IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 12TH OCTOBER 2009 / 20TH ASWINA 1931 WA.No. 2250 of 2009() --------------------- AGAINST THE JUDGEMENT IN WPC.28296/2008 Dated 11/11/2008 .................... APPELLANT(S): -------------- M/S. AMMA POLYMERS, MAIN ROAD, VADAKKUMBHAGAM, KOLLAM, REPRESENTED BY ITS MANAGER, S.RADHAKRISHNAN. BY ADV. SRI.BOBBY JOHN SRI.P.N.DAMODARAN NAMBOODIRI RESPONDENT(S): --------------- 1 THE COMMERCIAL TAX OFFICER, COMMERCIAL TAXES, III CIRCLE CIVIL STATON, KOLLAM. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPAURM. BY GOVT. PLEADER SRI MOHAMMED RAFFIQ. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N. RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. ---------------------------------------- W.A. No.2250 OF 2009 ---------------------------------------- Dated, the 12th day of October , 2009 JUDGMENT Ramachandran Nair, J. The appellant committed default in payment of salestax for the assessment year 1989-90. When the appellant approached this Court challenging the recovery proceedings, this Court had ordered payment of Rs.50,000/- from out of the outstanding arrears. The appellant, vide Ext.P4, remitted Rs.50,000/- on 3.9.99. subsequently, balance arrears were settled under Amnesty Scheme introduced under section 23B of the KGST Act. Under the Amnesty Scheme, appellant is entitled to reduction of full interest of arrears due for the period prior to 31.3.99 and, in fact, he is also entitled to reduction of 25% tax. The appellant's grievance is that while granting amnesty benefit, the assessing officer adjusted Rs.50,000/- paid on 3.9.99 WA 2250/09 -:2:- fully towards interest under Section 55 C and consequently, appellant did not get full relief under amnesty scheme. We find force in this contention because Section 55 C came into force with effect from 1.1.2000 whereas Rs.50,000/- was paid on 3.9.99. Even though the learned Single Judge found that under the general law, creditors were entitled to adjust interest first towards liability, we do not find that the department has any such case which is evident from the fact that Clause 2 of Section 55C provides for finality of payments adjusted towards tax prior to the commencement of the provision. Payment first set off against principal amount is therefore permissible under the Act and was in fact done by the officer. However, Government Pleader contended that at the time of payment, interest had already accrued and, therefore, the payment should be against accrued arrears which includes interest. From the rival contentions, we feel that an equitable remedy can be moulded for the petitioner by directing the officer to treat WA 2250/09 -:3:- the adjustment against payment of Rs.50,000/- made on 3.9.99 partly towards principal amount and partly towards interest. We direct the officer to make proportionate adjustment of amount paid towards tax and interest in proportionate to the amount outstanding at the time of payment under the head 'principal' and 'interest'. Consequential relief should be granted in amnesty benefit after adjustment as above and the same will be communicated to the appellant with refund if any due within two months from the date of receipt of this judgment. Writ appeal is allowed in part as above. C.N.RAMACHANDRAN NAIR JUDGE V.K.MOHANAN, JUDGE kvm/- WA 2250/09 -:4:- V.K.MOHANAN, J. O.P.No. JUDGMENT Dated:..