The liability to pay penal interest cannot be cast on the assessee for failure to file a return of turnover when the Act does not specifically provide for levy of penal interest for such failure.

1. Whether the appellant, an assessee, is liable to pay any penal interest on the assessed tax under S.23(3) of the Kerala General Sales Tax Act, 1963 (hereinafter 'the Act', for short), from the date when return was due though neither a return was furnished nor any tax paid on self-assessment basis, is the question arising for decision in this appeal.

2. Briefly stated the relevant facts are as follows: In April, 1983 the appellant, stationed in Patna, entered into an agreement with M/s. Tata Oil Mills Co. Ltd. to supply imported inedible tallow to their factory at Ernakulam. Accordingly, the tallow was imported at the Cochin Port and delivered to the buyer. The appellant did not filed a return of the turnover relating to the abovesaid transaction. The Sales Tax Officer finalised the assessment on 10.10.1984 and served the appellant on 4.3.1985 with notice raising a demand of sales tax whereafter the tax was paid. The appellant was then served with two notices raising demand for payment of Rs. 1,85,882.58p as penal interest under sub-s. (3) of S.23 of the Act for the period 20.5.1983, (the date by which the return of turnover was due to be filed accompanied by proof of payment of the tax due as per return) to 25.2.85. This demand was impugned by filing a Writ Petition before the High Court of Kerala at Ernakulam. A learned Single Judge allowed the petition and quashed the said demand. The State of Kerala preferred a Writ Appeal which has been allowed and the judgment of the learned Single judge has been set aside. The aggrieved appellant has filed this appeal by special leave.

3. Sub-s. (3) of S.23 of the Act reads as under:

"(3) If the tax or any other amount assessed or due under this Act is not paid by any dealer or other person within the time prescribed therefor in this Act or in any rule made thereunder and in other cases within the time specified therefor in the notice of demand, or within the time allowed for its payment by the appellate or revisional authority, as the case may be, or if payment is permitted in instalments by any of the authorities empowered in this behalf, any such instalment is not paid within the time specified, therefor, the dealer or other person shall pay, by way of penal interest, in the manner prescribed, in addition to the 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".

4. The present one is not a case where any amount of tax was collected by the appellant and then not deposited. It is an admitted position that the validity of impugned demand depends on the meaning to be assigned to the expression "if the tax or any other amount assessed" as occurring in S.23(3) of the Act. According to the appellant there was no order of assessment nor a return of turnover filed by way of self assessment in which case it should have accompanied by proof of payment of tax as per self assessment and, therefore, the appellant was not required to pay tax unless and until a demand based on an order of assessment was raised against it. According to the respondent, an assessee held liable to payment of sales tax and not filing a return of turnover, cannot be placed on a higher pedestal than an assessee who files a return and, therefore, a reasonable construction to be placed on sub-s. 3 of S.23 would be that an assessee not filing a return of turnover should be held liable to pay penal interest with effect from a date on which he should have filed a return of turnover accompanied by payment of tax even if such return was not actually filed. The learned Counsel for the appellant submitted in response that the scheme of the Act as it stood at the relevant time contemplates a different penal action against such default, i.e., penalty under S.45A of the Act for failure to submit the return of