AMAN TRADERS Vs. STATE OF KERALA

JUDGEMENT

(1.) These are cases where exaction of penal interest under S.23(3) of the Kerala General Sales Tax Act, 1963 is being challenged. Some of them relate to demands for penal interest made before 16. 9. 80 when alone sub-s.(4) to (6) were added to the Section by the Amending Act 19/80. One of the contentions is that the provisions of S.23(3), as they stood before the aforesaid amendment, were invalid. Another contention is that no penal interest could be claimed at all, for non payment of amounts due under provisional assessments, once final assessments are made; it is said that the provisional should be deemed to have merged with the final. There is also an attack against S.23(3), as it now stands. We are however of the view that instead of examining these questions in the abstract, the cases in this batch can be disposed of on their facts, particularly in the light of a circumstance to which it is convenient to immediately advert.

(2.) The law is that the liability to pay penal interest attaches automatically to the demand for tax, when default occurs in payment thereof, however erroneous the assessment be, and whether it is disputed or not. There was no provision, prior to Act 19/80, even to make allowances for variation in the tax liability by appellate or revisional orders. The position therefore was that an assessing authority could assess a dealer according to his fancy and that even if the assessment was subsequently set aside, the liability of the dealer to pay penal interest under the arbitrary and illegal assessment would survive. The provisions of S.23(3) were therefore attacked before this Court in O. P. No. 2396/78 and two other connected cases on the ground that they were opposed to Art.14, 19(1)(f) and (g) and Art.31(1). When the cases came up for hearing before a Division Beach, the State conceded that the pena interest demanded in those cases would not be collected, apparently for the reason that there was, difficulty in supporting the provisions, as they then stood, That was on 10. 4.80, and it was thereof or that sub-s.(4) to (6) were added on 16-9- 80. Could it be proper for the State to take a different stand in similar cases which are now before us, and can this Court permit the State to so pick and choose That is an aspect we will have to bear in mind when dealing with the individual, petitions.

(3.) In O. P. No. 708/81 the petitioner was paying tax under R.21, for the year 78-79, but Government bad issued an order of stay and permitted the petitioner to pay up the amounts in instalments. Penal interest was however charged in the final assessment order on the ground that despite the indulgence given by the Government, the liability had attached itself to the lax payable under R.21. The petitioner approached the Dy. Commissioner and the Board of Revenue, but both of them followed the decision of this Court in Haridas v. Asst. Commissioner (1979) 44 STC 26) and held that as the Government had no power under the Sales Tax Act to permit instalment payments, penal interest should be deemed to have accrued under S.23(3) from the date on which tax was statutorily due The learned Government Pleader relies on this decision to support the order impugned. This is what this Court had said in Haridas (44 STC 26):-