KALLARACKAL AGENCIES Vs. STATE OF KERALA

JUDGEMENT

(1.) THE levy of penal interest under sub-section (3) of section 23 of the Kerala General Sales Tax Act on the ground that the petitioner has not paid the tax in accordance with the return submitted by him under sub-rule (1) of rule 18 is challenged by the petitioner in this original petition. It is not disputed that no notice of demand as required by sub-rule (3) of rule 18 in form No. 14 has been issued in his case. We have ruled in O. P. No. 7804 of 1984-M [joy Varghese v. State of Kerala [1986] 62 STC 227 (Ker)] that liability to pay penal interest in such circumstances accrues only where there is a failure to pay the amount of tax demanded as per the notice of demand issued in accordance with sub-rule (3) of rule 18 of the Kerala General Sales Tax Rules and form No. 14. As no notice of demand has been issued as required, the levy of penal interest by the assessing authority on the petitioner and the notice of demand for penal interest under exhibit P3 and the order in revision filed by him exhibit P4 are hereby quashed. We say penal interest has been levied without any notice of demand as that is the case of the petitioner, which is further supported by the fact that there is no reference to the notice of demand in the impugned order exhibit P3. THE O. P. is accordingly allowed and the authorities are free to take appropriate steps in the light of the law declared by us in O. P. No. 7804 of 1984-M [joy Varghese v. State of Kerala [1986] 62 STC 227 (Ker)]. No costs. Petition allowed. ORDER ON C. M. P. No. 11675 OF 1985 IN O. P. No. 3779 OF 1985-N. Dismissed. .