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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 ..... petitioner cannot escape the rigour of the penal provision under the Act. Tax revision petition requires to be rejected and accordingly rejected X X X X Extracts X X X X X X X X Extracts X X X X ..... e being aggrieved by the levy of interest by the assessing authority had filed first appeal before the first appellate authority in S.T.A. No. 1561 of 2001, who by his order dated May 31, 2002 had allowed the appeal in part and further had directed the assessing authority to calculate the interest payable by the assessee in the light of the law laid down by the apex court in Maruti Wire Industries' case [2001] 122 STC 410; [2001] 2 KLT 100. The Revenue being aggrieved by the order passed by the first appellate authority had preferred second appeal in No. T.A. No. 543 of 2002 before the Kerala Sales Tax Appellate Tribunal, Additional Bench II, Ernakulam, inter alia, contending that the assessee is liable to pay interest from the due date of filing of the return and the decision of the apex court in Maruti Wire Industries case [2001] 122 STC 410; [2001] 2 KLT 100 is distinguishable on facts, since the case considered by the apex court was one where no return itself was filed by the assessee. The Appellate Tribunal by its order dated March 20, 2002 has allowed the Revenue's appeal, holding that, the first appellate authority is not justified in directing the assessing autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds by furnishing a declaration as mentioned in the proviso to clause (i), fails to make use of the same for the purpose for which the declaration was furnished, he shall be liable to pay the tax that would have been payable by him, had the declaration not been furnished, less the tax, if any, paid by him and the same shall be levied and collected as if it is a tax due from him." Sub-section (3) commences with a non obstante clause. The purpose is to exclude sub-section (1) of section 5 of the Act for the purpose of subsection (3) of the Act. Under this sub-section, a dealer engaged in trading of industrial raw materials, component parts, etc., which are liable to tax at a rate higher than three per cent, when it is sold to industrial units for use in the production of finished products inside the State for sale, shall be at the rate of three per cent on the taxable turnover relating to such industrial raw materials, component parts, etc. In sum and substance, sub-section (3) of section 5 of the Act provides concessional rate of tax of three per cent on the sale of industrial raw materials, etc., to an industrial unit in the State for a particular purpose. The proviso appended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after filing of the return under subrule (1) finds that a mistake has crept in the return filed. Sub-rule (3) mandates that every dealer liable to submit a return shall along with the return produce proof for having paid the full amount of tax or taxes due for the year on the basis of the return or taxes collected by him, whichever is higher before the assessing authority. Sub-rule (4) provides that if the assessing authority, on receipt of the return, is satisfied that the return is correct and complete, he may finally assess on the basis of the returns filed, the tax or taxes payable under section 5 or the taxable payable under the notification issued under section 10 for the year to which the return relates. Sub-rule (5) provides the procedure for best judgment assessment, if the return filed for the year to which return relate is either incorrect or incomplete. Rule 20 speaks of adjustment after final assessment. The assessing authority under this rule is authorised, after passing an order under subrule (4) or (5) of rule 18, to examine whether any, and if so, what amount is due from the dealer towards the final assessment after deducting the tax paid if any on the provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5(3) of the Act. The rule provides that the declaration provided under the aforesaid sub-section shall be in form No. 18. Sub-rule (5) says that a dealer who claims that a sale is liable to tax under sub-section (3) of section 5 shall attach to his return of turnover, a declaration received by him from the purchasing dealer. Section 23 of the Act provides for payment and recovery of tax. This section envisages that the tax assessed or any amount demanded under the Act shall be paid as may be specified in the notice of demand within twenty-one days from the service of demand notice. If there is any default in complying with the demand notice, the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay tax or other amounts due under the Act. Sub-section (2) speaks of the mode of recovery of tax assessed or any other amount due under the Act. Sub-section (3) of section 23 of the Act is relevant for the purpose of this case and therefore the same is extracted and it reads as under: "23(3): If the tax or any other amount assessed or due under this Act is not paid by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns by way of self-assessments in accordance with section 17(1) of the Act read with rules framed thereunder 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 at three per cent as provided under section 5(3) of the Act. It is not in dispute that the petitioner has collected tax at three per cent from the purchasing industrial units and the collected tax also is remitted before the assessing authority. To claim concessional rate of tax under section 5(3) of the Act, the selling dealer has to collect declaration in form No. 18 as provided under the KGST Rules from the purchasing industrial units and file it along with its returns before the assessing authority. Since the assessee failed to produce the declaration forms for part of the turnover declared in the returns filed, the assessing authority while quantifying the tax liability, has levied higher rate of tax as provided in the Schedule to the Act and also has levied interest under section 23(3) of the Act, on the ground that the assessee has failed to remit tax due u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner (Judicial), Sales Tax [1964] 15 STC 487 (All). Sri Mohammed Rafiq, learned Government Pleader for Taxes would contend, that though the petitioner had disclosed the turnover by filing monthly and annual returns, the petitioner had not paid the tax payable under the Act, but had paid only concessional rate of tax on the disclosed/ conceded turnover, solely on the ground that he is unable to collect declaration form No. 18 from the purchasing dealer. According to the learned counsel, the petitioner had to pay admitted tax as provided under the Act and the Rules framed thereunder, in default of which the assessee has to pay interest as provided under the Act. It is further stated that the liability to pay interest under section 23(3) of the Act is automatic and the condition precedent for levy of interest under sub-section (3) is default in payment of tax admittedly due to the department. The State is empowered by the Legislature to raise revenue through the mode prescribed under the Act, so that the State should not be the sufferer on account of the delay caused by the taxpayer in payment of tax due. The provision for charging interest is possibly introduced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able according to the return filed by the dealer. The Act enjoins upon the assessee the duty to file monthly and annual returns, declaring total and taxable turnover of that year. On the basis of turnover and taxable turnover declared, the assessee is required to make self-assessment and compute the tax payable and to pay in the manner prescribed under the Act. Thus, filing of the return and payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability under the Act. In the instant case, the dealer has filed returns for the assessment year 1997-98. The dealer is entitled to claim concessional rate of tax at three per cent, provided he furnishes declaration form No. 18 obtained from the purchasing dealer, otherwise he is liable to pay regular rate of tax. Rule 28 of the Rules provides for declaration form required for the purpose of section 5(3) of the Act. Sub-rule (5) says that a dealer who claims that his sale is liable to tax under sub-section (3) of section 5 only shall attach to his return of turnover a declaration received from the purchasing dealer. Proviso appended to sub-section (3) says that clause (i) shall not apply to any sale unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex court: (page 322) ". . . Section 3, the charging section, read with section 5, makes tax payable, i.e., creates a liability to pay the tax. That is the normal function of a charging section in a taxing statute. But till the tax payable is ascertained by the assessing authority under section 10, or by the assessee under section 7(2), no tax can be said to be due within section 16(1)(b) of the Act, for till then there is only a liability to be assessed to tax." The aforesaid observations were made by the apex court while interpreting section 16(1)(b) of the Rajasthan Sales Tax Act, 1954 which read as "has without reasonable cause failed to pay the tax due within the time allowed." The meaning of the expression "tax payable" and "tax due" is explained by Justice R.S. Pathak, as he then was, in M.A. & Company v. Assistant Commissioner (Judicial), Sales Tax [1964] 15 STC 487 (All). In the said decision, the court has observed that (page 491): "The liability to pay tax is created by section 3. The incidence of tax may be confined to a single point and the rate may be enhanced by a notification under section 3A. Sales tax is payable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich must be paid or is due, or may be paid' but its correct meaning can only be determined if the context in which it (1)Here italicised. is used is kept in view. The word has been frequently understood to mean that which may, can or should be paid and is held equivalent to 'due'. Therefore, the conjoint reading of sections 7(1), (2) and (2A) and 11B of the Act leaves no room for doubt that the expression 'tax payable' in section 11B can only mean the full amount of tax which becomes due under sub-sections (2) and (2A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under clause (a) of section 11B. It would be a different matter if the return is not approved by the authority but that is not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal rate of tax only if he produces declaration form No. 18 obtained from the purchasing dealer, but still had paid only concessional rate of tax and the payment so made is not tax due under the Act, and therefore, in view of the language employed in sub-section (3) of section 23 of the Act, and in view of what has been said by the apex court in J.K. Synthetics case [1994] 94 STC 422, the assessee is liable for payment of interest under the Act. The third instance that is envisaged in the sub-section is on the default committed by not paying tax or taxes or other amounts due under the Act after service of demand notice within the time prescribed. In the present case, this situation has not arisen and, therefore, debate or discussion on this aspect may not be necessary. Therefore, we do not intend to deliberate on this issue. The learned counsel, Sri Harishankar V. Menon, relying on Maruti Wire Industries case [2001] 122 STC 410 (SC); [2001] 2 KLT 100 (SC) would submit that a person who does not even file his returns nor does pay tax on self-assessment basis, cannot be on a higher pedestal than a dealer who had filed his return and had paid tax, may be lesser tax than what is spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated how the decision of the apex court cannot be applied to the facts and circumstances of the present case, it may not be necessary for us to consider in depth the observations made by this court in Damodaran's case [2004] 138 STC 442. The learned counsel for the assessee has also invited our attention to certain observations made by this court in the case of Evershine Plastics v. Assistant Commissioner [2000] 120 STC 396, Protech Appliances Pvt. Ltd. v. Assistant Commissioner [2002] 127 STC 322 and P.K. Ali Haji v. Board of Revenue [2008] 15 VST 165; [2007] 15 KTR 101. All these decisions are rendered in the light of what has been said by the apex court in Maruti Wire Industries case [2001] 122 STC 410; [2001] 2 KLT 100. Therefore, in our view, the observations made in those decisions may not assist the learned counsel, Sri Harishankar V. Menon, for the assessee. The learned counsel for the Revenue has brought to our notice the observations made by this court in the case of Miracle Elastomer (India) Ltd. v. Commissioner of Commercial Taxes, Thiruvananthapuram [2007] 10 VST 493; [2006] 2 KLJ 105 wherein it is stated (page 498 of VST): ". . . assessee cannot escape f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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