Kerala High Court
Sivasakthi Engineering And ... vs Sales Tax Officer And Anr. on 9 August, 2004
Equivalent citations: [2006]145STC438(KER)
Author: G. Sivarajan
Bench: G. Sivarajan
JUDGMENT G. Sivarajan, J.
1. Petitioner is a works contractor. It is exclusively dealing with Kerala State Electricity Board for manufacture and supply of concrete poles. According to the petitioner, since cement and steel were supplied by the electricity board and since the petitioner was only doing job-work, it was under the bona fide belief that no tax under the Kerala General Sales Tax Act was payable on the transaction. In the above circumstances, it is stated that the petitioner had filed returns for the assessment years 1990-1991 to 1992-1993 showing nil tax. It is stated that the matter went up to the Tribunal and the Tribunal finally decided in its appellate order (exhibit P4) that the petitioner is liable to pay sales tax on the supply of concrete poles to the electricity board. The petitioner had filed return for the assessment year 1993-94 also showing nil return. In these proceedings, the said assessment year is not in issue. Similarly, the petitioner filed returns under the Kerala General Sales Tax Act for the assessment years 1994-1995 to 1996-1997 showing nil tax. We are concerned with these three assessment years. It so happened that subsequent to the disposal of the appeals for the earlier years by exhibit P4 order, the petitioner filed revised returns for the assessment years 1994-1995 to 1996-1997 admitting liability to tax on the supply of concrete poles based on the Tribunal's decision on February 11, 1999. The petitioner had paid the tax due as per the revised returns (exhibits P6 to P8).
2. The grievance of the petitioner in this original petition is that notwithstanding the filing of the revised returns and remittance of sales tax due as per the said returns, the assessing authority issued three notices (exhibits P9 to P11) on May 3, 1999 demanding interest for the belated payment of tax based on the revised returns from May 1, 1995, May 1, 1996 and May 1, 1997, from the first day of May of each assessment year. Petitioner filed objections to the said notices (exhibits P12 to P14) and the assessing authority rejected the said objections and again issued demand notices (exhibits P18 to P20). The petitioner then filed revisions before the Deputy Commissioner of Sales Tax which were rejected and further revisions (exhibits P21 to P23) before the Board of Revenue (Taxes) which were dismissed subsequent to the filing of this writ petition, by order dated December 13, 2000 (exhibit P25) produced along with CMP No. 16301 of 2001. The petitioner has challenged the demands for interest in this writ petition.
3. I have heard Dr. K.B. Mohamed Kutty, learned Counsel appearing for the petitioner and Shri Sojan James, learned Government Pleader appearing for the respondents.
4. The short question that arises for consideration in this case is as to when the petitioner can be made liable to pay interest under Section 23(3) of the Kerala General Sales Tax Act in respect of the tax due as per the revised returns. Can it be said to be due from the first May of the assessment years concerned? According to the petitioner, in view of the decision of the Supreme Court in Maruti Wire Industries (Pvt.) Ltd. v. Sales Tax Officer [2001] 122 STC 410 : (2001) 2 KLT 100 (SC), the petitioner is not liable to pay interest for the period from 1st May of the respective assessment years, since the respondents did not reject the original returns filed without disclosing the turnover of concrete poles and since the assessing authority did not reject the original returns till the final assessment orders are passed in this case. The petitioner admittedly had filed revised returns for the three years on February 11, 1999 and the tax due as per the revised returns was paid on February 18, 1999. Until the revised return is filed by the petitioner, it did not admit any liability to tax in respect of the turnover of concrete poles. In these circumstances, it cannot be said that the petitioner had defaulted payment of the tax due under the Kerala General Sales Tax Act in respect of the assessment years concerned, until the liability is crystallised by the assessment orders passed for the aforesaid three years. Further, the liability to interest under Section 23(3) of the Act arises only if the petitioner had committed default in payment of the tax assessed and demanded as per a demand notice. In this case, no such situation has arisen. It would appear that the revised returns filed by the petitioner for the aforesaid three years have been accepted. Admittedly, the petitioner has paid the tax pursuant to the revised returns, of course, late by one week. Even by following the decision of the Supreme Court, the petitioner has got liability to pay interest for the delay of one week in remitting the tax due as per revised returns.
5. Learned Government Pleader based on the counter-affidavit filed in this case, submits that the petitioner was very well aware of the liability to pay sales tax on the supply of concrete poles to the electricity board from 1998 onwards, i.e., the year in which exhibit P4 order was passed by the Tribunal, and that the revised returns are filed only after a period of one year which would show that there is no bona fides in the petitioner's submission that it bona fide believed that there is no liability. The learned Government Pleader further submits that the petitioner has obtained certificate from the Kerala State Electricity Board as contemplated under S.R.O. No. 1928 of 1993 for concessional rate of tax which would also show that the petitioner was aware of the liability to pay tax. All these submissions are made by the learned Government Pleader on the basis of the averment of the petitioner in the writ petition that the petitioner had bona fide believed that there is no tax liability in the instant case. According to the petitioner, as I have already noted, those circumstances may not as much be relevant for the purpose of levy and payment of penal interest for these years and, therefore, I do not propose to deal with the submissions made by the learned Government Pleader in this case. I am of the clear view that the decision of the Supreme Court referred to earlier would squarely apply and the petitioner in the instant case is liable to pay interest in respect of the assessment years 1994-1995 to 1996-1997 only from February 11, 1999 till February 18, 1999 if the said dates are correct. In view of the above, the impugned orders cannot stand except to the extent of the demand of interest for the period from February 11, 1999 to February 18, 1999. I make it clear that all these matters are dealt with only with reference to the period prior to the date of assessments for the three years concerned.
The original petition is disposed of as above.