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TMI Blog2009 (7) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment Pleader appearing for the State and counsel appearing for the respondent. The respondent is a distillery engaged in manufacture and sale of Indian made foreign liquor. The entire products are sold to the Kerala State Beverages Corporation Limited, a Government of Kerala undertaking engaged in monopoly distribution of liquor in the State. Under the provisions of the Act, sales tax is payable on Indian made foreign liquor at the point of sale by the Beverages Corporation Limited. However, dealers in liquor including manufacturers are liable to pay turnover tax at the rate of five per cent on their turnover at all points of sale in the State. By virtue of this provision, the respondent as a manufacturer was liable to pay turnover tax on the sale price of liquor. Excise duty under the Foreign Liquor Rules was payable on Indian Made foreign liquor by the Beverages Corporation Limited at the point of release of liquor by them on sale from their warehouse. However, the Foreign Liquor Rules were amended by the Government with effect from January 5, 1999 whereunder the Beverages Corporation was liable to pay excise duty before lifting the liquor from the warehouse of the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of IMFL to its own licensed premises, the amount of duty paid formed part of the consideration paid by the Corporation to the manufacturers and consequently it formed part of the turnover of the manufacturers." There was a mistake in this part of the judgment because the Beverages Corporation remits the duty directly to the State before purchase of the liquor from the distillery and the statement of the Supreme Court that duty is paid by the KSBC to the distillery was incorrect. However, the distilleries, taking advantage of the mistake in the judgment, again contended that they are not liable to pay turnover tax as excise duty and they filed petition before the Supreme Court to clarify that since excise duty was paid by the KSBC to the State, the same cannot be included in their turnover. However, clarification petition was dismissed by the Supreme Court, but with the observation as follows: "The petitioners shall pay the balance turnover tax within a period of three months from today and till then no coercive steps shall be taken against them for recovery of turnover tax. This is without prejudice to the right of the respondents to demand penalty, interest or any other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. The counsel for the respondent, however, contended that interest payable under section 23(3A) is for default in payment of tax and the respondent-assessee cannot be held to be a defaulter because as and when assessments are made after judgment of the Supreme Court, they have remitted the tax. It is the specific case of the respondent that pursuant to the judgment of the Supreme Court, demand was raised on them on regular assessment and as and when regular assessments were completed, they remitted tax. However it is seen that even after judgment of the Supreme Court pronounced on May 6, 2005, the respondent has not cared to file revised returns or remit tax on excise duty. Further, though the assessing officer issued notice on October 13, 2005, the respondent filed revised return only for three months, i.e., for January, February and March 2002 and for the remaining period, they waited for assessments to be taken up for filing revised returns, that too without payment of tax. In our view, the Tribunal's decision is liable to be vacated for the simple reason that they decided the cases wrongly assuming that interest was levied under section 23(3) whereas the levy actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified and the assessing officer is bound to compute interest for the short-payment of tax for the period of default as provided under the said section. Interest under section 23(3A) is compensatory in nature and it will be payable in all cases where tax assessed and demanded is higher than the tax paid by the dealer based on the returns filed. Non-payment or short-payment of tax even on account of mistakes in returns will also lead to levy of interest on the dealer for the short-payment of tax. In this case, the assessments involved were for the assessment years 1998-99 onwards. As held by the Supreme Court, the respondent was liable to pay turnover tax on the turnover including excise duty for the sales made with effect from January 5, 1999. Therefore, along with the monthly returns filed from February 1999 onwards, the dealer should have included excise duty along with the turnover and should have remitted turnover tax on the entire turnover including excise duty. After the decision of the Supreme Court, the respondent has not contested about their liability to pay turnover tax on the excise duty component for sales made from January 5, 1999 onwards. Our finding above is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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