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TMI Blog2008 (4) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala General Sales Tax Act, 1963 from the date of filing of the return admitting the tax liability, but claiming concessional rate of tax or from the date of assessment and issuance of demand notice in pursuance thereof? The factual matrix in a nutshell are: The assessee is a partnership firm and a dealer registered under the provisions of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as, "the Act, 1963"). It is engaged in the trading of chemicals and drugs and an assessee for sales tax on the rolls of Sales Tax Officer, Aluva. The petitioner is opting and paying tax by self-assessment in accordance with section 17(1) of the KGST Act read with the Rules framed thereunder. The assessee had filed monthly and annual returns for the assessment year 1997-98, disclosing the turnover in chemicals and drugs for an amount of Rs. 18,38,419.50 to various industrial units. In the returns filed, the petitioner has shown this turnover as taxable as provided under section 5(3) of the KGST Act. It is not in dispute nor is it disputed by the Revenue that the petitioner has collected tax at three per cent from the purchasing industrial units and the collected tax is also remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority is not justified in directing the assessing authority to reconsider the levy of interest in the light of the observations made by the apex court in Maruti Wire Industries case [2001] 122 STC 410; [2001] 2 KLT 100. The correctness or otherwise of the order passed by the Tribunal is the subject-matter of this revision petition. We have heard Sri Harishankar V. Menon, learned counsel appearing for the assessee and Sri Mohammed Rafiq, learned Government Pleader for Taxes. The contentions canvassed and the decisions relied on in support of their case will be noticed by us at the appropriate stage in our judgment. Section 5 of the Act is the charging provision. It provides for levy of tax on sale or purchase of goods. Sub-section (1) of section 5 of the Act, envisages that every dealer, other than a casual trader or agent of a non-resident, whose total turnover for a year is not less than two lakhs of rupees and every casual trader or agent of non-resident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover for that year. Clause (i) of sub-section (1) of section 5 of the Act provides for the levy of tax in the case of goods specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State for a particular purpose. The proviso appended to the sub-section carves out an exception to the sub-section for getting this reduced rate of tax. For getting the benefit of sub-section (3) of section 5, the selling dealer has to produce a declaration form No. 18 as prescribed in the KGST Rules, issued by the purchasing dealer. The other clause in sub-section (3) of section 5 of the Act is not relevant for the purpose of the case and therefore, the same is not noticed. Chapter V of the KGST Act provides for assessment, collection and penalty. This chapter contains machinery and procedural provisions for the purpose of charging provisions. Section 16 of the Act, provides for assessment, levy and collection of tax as provided in the KGST Rules. Under section 17 of the Act, every registered dealer and every dealer liable to take out registration under the Act, shall submit such return or returns in the prescribed manner within the prescribed time as provided in the Rules. Under sub-section (2), if the assessing authority is satisfied that the return submitted by the dealer is correct and complete, he shall assess the dealer on the basis of the return filed by the dealer und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after deducting the tax paid if any on the provisional assessment with reference to rule 21 or at the time of submission of the return in form 8 with reference to sub-rule (3) of rule 18. If any amounts are due from the dealer towards the final assessment, he shall serve on the dealer a demand notice specifying the amounts due and the dealer shall pay the sum demanded within the time and in the manner specified in the notice. The sub-rule also provides for refund of the tax already paid, if in the final assessment the dealer has paid more than the tax assessed. Rule 21 has undergone several amendments and several sub-rules are, in fact, deleted from the statute. The rule now available is sub-rule (7) of rule 21, which provides for filing of monthly returns by a dealer registered or liable to be registered under the provisions of the Act on or before 10th and in some cases 15th of succeeding month. Under subrule (9), the assessing authority is empowered to pass the best-judgment assessment provisionally, if the return submitted by the dealer appears to be incorrect or incomplete or if no return is submitted by the dealer or where the return is submitted without the statements/certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessed or due under this Act is not paid by any dealer or other person within the time prescribed therefor in this Act or in any rule made thereunder and in other cases within the time specified therefor in the notice of demand, the dealer or other person shall pay, by way of interest, in the manner prescribed, in addition to the amount due, a sum equal to- (a) one per cent of such amount for each month or part thereof for the first three months after the date specified for its payment; (b) two per cent of such amount for each month or part thereof subsequent to the first three months aforesaid. Explanation.-Where the period of default is less than one month, interest shall be calculated for the actual number of days of default." The analysis of this sub-section is as under: The dealer or other person shall pay by way of interest, in addition to the amount due, a sum equal to two per cent of such amount for each month or part thereof subsequent to the first three months aforesaid. (i) if the "tax assessed" is not paid by any dealer or other person within the time prescribed under the Act or the Rules framed. (ii) if any "other amount assessed" is not paid by any dealer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax due under the Act in the manner prescribed under the Act. Learned counsel, Sri Harishankar V. Menon would contend, that, the interest under sub-section (3) of section 23 of the Act could be levied by the assessing authority, only, when the assessee defaults in paying the tax due under the Act after the same is quantified by the assessing authority and after service of demand notice thereof within the time prescribed under the Act. The learned counsel would further contend that, in the present case, immediately after quantification of tax liability and service of demand notice for payment of assessed tax by the assessing authority, the assessee has remitted the entire tax demanded and therefore, the assessing authority was not justified in levying and demanding payment of interest under section 23(3) of the Act. The learned counsel would further contend that the interpretation given by the Tribunal on Maruti Wire Industries case [2001] 122 STC 410 (SC); [2001] 2 KLT 100 (SC) does not reflect the correct position in law. Alternatively, it is contended that the interest levied by the assessing authority is highly illegal, improper and contrary to the statutory provisions. In aid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islature in order to compensate the Revenue for the loss occasioned to it due to delay in paying the tax. When interpreting such a provision in a taxing statute a construction which would preserve the purpose of the provision must be adopted. In the often-quoted decision, Cape Brandy Syndicate v. Commissioners of Inland Revenue [1921] 1 KB 64, which has been noticed and approved in Commissioner of Income-tax v. Ajax Products Ltd. [1965] 55 ITR 741 (SC); AIR 1965 SC 1358, it has been observed that, in interpreting a taxing statute, normally, there is no scope for consideration of principles of equity. In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no presumption to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. The apex court in the case of State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191, has observed that in interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer selling the goods furnishes to the assessing authority declaration form No. 18 received from the purchasing dealer. The dealer has to strictly follow the procedure and produce the relevant documents for claiming concessional rate of tax on the admitted turnover. Without production of declaration form No. 18, the dealer is not entitled to concessional rate of tax under clause (i) of section 5(3) of the Act. In the return filed, the assessee had paid tax at concessional rate of tax at three per cent. The assessing authority has held that the assessee has not paid tax admittedly payable under section 17(1) of the Act read with the Rules thereunder, and further the assessee has not calculated and paid tax at the rate prescribed under the Schedule to the Act and, therefore, it must be held that the assessee has failed to comply with the requirement under section 23(3) of the Act. In our view, this is not a case, where the rate of tax applicable is in dispute or disputed by the dealer. This is a case where a dealer has calculated the tax at the inapplicable rate. This is a case of self-assessment made by the assessee under section 17(1) of the Act read with rule 18 of the Rules. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which goods are sold or supplied or distributed by way of sale by the dealer. Tax becomes payable when liability to pay tax arises, and liability to pay tax arises by the happening of the taxable event. The taxable event under the U.P. Sales Tax Act is the sale of goods or their supply or distribution by way of sale. It is not necessary to wait until the assessment has been completed in order to be able to say that a tax has become payable. There is a distinction between the expressions 'tax payable' and 'tax due'. Tax is due when it becomes a debt owed to the taxing State: it becomes a debt when it has been determined by assessment and quantified, and a notice of demand has been issued intimating the amount of tax and demanding payment. (underlining(1) by us) In J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422, the Supreme Court has also explained the meaning of the expression "tax payable" and "tax due" under the Act at para 17 of the judgment. The same is noticed: (page 437) "17. Let us look at the question from a slightly different angle. Section 7(1) enjoins on every dealer that he shall furnish prescribed returns for the prescribed peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." Sub-section (3) of section 23 of the Act provides for levy of interest under different circumstances. Firstly, if the tax or any other amount assessed is not paid by the dealer or other person within the time prescribed for, i.e., the tax assessed is not paid within the time prescribed under the Act. The expression "tax assessed" is explained by Lord Dunedin in Whitney v. Commissioners of Inland Revenue [1926] AC 37 (HL), wherein it is stated, "Now, there are three stages for imposition of a tax: There is a declaration of liability, that is, part of the statute which determines what persons in respect of what properties are liable. Next, there is the assessment. Liability does not depend on assessment, that, ex hypothesi has already been fixed. But, the assessment particularises the exact sum which a person is liable to pay. Lastly, comes the methods of recovery, if the person taxed does not voluntarily pay." Therefore, tax assessed means the exact sum which a dealer or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken note of by the Tribunal before allowing the Revenue's appeal. The submission appears to be interesting, but on a deeper consideration has no merit, is our view. In Maruti Wire Industries case [2001] 122 STC 410; [2001] 2 KLT 100 (SC), the apex court was dealing with the question as to whether the assessee was liable to pay interest under section 23(3) of the Act from the date the return was due though neither return as envisaged under the Act had been filed nor tax had been paid on self-assessment basis. The apex court has taken the view that the liability of the assessee to pay sales tax could have arisen on return of turnover being filed by self-assessment or else on an order of assessment being made. To come to the aforesaid conclusion, reliance was placed on the decision of the apex court in Associated Cement Co. Ltd.'s case [1981] 48 STC 466 and J.K. Synthetics case [1994] 94 STC 422. In our view, the decision on which reliance was placed by the learned counsel for the assessee may not be of much assistance to the assessee, since the fact-situation in that case was entirely different from the factsituation in the present case. In the present case, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l aware of the fact that the SSI exemption limit expired on October 8, 1999, a fact which is in the exclusive knowledge of the assessee and not the assessing authority. Section 23(3) states that if tax or any other amount assessed or due under the Act is not paid by any dealer or other person within the time prescribed therefor, the dealer shall pay interest in the manner prescribed, in addition to the amount due. The assessee should have paid tax on the expiry of the exemption period. The assessee had failed to pay the tax also with the return. The tax was due to the State once the period of SSI exemption expired. Since the assessee's turnover had exceeded the exemption limit, necessarily he should have disclosed the correct turnover in the return and should have paid the tax due under the Act which he has not done and therefore, in our view, sub-section (3) of section 23 would squarely apply." We are in respectful agreement with the reasoning and conclusions reached by the learned judges in the aforesaid decision. In view of the aforesaid discussion, the tax revision petition requires to be rejected and accordingly rejected. In the facts and circumstances of the case, part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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