IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 30TH JANUARY 2008 / 10TH MAGHA 1929 MFA.No. 301 of 2000() --------------------- (AGAINST ORDER NO.R2-31103/99/CT DT.3.11.1999 OF COMMISSIONER OF COMMERCIAL TAXES) APPELLANT: ----------- M/S.S.WIRES & STEEL, KULAVIKKONAM, NEDUMANGAD, TRIVANDRUM DIST., REP. BY ITS MANAGING PARTNER, S.SIDHIQUE. BY ADV. SRI.V.P.SUKUMAR RESPONDENTS: ------------- THE STATE OF KERALA REP. BY THE CHIEF SECRETARY, SECRETARIAT, TRIVANDRUM. BY GOVERNMENT PLEADER SRI.K.P.PRADEEP THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 30/01/2008, ALONG WITH MFA NO. 331 OF 2000, THE COURT ON 30/01/2008 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. .................................................................... M.F.A. Nos.301 & 331 of 2000 .................................................................... Dated this the 30th day of January, 2008. JUDGMENT C.N.Ramachandran Nair, J. The question raised in these two appeals is whether appellant is liable to pay interest under Section 23(3) of the KGST Act for non-payment of arrears of tax for 1990-91 and 1991-92. The assessee was granted sales tax exemption for a specified amount for a period of five years commencing from 1989-90 to 1995. Even though exemption was granted for a period of five years, the entire eligible amount was absorbed by June 1991. In other words, assessee became liable to pay tax on the turnover from July 1991 onwards. However, assessee continued to file return but without payment of tax which led to demand of interest under Section 23(3) of the Act. Even though the Deputy Commissioner allowed the revision petitions cancelling the interest based on some decisions of the Supreme Court, the Commissioner reversed the orders in suo moto revision proceedings initiated under Section 37 of the KGST Act. It is against these orders that the appellant filed these separate appeals. 2. So long as appellant disclosed taxable turnover in the return filed, 2 the appellant was bound to pay the tax along with monthly returns as required under Rule 21(7) of the KGST Rules. Admittedly appellant's entitlement for exemption ceased by June 1991 and from April 1991 onwards, appellant was bound to remit the tax along with monthly returns. Since tax is not paid along with monthly returns, there is violation of Rule 21(7) of the KGST Rules. Section 23(3) of the KGST Act provides for interest for non-payment of tax assessed and demanded or tax otherwise due under the Act. Tax payable along with monthly return on the taxable turnover returned in the monthly return under Rule 21(7) is tax payable under the Act and since payment was not made in time, appellant is liable to pay interest under Section 23(3) of the Act. The decisions cited are not on the amended provisions of Section 23(3) of the Act and therefore, have no application. In the circumstances, these appeals are dismissed as devoid of any merit. However, since appellant is an SSI unit and since amnesty benefit was granted in 2004 reducing the interest by 40%, we grant an opportunity to the appellant to clear the arrears of tax if any due with 60% of interest within two weeks from date of receipt of copy of this judgment. If arrears of tax if any and 60% interest is paid as above, then 40% interest 3 payable under Section 23(3) will stand waived. However, if appellant does not make payment as above, then full interest can be recovered from the appellant. We make it clear that the relief granted above will not stand in the way of appellant settling liability under any other scheme or orders. C.N.RAMACHANDRAN NAIR Judge T.R.RAMACHANDRAN NAIR Judge pms