TMI Blog2000 (6) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Interest chargeable under section 23(3) is not a normal interest usually charged for delay in payment but interest at the rate of 24 per cent per annum beyond three months delay for payment of tax on due dates. Therefore, it is called penal interest even though the word "penal" was omitted from the section by the Finance Act, 1993. 2.. Petitioner herein is a firm registered under the Small Scales Department and engaged in the manufacture of PVC pipe and filed a return for the assessment year 1984-85 showing the entire turnover; but, claimed exemption under S.R.O. No. 968 of 1980. Petitioner also produced certificate issued by the District Industries Centre certifying that petitioner is entitled for exemption. The assessing authority accepted the claim for exemption but did not accept the calculation of the petitioner regarding the estimation of taxable turnover and levy of additional tax. The Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts P6 and P7 demands were made for penal interest on the amount of tax and surcharge for delayed payment. It is the contention of the petitioner that he has disclosed all the particulars and has filed true return and paid the tax as per the return and no penal interest is leviable because assessments were made subsequently on the basis of a later pronouncement of the court of law. According to the Revenue, penal interest should be paid from the due dates when tax should have been paid, irrespective of the reasons. 4.. The Revenue relied mainly on the decision of the Supreme Court in Associated Cement Co. Ltd. v. Commercial Tax Officer, Kota [1981] 48 STC 466, a Full Bench decision of this Court in P.C. Abdulla v. Sales Tax Officer, IV Circle, Thrissur [1992] 86 STC 259 and Sales Tax Officer, First Circle, Mattancherry v. Maruthi Wire Industries Private Limited [1999] 113 STC 19 (Ker); (1998) 2 KLT 248. In the Full Bench decision of this Court in P.C. Abdulla's case [1992] 86 STC 259 it was held that failure to pay tax along with the return automatically attract penal interest because as per the statutory provisions, tax as per the return has to be paid along with the return [rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o attract liability to pay penal interest. The Supreme Court held as follows: "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 the case here. It is difficult on the plain language of the section to 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." In this case also, petitioner has filed return in time disclosing all materials along with the admitted tax. No further demand or even provisional demands were made and returns were accepted. Assessments were made only subsequently and on demand without delay the petitioner paid tax as per the assessment. At the time of filing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Cement Co. Ltd. [1981] 48 STC 466 (SC) was overruled. 7.. The facts of the case under consideration is similar to the facts considered by the Supreme Court in J.K. Synthetics Ltd. case [1994] 94 STC 422 and as far as this case is concerned, with regard to the assessee who filed return correctly and bona fide and paid tax as per the above the decision in Associated Cement Co's. case [1981] 48 STC 466 (SC) and the Full Bench decision in P.C. Abdulla's case [1992] 86 STC 259 (Ker) are not applicable as it was overruled in J.K. Synthetic's case [1994] 94 STC 422 (SC) by the Supreme Court. 8.. In J.K. Synthetics Ltd's. case [1994] 94 STC 422 (SC) it was also stated that penal interest is payable if no tax is paid on the basis of the return. If tax is paid on the basis of assessment and demand, there is no liability to pay penal interest. Instant case is not a case where the petitioner has not filed any return or is not paying the tax as per the return. It is also contended by the learned counsel for the petitioner that the Full Bench decision overruled the Bench decision of this Court in Joy Varghese v. State of Kerala [1986] 62 STC 227. But, the above decision was upheld by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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