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Fashion Jewellers & Exporters v/s Sales Tax Officer

    W.A.No.1056 of 2005

    Decided On, 15 June 2005

    At, High Court of Kerala


    For the Appellant : S.K. Devi, Santhosh P. Abraham, Deepsur D. Jayan, K.P. Pradeep (Payyannur), Advocates. For the Respondent: Julian Xavier, Government Pleader (Taxes).

Judgment Text

K.S. Radhakrishnan, J.

Whether levy of penal interest for the delayed payment of additional sales tax payable under S.5D of the Kerala General Sales Tax Act is justified or not is the question that has come up for consideration in this case.

2. Assessee is a dealer in gold ornaments. They opted to pay tax at the compounded rates under S.7 of the KGST Act for the year 2001-02. The request of the assessee was accepted by the assessing authority. Later a demand notice No.2515390/2001-02 dated nil was served on the petitioner informing him that he was permitted to pay a sum of Rs.11,26,825/- for the period from 1.4.2001 to 31.3.2002 under S.7(1)(a) of the Act. Petitioner was informed that the amount should be payable in monthly/quarterly installments of Rs.93,903/-. Later books of accounts were called for verification by the assessing authority. Assessee had conceded a total and taxable turnover of Rs.5,40,04,824-99 and 2,57,38,130-97 respectively for the year. Final assessment for the year 2001-02 was completed under S.7 of the K.G.S.T Act vide assessment order dated 20.6.2003. Assessing authority levied additional sales tax of Rs.1,12,684/Assessing authority also demanded an amount of Rs.61,974/- being the penal interest.

3. Order of the assessing authority was challenged by the assessee before the Deputy Commissioner stating that the assessing authority had erred in levying additional tax with effect from 23.7.2001 and that the assessing authority was not justified in levying interest for nonpayment of additional sales tax. Revision Petition filed by the assessee was rejected by the Deputy Commissioner holding that there is no infirmity in the order of the assessing authority. Assessee filed a further revision before the Commissioner which was also dismissed. Aggrieved by the same assessee has approached this Court. Learned single Judge found no error in the demand of penal interest for the additional sales tax demanded from the petitioner. Learned single Judge however, granted some relief to the petitioner by reducing the penal interest rate from 2% to 1%.

4. A Bench of this Court Bhima Jewellary v. Assistant Commissioner, 2004 (1) KLT 374, examined the question whether a dealer who, opts for payment of sales tax at compounded rates under S.7 is also liable to pay the additional tax under S.5D of the KGST Act, 1963. This Court upheld the said provision and held that the assessee is liable. We are in this case concerned with the question whether in such a case for delayed payment penal interest could be demanded. S.5 and S.5A are charging section. S.5 provides for the levy of sales tax on the transfer of property in the goods and S.5A deals with purchase tax. S.5D provides for levy of additional sales tax. S.7 of the Act deals with payment of tax at compounded rates. Assessee has given an option to pay tax in lumpsum so as to avoid lengthy procedure of assessment and appeals etc. The amount payable on compounding is in lieu of the sales tax payable under S.5(i). If the assessee had not opted for payment of sales tax at the compounded rate of tax assessee will have to pay the tax in time including additional sales tax. Since the assessee had availed of a facility for his convenience, for the delayed payment of additional sales tax he has necessarily to pay interest. If this facility was not availed of, the department would have got sales tax in time. In this connection we may refer to section 23(3) of the Act which says that if the tax or any other amount accrued or due under this Act is not paid by any dealer or other person within the time prescribed therefore, in this Act or in any rule made there under, and in other cases within t

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he time specified therefore in the notice of demand, the dealer or other person shall pay, by way of interest, in the manner prescribed for the delayed payment and therefore the assessee is bound to pay the interest. We therefore find no infirmity in the view expressed by the authorities below as well as the learned single Judge. Writ Appeal therefore lacks merits and the same would stand dismissed.