JUDGMENT
G. Sivarajan, J.
1. The petitioner is an assessee to sales tax both under the Kerala General Sales Tax Act and under the Central Sales Tax Act. The question involved in this Writ Petition is as to whether penal interest Under Section 23(3) of the KGST Act can be imposed in respect of delayed payment of Central Sales Tax due under the said Act. According to the petitioner, Section 9(2) of the CST Act did not provide for levy of penal interest provided under Section 23(3) of the KGST Act for delayed payment of Central Sales Tax. Whereas according to the respondents, by virtue of the provision of Section 9(2) of the CST Act, all the provisions of the KGST Act in regard to assessment and recovery of penal interest, etc. will automatically apply.
2. In this case, the petitioner has challenged Exts.P2, P4 and P5 assessment proceedings under the CST Act to the extent of the interest levied therein by invoking the provision of Section 23(3) of the KGST Act. The petitioner has also sought for a declaration that Section 9(2), 9(2A) and 9(2B) of the CST Act and the Validation Clause enacted by the Union Finance Act, 2000 as unconstitutional and invalid. There is a further prayer for a declaration that the Validation Clause introduced by the Union Finance Act, 2000 is valid only prospectively.
3. A counter affidavit is filed by the 3rd respondent. It is stated therein that revenue recovery notice was issued by the District Collector, Trivandrum based on the requisition sent by the Assistant Commissioner (Assessment), Special Circle, Thiruvananthapuram, for realisation of a sum of Rs. 34,80,676/- from the petitioner towards arrears of sales tax for the assessment years 1989-90, 1990-91 and 1992-93 and 1993-94 and that the Tahsildar, Revenue Recovery, Trivandrum, issued demand notices Under Sections 7 and 34 of the Revenue Recovery Act to the Petitioner. The 3rd respondent has stated that the recovery proceedings are in accordance with law. Though the petitioner has challenged the validity of the amendments made to the CST Act, the Union Government has not filed any counter.
4. I have heard Dr.Sri.K.B. Mohammed Kutty, learned counsel appearing for the petitioner and Sri.Raju Joseph, learned Special Government Pleader (Taxes) appearing for respondents 2 and 3, as also the learned counsel for the first respondent. Counsel for the petitioner, in support of his contention that Section 9(2), 9(2A) & 9(2B) of the Central Sales Tax Act and the Validation Clause enacted by the Union Finance Act, 2000 as unconstitutional and invalid, has relied on the Constitution Bench decision of the Supreme Court in M/s. Khemka and Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, AIR 1975 SC 1549, particularly paragraph 35 of the majority judgment. Counsel submitted that the Union Parliament has delegated the essential powers to the State Government which is not valid in law. Counsel submits that the Constitution Bench in the said decision had observed that conferment of such an uncontrolled power upon the State Legislatures could, if it was really intended, be said to travel beyond the province of permissible delegated legislation on the principles laid down long ago by the Supreme Court itself in Re Delhi Laws’ case, 1951 SCR 747 = AIR 1951 SC 332, etc. Counsel on the basis of the said decision submits that, an abdication of an essential legislative powers to the State Government in the matter of levy of interest on delayed payment of CST was beyond its legislative competence. Counsel also submits that, the delegation of powers contained in the provision of Section 9(2), 9(2A) and 9(2B) of the CST Act are in violation of the provisions of Arts. 258(2) and 265 of the Constitution. Counsel also points out the patent illegality in giving retrospective effect to the validation provision by way of validation, which in effect reopen the matters, which were already concluded. Counsel further submits that there are mistakes in the calculation of interest also.
5. The Special Government Pleader appearing for respondents 2 and 3, on the other hand submits that, the question raised by the petitioner in the Writ Petition has already been considered by the Supreme Court in various decisions (India Carbon Ltd. v. State of Assam, 106 STC 460, and the decision of the Supreme Court in Shiv Dutt Rai Fatheh Chand & Ors. v. Union of India & Ann, (1983) 3 SCC 529) and submitted that all the questions which have been raised including the decision of the Constitution Bench of the Supreme Court in Khemka & Co. (supra) considered there and the provisions have been upheld. The Government Pleader further submits that, the amended provision took in the levy of interest also and consequently there is no merits in the contentions taken by the petitioner that the Union Government had delegated the essential powers in favour of the State Government. The Special Government Pleader also submits that, the other provisions of the Constitution relied on by the petitioner have no application.
6. I have considered the rival submissions. So far as the legislative competence and the validity of the provision of Section 9(2), 9(2A) and 9(2B) of the CST Act are concerned the very question is concluded by the decision of the Supreme Court in Shiv Dutt Rai Fatheh Chand & Anothers’ case (supra), where the Supreme Court after due consideration of the relevant matters including the decision of the Constitution Bench of the Supreme Court in Khemka’s case (supra) upheld the validity of the aforesaid provision and even the validation Act has been upheld. In the said case the following contentions were raised.
1. that the introduction of Sub-section(2-A) in Section 9 of the Act does not have the effect of making the provisions, relating to penalities leviable under the general sales tax laws of the States applicable to the proceedings under the Act;
2. that the Parliament cannot adopt the provisions relating to penalities in the general sales tax laws of the States for enforcing the charge under the Act, as such a course would amount to an abdication of its essential legislative function by Parliament;
3. that the provision giving retrospective effect to Sub-section(2A) of Section 9 of the Act and the provision validating all the penalties levied prior to the coming into force of the Amending Act are violative of clause (1) of Art. 20 of the Constitution.
4. that the levy of penalties with retrospective effect is also violative of Art. 19(l)(f) and (g) of the Constitution and
5. that in the case of assessment of the State of Haryana it is urged that Section 48 of the Haryana General Sales Tax Act is void as it confers arbitrary and unguided power on the authorities to levy penalities.
7. The first contention was considered in para. 18 of the said judgment. It was held that there is no substance in this contention. With reference to Section 9(2A) and 9(1) it was observed that Parliament removed the deficiency pointed out in Khemka’s case in the Act. It was further observed that in view of the retrospective amendment, the basis of the judgment in Khemka’s case was also removed and consequently the judgment delivered in that case could not stand in the way of realisation of penalties in accordance with validating provisions of Section 9(2) of the Amending Act. It was held that Sub-section(2A) of Section 9 of the Act and Section 9 of the Amending Act are adequate enough to assess and realise penalty with effect from 5.1.1957 as contemplated therein. The second contention was rejected by holding that Sub-section(2A) of Section 9 of the Act does not suffer from the vice of excessive delegation merely because the provisions relating to penalty in the general sales tax laws of the States are adopted for purpose of the Act. The third contention was considered in para. 24 and the same was rejected. It was observed that a penalty imposed by the sales tax authorities is only a civil liability though penal in character. The further contention was dealt with in para.32 of the judgment and it was held that the contention that the impugned provision is violative of Art.l9(l)(f) and (g) of the Constitution is without merit. The last contention viz., the section authorises the levy of penalty at a sum of not less than twice and more than ten times the amount of tax on proof of default mentioned therein is violative of Art. 14 as there is no guidance given to the authority levying the penalty about the quantum of penalty it was held that there is no substance.
8. All the aspects raised by the petitioner in the present Writ Petition were raised in the said case and they were rejected. The only difference is that the said case was relating to imposition of penalty and the present case is relating to interest.
9. The Supreme Court in India Carbon Ltd. v. State of Assam, 1997 106 STC 460, considered the question whether interest can be levied for delay in payment of CST in the absence of a substantive provision in the CST Act.
10. The Supreme Court deduced the proposition that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. After referring to the Constitution Bench decision in Khemka’s case it was noted that Section 9(2A) as amended makes no reference to interest. It was held that there is no substantive provision in the Central Act regarding payment of interest on CST and hence in view of the decision in Khemka ‘s case the demand of interest at 24 percent per annum on delayed payment of CST under the provisions of the State Act must be held to be bad in law. This decision was rendered on 16.7.1997.
11. Section 9(2) and 9(2A) were amended and a new Section 9(2B) was added by the Finance Act, 2000 (Act 10 of 2000) Section 9(2A) amendment with effect from 7.9.1976 and the other provision with effect from 1.4.2000. In Section 9(2) enforcement of payment of tax, including interest payable was added. Section 9(2A) provides that all the provisions relating to offences, interest and penalties…….of the General Sales Tax law of each State. Section 9(2B) inserted also provides that the dealer shall be liable to pay interest for delayed payment of tax under CST Act all the provisions for delayed payment of tax and all the provisions relating to the due date for payment of tax, rate of interest for delayed payment of tax would apply as if the tax and the interest payable under this Act were a tax and an interest under the sales tax laws.
12. Thus by the amendment of Section 9(2), 9(2A) and the introduction of Section 9(2B) by the Finance Act there is substantive provision in the Act itself for imposition of interest and the infirmity pointed out in Khemka’s case and in Indian Carbon Ltd. case are removed.
13. I do not find any merits in the submission of the counsel for the petitioner that the provision of Arts.258(2) and 265 of the Constitution are violated. So far as the contention that the rate of interest provided under the various State enactments varied and that the levy of 24% interest under Section 23(3) of the Act is arbitrary, also does not have any merit in view of the fact that under the provisions of Art.258(l) entire CST revenue is being given to the State for its purpose. Thus when the State legislature has provided for 24% interest under Section 23(3) of the Act in respect of arrears of sales tax due as per the KGST Act, it cannot be said that demand of penal interest at the same rate in respect of arrears of CST itself is arbitrary. Each state is entitled to fix the rate of interest and levy of interest by one State cannot be considered to be arbitrary with reference to the rate of interest provided in another State enactment. On the whole there is no merits in this Writ Petition, it is, accordingly, dismissed. However, if the petitioner has got any case regarding the calculation of interest made by the assessing authority, certainly the petitioner is entitled to point out the same before the authority and the concerned authority will consider the same and pass appropriate orders on such representation. It is made clear that in view of the dismissal of the Writ Petition, demand as on now, will stand. The stay already granted will continue for a period of two months. This is to enable the petitioner to file the representation mentioned earlier in regard to calculation mistakes and to get orders from the authorities concerned.
