IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 11TH NOVEMBER 2008 / 20TH KARTHIKA 1930 WP(C).No. 28296 of 2008(R) -------------------------- PETITIONER(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 STATION, KOLLAM. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - - - WP.(C) No. 28296 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 11th day of November, 2008 JUDGMENT Petitioner seeks to quash Ext.P7 order and a direction is sought to consider Ext.P6 application afresh. Ext.P7 is the order passed under the Amnesty Scheme 2008-2009 intimating the petitioner the amount to be paid. The complaint of the petitioner is that the calculation made in Ext.P7 is not correct. It is pointed out that demand as per Ext.P2 modified assessment order is Rs.1,90,649/- (Rs.1,68,587/- and Rs.22,062/- as sur charge). The balance amount outstanding is Rs.1,40,649/-. It is pointed out that being a demand relatable to 1989-1990 petitioner is entitled to reduction of 25% of the tax demanded and complete reduction of interest as per Section 23B of the KGST Act, and this was not granted vide Ext.P7. It is pointed out that Rs.50,000/- was remitted towards the demand as per Ext.P3 order of this court dated 4.8.2008 in a writ petition filed by the petitioner. It is pointed out that Section 55C of the KGST Act came into force on 1.1.2000. It is therefore contended that the amount remitted by the petitioner as per the direction should be credited towards the principal amount and any view contrary or otherwise will be illegal. WPC.28296/2008. 2 2. A statement of accounts is filed by the Government Pleader, wherein it is stated as follows: “Assessment in respect of the petitioner for the year 1989-1990 as modified on 5.7.1999. Tax due as per modified order : Rs.3,44,714.00 Excess adjusted from the previous year ie. 1998-99 : Rs.1,76,127.00 Balance to be paid : Rs.1,68,587.00 Surcharge due : Rs. 22,062.00 Interest due w.e.f. August 99 to 3/05 : 68 months @ 2% per month. 4.05 to 8/08 : 40months @ 1% per month. Total % of interest 176%. Balance to be paid Tax due Surcharge due Interest due Rs.1,68,587.00 Rs.22,062.00 Rs.3,35,542.00 Paid Deposited Rs.50,000/- in the Village Office, Kollam on 3.9.1999 which was paid to the Taxes Department on 4.7.1999. This amount was taken in to credit towards interest.” 3. I heard learned counsel for the petitioner and the learned Government Pleader. WPC.28296/2008. 3 4. Section 55C of the KGST Act was introduced on 1.1.2000. It reads as follows: “55C. Appropriation of payment:- (1) Where any tax or any other amount due or demanded under the Act is paid by any dealer or other person, the payments so made shall be appropriated first towards interest accrued on such tax or other amount under sub-section (3) of section 23 on such date of payment and the balance available shall be appropriated towards principal outstanding, notwithstanding any request to the contrary by the dealer or any person making such payments. (2) Notwithstanding anything contained in sub-section (1) where an y dealer or other person has paid any amount towards tax or any other amount and such payment has been set off towards the principal amount prior to the coming into effect of this section, no recomputation of such payment shall be made under sub-section (1).” 5. Undoubtedly Section 55C speaks about the appropriation of the amount in the manner provided therein. It has to be done towards interest on tax first or other amount under Section 23(3) and the balance towards principal even if there is any request to the contrary by the dealer making such payments. Payment of Rs.50,000/- may have been made prior to the introduction of Section 55C. But I would not think that the State would be deprived of the right to appropriate the amount paid even prior to WPC.28296/2008. 4 the introduction of Section 55C towards interest. It is the general principle of law that in a creditor debtor relationship when a payment is made by the debtor, unless there is a specific contract to the contrary or a legal provision, it is open to the creditor to appropriate the payment so as to liquidate the amount due under the account of interest. Going by the statement filed in this case, the Government has appropriated the amount towards interest. The mere fact that petitioner paid Rs.50,000/- under Ext.P3 order of this court should not mean that the State is robbed of its right to appropriate the amount towards interest. If that be so, there cannot be any further complaint against Ext.P7. Accordingly, the writ petition fails and it is dismissed. (K.M. JOSEPH, JUDGE) sb