IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 11TH OCTOBER 2010 / 19TH ASWINA 1932 ST.Appl..No. 2 of 2010() ------------------------ ORDER.R3/1270/2006 of COMMR. OF COMMERCIAL TAXES, TRIVANDRUM .................... APPELLANT: ------------------------------ TERUMO PENPOL LIMITED, BY ITS MANAGING DIRECTOR, I-2, JAWAHAR NAGAR, KOWDIAR P.O., TRIVANDRUM, KERALA, PIN-695 003. BY ADV. SRI.T.V.LAKSHMANAN SMT.SARITHA DAVID CHUNKATH SMT.SMITHA GEORGE RESPONDENT(S): --------------- STATE OF KERALA, COMMISSIONER, COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY G.P. SRI. MOHAMMED RAFEEQ THIS SALES TAX APPEAL HAVING BEEN FINALLY HEARD ON 11/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.R. C .N. RAMACHANDRAN NAIR, & K. SURENDRA MOHAN, JJ. -------------------------------------------- S. T. A. No. 2 of 2010 -------------------------------------------- Dated this the 11th day of October, 2010 JUDGMENT Ramachandran Nair, J. The question raised is whether the Commissioner of Commercial Taxes was justified in holding that appellant is liable to pay interest on belated payment of central sales tax for the assessment year 2000-01. We have heard counsel appearing for the appellant and Government Pleader for the respondent. 2. The facts are admitted inasmuch as the appellant though made inter-State sale declaring turnover at concessional rate on condition of production of C Forms, C forms were never produced leading to assessment at full rate in terms of Section 8(2)(b) of the C.S.T. Act. Appellant has no dispute with regard to higher amount of tax assessed over the tax returned and paid by the appellant. However, the dispute is limited to the interest demanded for belated payment of balance demand of central sales tax. The assessing officer was of the view that STA 2/2010 2 interest is payable under Section 9(2B) of the CST Act and accordingly interest was levied on the remaining unpaid tax for the period during which tax remained unpaid. In the first revision the Deputy Commissioner following certain decisions of this Court allowed the revision. However, the Commissioner noticed that later decisions of this Court justified levy of interest for belated payment of tax. Accordingly, the first revisional order was vacated by the Commissioner in exercise of suo motu revisional power and interest levied was restored. This appeal is filed against the order of the Commissioner restoring levy of interest. 3. Appellant's contention is that since CST Rules provide for filing of C Forms later, the Division Bench decision of this Court relied on by the Commissioner does not apply at all. Section 9(2B) of the CST Act under which interest is demanded is as follows: 9. Levy and collection of tax and penalties:..... (2B)If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax and assessment and collection of interest STA 2/2010 3 foe delayed payment of tax, of the general sales tax law of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law. .......... It is to be noted that prior to introduction of Section 9(2B) by the Finance Act, 2000, subsection (2A) was introduced to Section 9 of the CST Act by Act 103 of 1976 making the provisions of local Sales Tax Act of the State in respect of levy of interest and penalties applicable to CST Act. It is to be noted that judgments relied on by the appellant have been superseded not only by statutory amendment but also by two judgments of this Court, particularly the Full Bench judgment of this Court in STATE OF KERALA V. WESTERN INDIA COSMETIC AND HEALTH PRODUCTS LTD., (2010) 1 K.L.T. 786 (FB), wherein the Division Bench judgment relied on by the Deputy Commissioner stood overruled. In fact Division Bench judgment of this Court in CHANDRAMANI TRADERS' case, (2008) 16 KTR 527 also squarely applies to the appellant's case inasmuch as appellant is not entitled to STA 2/2010 4 concessional rate claimed in the monthly returns because of non- production of C Forms even later. In our view, payment of tax at concessional rate at 4% along with monthly returns is on the specific premise that appellant will produce C Forms later or will pay differential tax with interest. The stand taken by the appellant is that since there is time to produce C Forms, such time available for production of C Forms will be available for payment of balance tax without interest. However, Section 9(2B) read with Section 23(3A) of the KGST Act provides for payment of interest for any delay in payment of tax. Therefore irrespective of circumstances that led to delay in payment of tax, interest is payable at the rate prescribed in the statute. We notice that by virtue of Section 9(2B), Section 23(3A) of the KGST Act is made applicable for the purpose of levy and collection of interest for belated payment of central sales tax. We have in the Full Bench judgment considered in detail the scope of Section 23(3A) of the KGST Act. Even though counsel for the appellant relied on two decisions of the Supreme Court in BABU KHAN V. NAZIM KHAN, (2001) 5 SCC 375 and BIHAR SCHOOL EXAMINATION BOARD STA 2/2010 5 V. SURESH PRASAD SINHA, (2009) 8 SCC 483, we do not find that those decisions have any application to the facts of this case, and the issue is covered by Full Bench decision of this Court above referred. Therefore following the Full Bench decision of this Court above referred and earlier Division Bench decision of this Court in CHANDRAMANI TRADERS' case, we uphold the order of the Commissioner and dismiss the Sales Tax Appeal. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk STA 2/2010 6