IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP No. 9680 of 2000(B)
1. VENAD CONDUCTORS PVT.LTD
... Petitioner
Vs
1. STATE OF KERALA
... Respondent
For Petitioner :SRI.A.M.SHAFFIQUE
For Respondent :SRI.C.RAGHAVAN, SC, KSEB
The Hon'ble MR. Justice P.R.RAMAN
Dated :23/11/2007
O R D E R
P.R.RAMAN, J.
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O.P.No.9680 OF 2000
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Dated this the 23rd day of November, 2007
JUDGMENT
Petitioner is a Private Limited Company incorporated under the
provisions of the Companies Act, 1956. During the year 1994-95 the
petitioner-Company supplied conductors, which is shortly called as “AAC
& ACSR” to the Kerala State Electricity Board. In respect of the
transaction in question the petitioner also filed Form No.9 return to the
Additional Sales Tax Officer conceding the turnover and tax payable
thereof. Since the goods supplied to the K.S.E. Board are inclusive of tax,
the obligation to pay the tax liability is on the K.S.E. Board. However, in
their communication dated 25/5/1994 the Electricity Board informed the
petitioner that they will pay tax on concessional rate provisionally and will
take up the matter with the Government for concession regarding the
balance tax liability and in case such concession is not extended, the
balance amount of tax also will be paid by them. Accordingly, the K.S.E.
Board paid the tax at 4% on the goods supplied to them provisionally,
which amount was admittedly paid over to the Government. However, at the
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time of making the assessment order, Ext.P2, the question regarding the
concession, if any, to be extended to the K.S.E. Board, was not decided.
The Assessing Officer assessed the tax at 10%, as the petitioner could not
prove that any concession was given to him or to the K.S.E. Board, as the
case may be, in respect of the supply made. The balance tax liability less
what has been paid by the petitioner was accordingly demanded, which
comes to an amount of Rs.9,14,418/-. This is apart from the surcharge
payable by the petitioner. There is no dispute that the balance tax as
demanded was also paid by the petitioner. The K.S.E. Board also paid the
difference in the tax less what has been paid by them to the petitioner.
Therefore, as regards the tax liability is concerned, there is no further
dispute between the parties. So however, by Ext.P7 the petitioner was
demanded an amount of Rs.7,58,967/- being the penal interest imposed on
him under Section 23(3) of the K.G.S.T. Act. Pursuant thereto the
petitioner by Ext.P8 approached the K.S.E. Board for arranging the
payment of penal interest as demanded in Ext.P7. By Ext.P9 the
petitioner informed the additional Sales Tax Officer that without prejudice
to his right under the act and law he opted to remit the interest as per the
referred notice under Section 23(3) of the Act at reduced rate under
Section 23A and requested the Officer to issue the demand in Form 24. By
Ext.P10 dated 25/9/1999 the Department accepted the option exercised by
the petitioner under Section 23(3) of the Act and allowed the reduction.
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Thus, as against the outstanding amount of Rs.9,14,418/- the petitioner
was given the benefit of the option exercised by him and after reducing
the amount of Rs. 5,48,650/- from the original demand, the balance
amount of Rs.3,65,768/- was demanded. The petitioner by Ext.P11 again
took up the matter to the K.S.E. Board informing them of the reduction
given to him by the Sales Tax Department and requested to arrange
payment accordingly. Since the petitioner did not pay the reduced amount
of Rs.3,65,768/- within the time as allowed by law, recovery proceedings
were taken for realisation of the original amount of Rs.9,14,418/-. It is in
those circumstances, the petitioner has approached this Court by filing this
original petition.
2. The prayer made in this original petition is for a direction to the
4th respondent-K.S.E.B. to pay interest levied and reduced at the
concessional rate under Section 23A as per Ext.P10 and also to quash
Ext.P7 notice under Section 23(3) of the Act. There is no challenge
against revenue recovery notice issued. The K.S.E. Board declares their
liability to pay interest and a statement is filed by them. So however, no
counter affidavit is filed by them. According to them, they have
discharged the primary responsibility of paying the tax and hence if there
is any short collection made by the petitioner or short assessment made by
the Department, they are not responsible for the same. The Government
Pleader however supported the demand raised.
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Heard the parties.
3. In this case admittedly the petitioner opted to pay interest on
concessional rate under Section 23 A of the Act of course without
prejudice his right under the act and law. Therefore, it was open to him to
challenge the demand for interest under Section 23(3) in accordance with
the act and law. This is not done. I have already referred to the prayer
made in this original petition. According to the petitioner, the interest
payable by him is to be reimbursed by the K.S.E. Board. That is not a
challenge against the demand for interest. Even though he sought to
quash Ext.P7, no grounds are urged in this original petition contending
that he is not liable to pay interest under Section 23(3) of the Act. In such
circumstances, Ext.P7 cannot be quashed. The liability to pay tax is
always on the seller of the goods. The Sales Tax Act enables him to
collect it from the buyer. The mere fact that he has not collected tax from
the buyer may not be a ground for non-payment of the tax to the
Department. When he has not paid the tax to the Department and this is a
case where return has been filed, this case is not covered by the decision
reported in Maruthi Wire Industries Pvt. Ltd. v. Sales Tax Officer,
Mattancherry and others ((2001) 122 STC 410). Further, the petitioner
himself has opted to pay interest under Section 23A. Consistent with the
stand made in Ext.P7 he should have remitted the reduced interest and
then challenge the levy, if any. So far as there is no challenge at all as
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against the levy of interest under Section 23(3) in this original petition, no
relief can be granted to the petitioner. As against the K.S.E.B. is
concerned, short liability if any made is contractual in nature and therefore
I am not granting any relief to the petitioner. The right of the petitioner is
left open.
Original Petition fails and it is accordingly dismissed with costs.
P.R.RAMAN,
Judge.
kcv.
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