IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR WEDNESDAY, THE 2ND JANUARY 2008 / 12TH POUSHA 1929 OP.No. 21001 of 2001(A) ----------------------- PETITIONER: ------------ M. ABBUBACKER, PROPRIETOR, M/S. NATIONAL BOARDS, KUMBLA, KASARAGOD DIST. BY ADV. SRI.V.P.SUKUMAR SRI.C.A.KURIAKOSE SRI.V.DEVANANDA NARASIMHAM SMT.DEEPA. P.R. RESPONDENTS: ------------- 1. THE ADDL. SALES TAX OFFICER III, KASARAGOD. 2. THE STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, TO GOVT., SECRETARIAT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 02/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 ORDER ON CMP 34001 OF 2001 IN OP 21001 OF 2001 DISMISSED 2.1.2008 SD/-C.N.RAMACHANDRAN NAIR, JUDGE. APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE PERMANENT SSI REGISTRATION CERTIFICATE DATED 16.9.91 EXT.P2 TRUE COPY OF THE ANNUAL RETURN FILED BY THE PETITIONER FOR THE YEAR 1996-97 UNDER THE KGST ACT. EXT.P3 TRUE COPY OF THE ANNUAL RETURN FILED BY THE PETITIONER FOR THE YEAR 1996-97 UNDER THE CST ACT. EXT.P4 TRUE COPY OF THE NOTICE DATED 13.6.2001 ISSUED TO THE PETITIONER BY THE FIRST RESPONDENT. EXT.P5 TRUE COPY OF THE DEMAND NOTICE DATED 14.6.2001 EXT.P6 TRUE COPY OF THE NOTICE FOR INTEREST DATED 13.6.2001 UNDER CST ACT. EXT.P7 TRUE COPY OF THE DEMAND NOTICE IN FORM 24 DATED 14.6.2001 RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- O.P. NO. 21001 OF 2001 -------------------------------------------- Dated this the 2nd day of January, 2008 JUDGMENT Petitioner is challenging the demand of interest under Section 23 (3)/23(3A) for the assessment year 1996-97. Demands of interest under challenge are raised through Exts. P4 to P7 notices. I heard counsel for the petitioner and Government Pleader. Petitioner was granted sales tax exemption for the period commencing f rom 12.4.1991 to 11.4.1996. There is no dispute on this. Therefore petitioner was bound to file monthly returns and remit tax from 12.4.1996 onwards. Contrary to this, petitioner filed monthly returns showing taxable turnover and tax due, but without remitting any tax. According to the petitioner, this was on account of mistaken belief that petitioner was entitled to exemption during 1996-97 also. Even though interest is demanded under Section 23(3A), and the petitioner's case that Section 23(3A) having been introduced from 1.4.1997 does not apply to the petitioner, I feel the demand is sustainable by virtue of Section 23(3) of the act, which provides for collection of interest for 2 belated payment of tax due under the Act. After the amendment introduced to Section 23(3), interest is automatic for default in payment of tax due under the Act. Petitioner was bound to remit tax along with monthly returns as provided under Rule 21(7) of the KGST Rules. Since payment was not made, whatever be the reason thereof, interest has to be recovered on the admitted tax so payable. Therefore the demand of interest is justified under Section 23(3) of the Act. However, since stay was granted by this Court, and Amnesty benefit was available during 2004, I reduce the interest to 50% provided petitioner remits balance 50% of interest demanded before 31.1.2008. O.P. is disposed of as above. (C.N. RAMACHANDRAN NAIR) Judge 3