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TMI Blog2016 (2) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... emicals, fertilizers and pesticides which are being used as manure to protect the plants from pest and disease. The petitioner/company had claimed input tax credit on the purchases of chemicals, fertilizers, pesticides and insecticides. For the assessment years 2006-07 to 2011-Aug 2012 (77 tax periods), the same had been disclosed in the returns filed for all these tax periods. The returns filed by the assessee had been accepted by the Assessing Authority allowing the input tax credit for all the aforesaid tax periods under Section 38(1) of the KVAT Act, 2003 (the 'Act' for short). The prescribed authority exercising the powers under Section 39(1) of the Act initiated reassessment proceedings and denied the input tax claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated the tax liability in the returns is uncalled for. The challenge is made on the levy of interest as it is not mandatory. It is urged that sub-section (1) of Section 36 provides for the liability to pay simple interest on any amount of tax which ought to have been declared on a return which has not been declared. The petitioner has relied on the Judgments of the Apex Court in: (1) HINDUSTAN STEEL LIMITED vs STATE OF ORISSA (25 STC 211). (2) CIT vs. RELIANCE PETRO PRODUCTS (P) LTD. (322 ITR 158) (3) SHREE KRISHNA ELECTRICALS vs. STATE OF TAMIL NADU ((2009) 23 VST 249) 5. Learned counsel Sri T K Vedamurthy, counsel appearing on behalf of the revenue supports the order passed by the Tribunal and contends that the returns filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are used as manure in the course of business. Accordingly, levied penalty and interest as it is mandatory under the relevant provisions of the Act. Except observing so, no satisfactory reasoning is given by the Assessing Officer to levy penalty and interest. It is true that there is difference between the penalty and interest. Penalty is not automatic where as interest is mandatory. As per the language employed in Section 72(2) of the Act, the condition precedent for imposing penalty is, that the returns filed by the assessee should understate the tax liability. As we noticed, the assessee has claimed the input tax deduction on the purchase of manure like pesticides, chemicals etc, used in the course of business declaring the same in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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