IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 13TH NOVEMBER 2008 / 22ND KARTHIKA 1930 ST.Appl..No. 6 of 2007 ----------------------------- APPELLANT: ------------------ M/S.CONTINENTAL WOOD INTERIORS, EDAVANA, KOZHIKODE DISTRICT. BY ADV. DR.K.B.MUHAMED KUTTY (SR.) RESPONDENT: --------------------- THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDING, MUSEUM JUNCTION, THIRUVANANTHAPURAM-695 033. BY G.P.SRI. MUHAMMED RAFIQ THIS SALES TAX APPEAL HAVING BEEN FINALLY HEARD ON 13/11/2008 ALONG WITH STA.NO.16/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.A.Nos.6 & 16 OF 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 13th day of November, 2008 JUDGMENT H.L.DATTU, C.J. S.T.A.No.6/2007 is connected with S.T.A.No.16/2007. (2) The assessee is common in both these appeals. The legal issue involved is also identical. The counsel, who appears in both these appeals, is also the same. Therefore, both these appeals are clubbed together, heard and disposed of by this common judgment. (3) The assessing authority, for the first assessment year 1998-99, has completed the assessment by his order dated 13.2.2000 and after quantifying the tax liability, has imposed penal interest under Section 23(3) of the Kerala General Sales Tax Act (the “Act” for short). (4) In so far as quantification of the tax liability is concerned, the assessee did not have any dispute. It had questioned only the levy of interest by the assessing authority before the first revisional authority. The first revisional authority, following the observations made by this Court in the case of Maruthi Wire Industries (P) Ltd. v. Sales Tax Officer [2001 (2) KLT 100], has allowed the revision 2 S.T.A.Nos.6&16/07 petition. (5) The order so passed by the first revisional authority is taken exception to by the Commissioner of Commercial Taxes and accordingly, he has invoked his suo motu revisional powers. By his order dated 10.7.2006, he has cancelled the orders passed by the first revisional authority and has affirmed the order passed by the assessing authority. (6) In S.T.A.No.16/2007, the assessing authority has completed the assessment for the assessment year 1999-2000 and again, while quantifying the tax liability of the assessee, has imposed penal interest under Section 23(3) of the Act . As in the earlier case, the first revisional authority has allowed the assessee's revision petition but, the Commissioner of Commercial Taxes, by order dated 10.7.2006, has modified the orders passed by the first revisional authority and has confirmed the orders passed by the assessing authority in levying penal interest. (7) Inter alia calling in question, the correctness or otherwise of the orders passed by the Second revisional authority, the assessee is before us in these sales tax appeals. The assessee has framed the following questions of law for our consideration and decision. They are as under: “(i) Whether on the facts and in the circumstances of the case, has not the respondent committed an error in restoring the penal interest from the date of commencement 3 S.T.A.Nos.6&16/07 of the assessment year though order of assessment was passed only on 13.2.2003 and served on 20.07.2004. Is not the demand of interest from the commencement of the assessment year erroneous in law in as much as the appellant has included the purchase turnover from unregistered dealers in the return filed by him? (ii) Whether on the facts and in the circumstances of the case, is not the levy of penal interest from the date anterior to the assessment order illegal in the light of judgment of this Hon'ble Court in Damodaran vs. State of Kerala (2003) 2 KLT Sh.Note 121?” (8) We have heard Sri. Mohamedkutty, the learned senior counsel appearing for the appellant and Sri.Mohammed Rafiq, the learned Government Advocate. (9) After carefully considering the legal issues canvassed, in our opinion, those legal issues are not tenable in view of the decision of a Division Bench of this Court in the case of Chandramani Traders v. State of Kerala [( 2008) 16 VST 294 (Ker)]. In the said decision, the Court has observed as under: “Held, dismissing the petition, that Section 23(3) of the Act provides for levy of penal interest under certain circumstances, one of them being failure to pay tax due under the Act within the time prescribed therefor. Tax due under the Act is that amount which becomes due ex hypothesi on the turnover shown in or based on the return. Petitioner's case was that of self-assessment made by it under Section 17(1) of the Act read with rule 18 of the Rules. In the returns filed the petitioner had declared its total turnover and if not under 4 S.T.A.Nos.6&16/07 Section 5(3) of the Act it should have paid regular rate of tax as specified in the Schedule to the Act. The petitioner, while filing the return, was fully aware of the fact that it would be entitled to concessional rate of tax only if it produced declaration form No.18 obtained from the purchasing dealer, but still had paid only concessional rate of tax and the payment so made was not tax due under the Act. Therefore, the petitioner was liable for payment of interest under Section 23(3) of the Act”. (10) In view of the observations made by this Court in the aforesaid decision, in our view, the questions of law framed by the assessee require to be answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE cl 5 S.T.A.Nos.6&16/07