WOOD VENEERS, VALAPATTANAM Vs. ASST. COMMISSIONER

JUDGEMENT

(1.) The petitioner is challenging Ext.P15 order under which the Commissioner of Commercial Taxes has confirmed interest levied for belated payment of tax. According to the petitioner, the levy of interest is illegal and unauthorised. He has also relied on decision of the Supreme Court in MARUTHI WIRE INDUSTRIES PVT. LTD. V. SALES TAX OFFICER (2001) 122 STC 410 and that of this court in P. K. DAMODARAN V. STATE OF KERALA (2004) 12 KTR 133 in support of his contention that interest is not payable in this case. I have heard the Government Pleader also.

(2.) Even though petitioner was granted sales tax exemption, the same was withdrawn by the Government vide Ext.P1 on 24.7.1998.

(3.) While Section 23(3) provides for interest for belated payment of tax due under the Act whether assessed or demanded tax, sub-section (3A) of Section 23 provides that where any dealer fails to include turnover of his business in his return filed or when any turnover escape assessment, interest under sub-section (3) shall accrue on the tax on such turnover with effect from such date on which tax would have fallen due for payment had the dealer included the same in the return relating to the period to which such turnover relates. Sub-section (3A) therefore applies not only to a case where dealer fails to include turnover in his return, but all cases of non- payment of tax on the taxable turnover. In this particular case it is neither a case of failure to include turnover in the return nor escapement of turnover, but wrong classification of turnover in the return. In the original return filed by the petitioner, turnover was declared as exempted turnover. When sales tax exemption was withdrawn, the return should have been revised by transferring turnover on which exemption was claimed to taxable turnover and petitioner should have paid the tax thereon. Failure to do so is also a situation covered by sub-section (3A) of Section 23 because on account of misclassification, escapement of self-assessment and payment of tax on taxable turnover happens which attracts interest under the said Section.