J V J LIQUORS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) In this original petition a question of law has been raised by an assessee under the Kerala General Sales Tax Act (for short 'KGST Act'), as to whether for delay in payment of surcharge under the Kerala Surcharge on Taxes Act, 1957 (Surcharge Act), interest can be levied under Section 23(3) of the KGST Act in the absence of a specific provision in the Surcharge Act for levy of interest

(2.) The facts necessary for disposal of this original petition are as follows. The petitioner was a firm engaged in the business of retail sales of arrack during the year 1992-'93. The petitioner opted to pay tax under Section 7(14) of the KGST Act to remit tax on compounded rates as per Ext. P1 order. Pursuant to Ext. P1 order, the petitioner paid tax in monthly instalments after deducting the tax paid on purchase of arrack at the first sale point. Although at that point, surcharge under the Surcharge Act was also leviable on the tax so paid, the same was not paid as original petitions were pending before this Court challenging the levy of surcharge under the Surcharge Act on tax payable under Section 7(14) of the KGST Act and this Court had granted interim stay in those petitions, which were later decided against the assessees. Subsequently, assessment orders were passed in respect of the petitioner for the assessment year 1992-'93 in which surcharge of Rs. 3255-20 was also demanded. The said assessment order is produced as Ext. P2. Thereafter, the petitioner was served with Ext. P3 revenue recovery notice demanding amounts of Rs. 22,661/- and Rs. 6,118/-. According to the petitioner, the amount of Rs. 22,661/- represents surcharge and the amount of Rs. 6,118/- represents penal interest on the surcharge. The petitioner is challenging Ext.P3 notice to the extent it demands interest on the surcharge for delayed payment of surcharge and seeks the following reliefs:

(3.) The contention of the petitioner is that payment of interest is a substantive provision and unless the liability to pay the same is provided for by the Act by which surcharge is levied itself, interest cannot be charged on the surcharge. The petitioner would point out that under the Surcharge Act, there is no provision whatsoever under which an assessee is liable to pay interest on surcharge and therefore no surcharge can be levied on the surcharge as demanded by Ext. P3.