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TMI Blog1992 (3) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... under rule 21 of the Kerala General Sales Tax Rules, 1963 and was accordingly filing monthly returns of his turnover. For the months of May and June, 1980, the assessee claimed exemption from sales tax on the purchase turnover of cashewnuts under section 5(3) of the Central Sales Tax Act, 1956, on the ground that the purchase was one in the course of export as it was the last purchase preceding the export of the goods outside the territory of India in compliance with an anterior order in relation to the export. The claim for exemption was rejected by the Sales Tax Officer and he passed an order of provisional assessment for the aforesaid two months, exhibit P1 order dated December 31, 1980. Against exhibit P1 order the petitioner filed an appeal and by exhibit P2 order dated November 17, 1981, the Deputy Commissioner (Appeals) held that the period for which the provisional assessment was made had already run out and the assessment is ripe for finalisation. Accordingly he directed the Sales Tax Officer to finalise the assessment as early as possible. It was further directed that the contentions put forward by the assessee could also be duly considered at that stage. 3.. Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enal interest can be levied towards non-payment of the amount due under the provisional assessment. 6.. A counter-affidavit has been filed on behalf of the 2nd respondent. It is stated therein that for the assessment year 1977-78 the net turnover in respect of the petitioner was fixed at Rs. 3,06,25,251.97. But in the return furnished in form 10 for the purpose of provisional assessment for the year 1978-79, the assessee returned a taxable turnover of Rs. 1,66,00,000 only. After calling for the accounts and scrutinising the same, the return was rejected and the provisional assessment for the year 1978-79 was completed to the best of judgment by order dated June 2, 1978, fixing a taxable turnover at Rs. 3,85,67,000. Accordingly the monthly rate of tax, additional sales tax and surcharge to be paid was also fixed. A demand notice for the aforesaid amount was also served on the petitioner on July 17, 1978. But the amount of provisional tax was not remitted within the time fixed in the demand notice and on October 19, 1978, the petitioner submitted an application for revising the provisional assessment on the ground that the turnover assessed was too high on the basis of the actuals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But a later Division Bench decision of this Court in Joy Varghese v. State of Kerala [1986] 62 STC 227 held that notice of demand is necessary before the liability to penal interest under section 23(3) starts. In the connected case, namely, O.P. No. 3501 of 1986*, which was heard along with these original petitions, we have already held that the later decision reported in [1986] 62 STC 227 (Joy Varghese v. State of Kerala) does not lay down the correct law and that accrual of penal interest under section 23(3) is automatic and that it is not dependent on any demand being made by the sales tax authorities for payment of that amount. We have decided the question after considering the scope of section 23(3) of the Act read along with rules 18, 21 and 31 of the *Since reported: See P.C. Abdulla v. Sales Tax Officer [1992] 86 STC 259 supra. Kerala General Sales Tax Rules. As we have already taken that view in the connected case, the first point raised by the petitioners in these two original petitions has only to be rejected. 8.. In both the cases though there is a prayer for declaring section 23(3) as unconstitutional, no grounds were urged before us to come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds have been made out in this case which absolve the petitioner from the liability to pay penal interest under section 23(3) of the Kerala General Sales Tax Act and accordingly it is not possible to give any relief to the petitioner. 11.. It is said that after the filing of the original petition (O.P. No. 9277 of 1983), the final order of assessment has already been passed and that the tax due thereunder has been paid by the petitioner. The order of final assessment is not produced and we are not in a position to know as to what was decided therein. In these circumstances, the petitioner is not entitled to any relief at present and the original petition has only to be dismissed. But it is made clear that we have not expressed any opinion on the-question as to whether the petitioner is entitled to any exemption under section 5(3) of the Central Sales Tax Act which the petitioner will be at liberty to agitate in the appropriate forum. We are concerned in this original petition only with levy of penal interest made in exhibit P3 demand. 12.. In O.P. No. 2361 of 1984, petitioner raised a contention, that from the final order of assessment, evidenced by exhibit P1, it can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer or other person as the case may be. (5) Where, as a result of any order in appeal or revision or any rectification under section 43, any tax assessed or any other amount due from any dealer or other person has been reduced, the penal interest levied for the non-payment of such tax or other amount shall be proportionately reduced and if, any amount of penal interest in excess of such reduced penal interest has been collected, such excess shall be refunded to the dealer or other person, as the case may be. (6) The provisions of sub-sections (4) and (5) shall, so far as may be, apply, in respect of penal interest levied for the non-payment of tax provisionally assessed which has been reduced in part or in full as a result of final assessment." Section 23(4) provides that if in appeal or in revision or by any rectification under section 43, any dealer or other person is not liable to pay the tax assessed or any other amount, the levy of penal interest for nonpayment of such tax or other amount shall be cancelled and the assessee will be entitled to a refund of any amount of penal interest collected. Subsection (5) provides for cases where in appeal or revision the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time prior to its passing. The clause in question makes a particular conduct the ground for an application for eviction. The necessary condition for the application of section 9(1)(ii) may commence even before the Act came into force and past conduct, which is as relevant for the clause as conduct after the coming into force of the Act, cannot be overlooked. The Tribunals were, therefore, right in considering conduct of the appellant prior to the coming into force of section 14-A while determining whether the appellant was irregular in paying the rent." 15.. The Financial Memorandum in the Statement of Objects and Reasons for the Amendment Act 19 of 1980 would also indicate that the provisions of section 23(4) to (6) were intended to have a retrospective operation. 16.. The matter can be looked from another angle as well. The law is that the liability to pay penal interest attaches automatically to the demand for tax whether it is provisional or final, when default occurs in payment thereof. Even if the order is erroneous and whether it is disputed or not, the liability to pay penal interest will continue. There was no provision prior to Act 19 of 1980 to make allowances fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovement in the administration of justice and the eradication of defects in our system of jurisprudence, should be favoured over one which perpetuates wrong. It seems proper to assume that the law-makers intended to advance our laws forward as far as our conceptions of justice and proper conduct extend. For this reason, if no other, remedial legislation is entitled to a liberal construction." 18.. A remedial Act though not necessarily retrospective will have retrospective effect if it is clear from the express terms or by necessary intendment as could be seen from the provisions. On the setting and intendment of sub-sections (4) to (6) of section 23, we are clearly of the opinion that the aforesaid provisions will apply to the case of the petitioner and the liability for penal interest, if any, will have to be recomputed in the light of exhibit P1 order. 19.. From the available materials in O.P. No. 2361 of 1984, it is not possible to decide as to whether the petitioner will be liable to pay penal interest at all or whether their liability will have to be reduced. It is a matter which the 2nd respondent will have to decide afresh, in the light of subsections (3) to (6) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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