2004 (8) TMI 666 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability to pay interest on belated payment of tax based on revised returns for assessment years 1994-1995 to 1996-1997.

Analysis:
The petitioner, a works contractor dealing with the Kerala State Electricity Board for concrete pole supply, filed nil tax returns for assessment years 1990-1993. After a Tribunal decision, revised returns were filed for 1994-1997 admitting tax liability, paid subsequently. The assessing authority issued interest demands for belated tax payment based on revised returns, leading to objections and subsequent rejections. The petitioner challenged these demands in a writ petition.

The main issue revolved around the liability to pay interest under section 23(3) of the Kerala General Sales Tax Act concerning the tax due as per the revised returns. The petitioner argued that interest should not be charged from the beginning of the assessment years as they filed revised returns only after the Tribunal decision. The Supreme Court's decision in Maruti Wire Industries case was cited to support this contention, emphasizing that interest is payable only if there was a default in payment after a demand notice. The petitioner maintained that interest should apply only from the date of filing the revised returns, not from the start of the assessment years.

The Government Pleader contended that the petitioner was aware of the tax liability since 1998, as evidenced by actions like obtaining a certificate for concessional tax rates from the Electricity Board. However, the court focused on the timing of the revised returns and the actual liability crystallization. It held that interest should be levied from the date of filing the revised returns until the tax payment date, considering the one-week delay. The court emphasized that the liability to interest arises only upon default in payment following a demand notice, and in this case, the revised returns were accepted, and the tax was paid albeit with a slight delay.

In conclusion, the court disposed of the original petition, ruling that interest demands were valid only for the period between the filing of revised returns and the subsequent tax payment dates. The judgment clarified that all matters were addressed concerning the period before the assessments for the relevant years, emphasizing the application of the Supreme Court decision on interest liability in such cases.