2005 (6) TMI 535 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether levy of penal interest for delayed payment of additional sales tax under section 5D of the Kerala General Sales Tax Act, 1963 is justified.

Analysis:
The case involved a dealer in gold ornaments who opted to pay tax at compounded rates under section 7 of the KGST Act for the year 2001-02. The assessing authority later levied additional sales tax and penal interest on the dealer. The dealer challenged this before the Deputy Commissioner, whose decision was upheld by the Commissioner. The dealer then approached the High Court, where a single judge upheld the demand for penal interest but reduced the rate. The High Court examined whether a dealer opting for compounded tax rates under section 7 is liable to pay additional tax under section 5D. Referring to a previous judgment, the court affirmed that such dealers are indeed liable. The court emphasized that the option for compounded tax is to simplify the tax payment process, and failure to pay additional tax on time due to this option necessitates the payment of interest, as per section 23(3) of the Act. Therefore, the court found no fault in the decisions of the lower authorities and the single judge.

In conclusion, the High Court dismissed the writ appeal, stating that it lacked merits. The judgment affirmed the validity of levying penal interest for delayed payment of additional sales tax by a dealer who opts for compounded tax rates under section 7 of the KGST Act.