IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR THURSDAY, THE 22ND MAY 2008 / 1ST JYAISHTA 1930 WP(C).No. 24624 of 2005(F) -------------------------- PETITIONER: ------------ M/S. SABEENA CRUSHER & CEMENT PRODUCTS KARALAI JUNCTION P.O., WEST KALLADA, KOLLAM, REPRESENTED BY Y. NIZAR, MANAGING PARTNER. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: ------------- 1. SALES TAX OFFICER, KARUNAGAPPALLY. 2. TAHSILDAR (REVENUE RECOVERY), TALUK OFFICE, KUNNATHUR. BY G.P. SRI.TEKCHAND THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/05/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF ASSESSMENT ORDER PASSED BY R1 FOR THE YEAR 1995-96 DT.28.11.96. P2: .DO. DT.4.3.2004. P3: .DO. 1996-97 DT.4.3.2004. P4: .DO. 1997-98 DT.4.3.2004. P5: .DO. 1999-00 DT.3.6.2004. P6: COPY OF JUDGMENT IN S.T.REV.63/05 OF THIS HON'BLE COURT DT.3.2.2005. P7: COPY OF ORDER IN TA 391 TO 393/04 OF THE APPELLATE TRIBUNAL DT.6.5.2005. P8: COPY OF ORDER IN TA 132/05 OF THE APPELLATE TRIBUNAL DT.6.5.2005. P9: COPY OF ORDER FOR 1995-96 TO 97-98 PASSED BY R1 DT.8.8.2005. P10: .DO. 1999-00 .DO. P11: COPY OF LETTER TO R2 FROM R1 DT.8.8.2005. P12: .DO. .DO. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR, J. .................................................................... W.P.(C) No.24624 of 2005 .................................................................... Dated this the 22nd day of May, 2008. JUDGMENT The petitioner is challenging demand of interest under Section 23(3A) for assessment years 1995-96 to 1999-2000 except for the year 1998-99. The petitioner, a stone crushing unit claimed sales tax exemption on the sale of stone chips (popularly known as metal) on the ground that petitioner is a Khadi unit. However, no certificate of exemption was obtained either from the Industries Department or from the Khadi Board or Commission. Still, initially exemption was granted based on certificate produced to the effect that petitioner is a Khadi unit. The exemption for Khadi units was only for products manufactured by the unit. It is a settled position by decision of the Supreme Court that conversion of stone moulders to chips is not a manufacture. Therefore, claim of exemption was not allowed. The petitioner's case is that the decision of the Supreme Court came later in 2002, whereas claim of exemption was made from 1995-96 onwards. In any case on account of the wrong claim made by the petitioner, sales tax payable was not paid in time and consequently interest was demanded. Government Pleader submitted that interest is payable under Section 23(3) itself for the 2 tax due under the Act i.e. based on turnover declared in the returns. Therefore, interest is payable for all the years either under Section 23(3) or Section 23(3A) of the KGST Act. This court also in the Division Bench decision in S.T.R.V. No.339/2003 dated 7.4.2008 held that petitioner is liable to pay interest for belated payment of tax due under the return. Even though petitioner has declared turnover, it was wrongly shown as exempted turnover and consequently, no tax was paid. Since interest is payable under Section 23(3A) or Section 23(3) for all the years by virtue of the decision of this court abovereferred, the W.P. is dismissed. However, it will be open to the petitioner to settle liability under amnesty scheme and get incentives. C.N.RAMACHANDRAN NAIR Judge pms