable to pay interest under Section 23(3) of the KGST Act from the date on which the tax ought to have been remitted. It is admitted that the petitioner had paid the amount demanded in exhibit P1 by way of instalments pursuant to exhibit P2 order. It is also stated that the decision relied on by the petitioner was based on the provisions of Section 23(3) of the KGST Act as it stood prior to the introduction of Sub-section (3A) as per the Finance Act, 1994. It is further stated that the provisions of Sub-section (3A) of Section 23 of the KGST Act apply to all taxes and other amounts pending payment as on April 1, 1994. The challenge to the provisions of Section 23(3A) of the KGST Act was also stated to be unsustainable.

(3.) I have heard the learned Special Government Pleader for the respondents. Special Government Pleader submits that the demand of penal interest for the period from February 9, 1995 till the date of payment of the entire amount was justified and that Section 23(3A) later renumbered as 23(3B) would apply to the present case as per which notwithstanding the instalment facility granted by the Government, the petitioner is liable to pay interest on the outstanding amounts. Special Government Pleader alternately submits that even under exhibit P2 Government Order the payment of 40 per cent of the amount due as per exhibit P1 was to be paid only on August 30,1995 and therefore, at any rate, petitioner is bound to pay interest for the period from February 9, 1995 to August 30, 1995. In support of the above, Special Government Pleader relied on the decision of a division Bench of this Court in Narani Stores v. State of Kerala,2001 122 STC 621.