P. K. ALI HAJI Vs. BOARD OF REVENUE

JUDGEMENT

(1.) The appellant-assessee had filed annual return in form 8 declaring total and taxable turnover of Rs. 58,37,320 for the year 1990-91 on April 30, 1991 and he paid tax amounting to Rs. 4,53,998 and surcharge on Rs. 27,538 along with return on self-assessment. The appellant is a dealer of arecanut and it is taxable at the last purchase point under the Kerala General Sales Tax Act, 1963. It is the case of the appellant that after verification of records and after collecting details of various purchases through different agents, he found out that turnover was higher and he filed a revised return on June 1, 1994 declaring total and taxable turnover of Rs. 83,60,300 and according to the revised return he was liable to pay the balance tax amount to Rs. 1,73,025 and Rs. 12,591 as surcharge. He paid the above amount with the revised return. This was done without any demand notice or instructions of the assessing authorities. In the assessment order, revised return was accepted but penal interest was imposed on the same as provided under Section 23(3) of the KGST Act. Aggrieved by the above the petitioner filed appeal before the Deputy Commissioner. The Deputy Commissioner held as follows:

(2.) On the basis of the above findings he allowed the revision application and held that penal interest is not payable under Section 23(3) even though it may attract penalty under Section 45A(1)(c). In suo motu revision, the Board of Revenue confirmed the demands and set aside the Deputy Commissioner's order. Against that this appeal is filed.

(3.) The various decisions of the Supreme Court were cited by the senior advocate who argued the case. After referring to Rule 21(9) and Sub-rule (5) of Rule 18 of the Kerala General Sales Tax Rules, 1963, it was argued that as held by the Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer, 1994 94 STC 422an assessee can be directed to pay penal interest only after demand notice was served on him by the assessing authority in accordance with law. Even if the appellant files return, or if there is further assessment without filing any return, the penal interest will be chargeable only from the date of notice of demand. The imposition of penalty is a different matter. The above view was followed by the Supreme Court in Maruti Wire Industries Pvt. Ltd. v. Sales Tax Officer, 2001 122 STC 410. The apex court, while carrying the liability to pay penal interest under Section 23(3) of the KGST Act at paragraph 7, held as follows: