IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 8TH FEBRUARY 2008 / 19TH MAGHA 1929 OP.No. 25834 of 2001(A) ----------------------- PETITIONER: ------------ JACSON FURNITURE, N.H. 47, TOLL GATE, EDAPPALLY, KOCHI 24 BY ADV. SMT.LATHA.K. RESPONDENTS: ------------- 1. THE SALES TAX OFFICER, FIRST CIRCLE, KALAMASSERY,EDAPPALLY. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM. 3. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY TO GOVT. OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 08/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 ORDER ON CMP 42008 OF 2001 IN OP 25834 OF 2001 DISMISSED 8.2.2008 SD/-C.N.RAMACHANDRAN NAIR, JUDGE. APPENDIX PETITIONER'S EXHIBITS: EXT.P1(A) TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 1996-97 DATED 23.10.2000 EXT.P1(B) TRUE COPY OF FORM 13 NOTICE OF DEMAND FOR THE YEAR 1996-97 EXT.P2 (A) TRUE COPY OF FORM 31 DATED 6.6.2001 EXT.P2(B) TRUE COPY OF GROUNDS OF REVISION FOR THE YEAR 1996-97 EXT.P2(C) TRUE COPY OF FORM 31C FILED BY THE PETITIONER AGAINST THE ASSESSMENT ORDER DATED 6.6.2001 FOR THE YEAR 1996-97 EXT.P3 TRUE AND ORIGINAL COPY OF THE FORM 24 DEMAND NOTICE DATED 20.2.2001 EXT.P4 TRUE COPY OF ANNUAL RETURN FOR THE YEAR 1996-97 IN FORM NO. 9 DATED 14.11.2000 EXT. P5 TRUE AND ORIGINAL COPY OF THE ORDER OF THE SECOND RESPONDENT FOR THE YEAR 1996-97 DATED 24.7.2001 RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- O.P. NO. 25834 OF 2001 -------------------------------------------- Dated this the 8th day of February, 2008 JUDGMENT Petitioner is challenging Ext.P5 order whereunder the Deputy Commissioner has rejected the revision petition for the reason that there was no order demanding interest which could be adjudicated in revision proceedings. The assessing officer only issued a demand notice demanding interest under Section 23(3) of the KGST Act for the year 1996-97. If tax was due on taxable turnover admitted by the petitioner, then interest is payable by the petitioner. However, the assessing officer ought to have issued notice proposing interest, heard the petitioner's objection and only then levied the interest. If interest demanded does not represent interest on tax on taxable turnover declared by the petitioner in the return, then interest cannot be demanded under Section 23(3) of the Act because Section 23(3A) authorising interest on differential tax was introduced only with effect from 1.4.1998. However, if exemption was claimed without any bona fides, the Officer should consider levy of penalty under Section 45A 2 and at least penalty equivalent to compensate interest should be demanded and recovered. Since adjudication order was not issued I set aside Ext.P5 and demand notice issued by the assessing officer demanding interest under Section 23(3) of the Act with direction to the assessing officer to reconsider the matter after verifying the records and issue a speaking order after hearing the petitioner, if either penalty or interest is proposed against the petitioner, within a period of three months from now. Petitioner will produce a copy of this judgment before the assessing officer for compliance. O.P. is allowed as above. (C.N. RAMACHANDRAN NAIR) Judge kk 3