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2015 (4) TMI 699 - HC - VAT and Sales TaxLevy of penal interest under Section 23 (3) of the KGST Act - Held that:- while filing the return, without including the amount of cess on rubber purchased in the turnover, the petitioner had paid tax on the turnover that was declared by it in the return. Thereafter, it was only while completing the assessment by Ext.P1 order that the demand consequent to the inclusion of cess on rubber purchased became due and payable from the petitioner. In otherwords, it is only from the date of the assessment order or the consequent demand notice that the liability of the petitioner to pay interest would arise in terms of Section 23(3) of the KGST Act. Since, in the instant case, the petitioner had paid the entire tax due as per the return, the liability of penal interest under Section 23 (3) of the KGST Act could not be fastened on it going by the decision of the Supreme Court in Maruti Wires's case (2001 (3) TMI 856 - SUPREME COURT OF INDIA). Interest under Section 23 (3A) of the KGST Act also would not apply to the petitioner for the assessment year in question namely 1996-1997. The provisions of Section 23 (3A) where introduced in the KGST Act only from 1998 and did not contemplate a retrospective operation for an anterior period. This being the case, the levy of interest on Section 23 (3A) would not apply in respect of a demand of tax pertaining to assessment year 1996-1997. - assessment order, to the extent it demands penal interest under Section 23(3) of the KGST Act on the petitioner, cannot be legally sustained. I quash Ext.P1 assessment order to the extent it demands penal interest under Section 23(3) of the KGST Act from the petitioner for the assessment year 1996-1997. - Decided in favour of assessee.
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