TMI Blog2021 (9) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... d the scope and effect of these provisions in the light of the judgment of the Hon'ble Apex Court in the case of J.K. Synthetics Ltd. Vs. Commercial taxes Officer [ 1994 (5) TMI 233 - SUPREME COURT] and another Division Bench ruling of this Court in the case of State of Karnataka Vs. Mandovi Motors (Private) Limited, Mangalore, [ 2015 (11) TMI 1076 - KARNATAKA HIGH COURT] and has arrived at a conclusion that in the absence of provisional assessment made under Section 12-B[3] of the KST Act [therein] to determine the tax liability rejecting the monthly return incomplete or incorrect levying interest on the short payment of tax, such short payment of tax determined by the Assessing Authority while concluding the regular assessment would not attract the levy of interest. It is held that an harmonious reading of Sub-sections (1), (2), (3), (3A) and (4) of Section 12-B makes it clear that the phrase 'paid' and 'payable' employed in sub-Section (2) shall be the determination of advance tax made subsequent to final assessment by the Assessing Authority. It is obvious that the assessee pays the tax whichever is liable according to him on the information returns fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered dealer under the provisions of the Act and has admitted turnovers of machinery and lubricants for the purpose of entry tax whereas the same was not admitted on the turnovers of cutting tools such as drill-bits, reamers, cutters, taps etc. the appellant was subjected to reassessment under Section 6 of the Act for the assessment years under consideration. On such reassessment proceedings being concluded, the entry tax was levied on such machine tools, which was not exigible to tax as per the assessee. Accordingly, tax was levied on this turnover along with penalty under Section 6[2] and interest under Section 7[2] of the KTEG Act by the Assessing Authority. 5. Being aggrieved, the assessee has preferred appeal before the First Appellate Authority wherein, the levy of entry tax on machine tools and the levy of interest was confirmed. 6. Being aggrieved, the assessee preferred appeals before the Karnataka Appellate Tribunal, (Camp at Mysore) ['Tribunal' for short] in STA Nos. 1692-1695/2013. The Tribunal has framed the following points for consideration: 1. Whether, the FAA is correct in holding that the cutting tools like drill bits, reamers, taps, inserts et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the KTEG Act by the assessee. In such circumstances, the Assessing Authority was justified in imposing interest under the Statutory Scheme of Section 7[2] of the KTEG Act and the same was rightly affirmed by the Commissioner of Income Tax [Appeals]. However, the Tribunal failed to appreciate the provisions of Sections 7[1] and 7[2] of the Act in a right perspective and concluded that the assessee is not liable to pay interest under Section 7 of the Act. Thus, the learned counsel submits that levy of interest is to compensate the delay in payment of tax and the same being automatic, the Tribunal ought to have been directed the assessee to pay interest affirming the orders of the authorities. 10. Learned counsel for the assessee placing reliance on the judgment of the Dharwad Bench of this Court in the case of State of Karnataka Vs. Shree Renuka Sugars Limited, Belagavi [2018 (90) KGST L.J. 498 (HC) (DB)] [where one of us, Hon'ble SSJ was member] would contend that the Division Bench of this Court considering the provisions of Section 12-B[2] of the Karnataka Sales Tax Act, 1957 ['KST Act' for short] which is in pari materia with Section 7[1] and [2] of the KTEG Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of tax paid is less than the amount of tax payable for any month or quarter as the case may be, the dealer defaulting payment of tax or making short payment of tax shall, in addition to the tax, pay interest calculated at the rate of two per cent per month from the date of such default or short payment to the date of payment of such tax.] (3) If at the end of the year it is found that the amount of tax paid in advance by any dealer for any month or for the whole year in the aggregate was less than the tax payable for that month or the tax for the whole year as finally assessed, as the case may be, by more than fifteen percent the assessing authority may direct such dealer to pay in addition to the tax, by way of penalty, a sum [calculated at the rate of two per cent per month of the tax paid in short from the date of expiry of thirty days after the close of the month or the quarter or the year, as the case may be, to which such tax relates.] Provided that no penalty under this sub-section shall be imposed unless the dealer affected has had a reasonable opportunity or showing cause against such imposition. [(4)] If no such statement is submitted by a dealer under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that Section 7[2] would certainly not be applicable in the facts of the present case when the tax element has been quantified by the Assessing Authority after concluding the final assessment, without there being any provisional assessment rejecting the returns declared by the assessee if found incorrect. 15. It is obvious that the assessee pays the tax whichever is liable according to him on the information returns filed by him, it is highly unrealistic to expect him to pay the tax on the basis of final assessment to be done by the Assessing Authority at a future date or in other words, the assessee cannot predict the liability accruing on the basis of the final assessment proceedings or the assessee cannot affirm such eventualities which according to him was unexpected/uncalled unless provisional assessment is made. If any tax is made finally on final assessment made by the Assessing Authority, penal provisions under Section 7[3] and 8[2] of the KTEG Act ought to have been invoked, but no power under Section 7[2] of the KTEG Act would have been exercised by the Assessing Authority. These aspects are meticulously examined by the Tribunal in giving a finding that the levy of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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