Penal interest under S.23(3) of the Kerala General Sales Tax Act is payable on the amount due as per the notice of demand, and if the amount is reduced in appeal, the penal interest will be limited to the amount remaining payable as per the appellate order.

Paripoornan, J.

The petitioner/ appellant is a proprietary concern. It is a dealer in cashew. It is an assessee under the K.G.S.T. Act. We are concerned with the assessment year 1975-76. An order of assessment was passed on 30-11-1978. A taxable turnover of Rs.4,23,32,097.04 was determined in Ext. P1 order of assessment. Deducting the tax paid, the balance tax payable was determined at Rs. 13,56,923.96 and deducting the surcharge paid, an amount of Rs. 67,848.20 was determined as surcharge payable. The appeal filed by the petitioner was disposed of by the Deputy Commissioner (Appeals), Agrl. Income tax and Salestax, Kollam, by Ext. P2 dated 5-2-1986. Some modification was made by the first appellate authority. The second appeal filed by the petitioner before the Salestax Appellate Tribunal, Trivandrum was disposed of by Ext. P3 dated 30-3-1987. The order passed in the appeal was given effect to by the assessing authority, by Ext. P4 dated 7-7-1987. The taxable turnover was fixed at Rs. 4,21,86,500/- and a tax liability of Rs. 20,90,510/- was arrived at. After deducting the tax paid, the tax payable was determined at Rs. 11,68,973.50 and after deducting the surcharge paid, the surcharge payable was determined at Rs. 58,447.70. By Ext. P5 dated 29-2-1988, the petitioner was directed to pay the penal interest under S.23(3) of the Kerala General Sales Tax Act in the sum of Rs. 14,36,082.80. In the Original Petition, the attack was against Ext. P5.

2. We heard counsel for the appellant/ petitioner. The main grievance of the counsel for the appellant is that penal interest is calculated for the amount due as per the appellate order, for the period from the date of the original notice of demand. According to counsel, penal interest is become payable only for the amount due as per the appellate order and from the date of the appellate order.

3. It will be useful to extract S.23(1), 23(3) and 23(5) of the Kerala General Sales Tax Act. They are as follows:

"23. Payment and recovery of tax: - (1) The tax assessed or any other amount demanded under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be specified in the notice of demand, not being less than twenty-one days from the date of service of the notice. If default is made in paying according to the notice of demand, the whole of the amount outstanding on the date of the default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or other amount under this Act:

Provided that the time limit of twenty one days for a notice under this sub-section shall not apply to casual traders.

(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 therefore, in this Act or in any rule made thereunder and in other cases within the time specified therefore 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, therefore, 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 percent of such amount for each month or part thereof subsequent to the first three months aforesaid.

(5). Where, as a result of any order in appeal or revision or any rectification under S.43, any tax assessed or any other amount due from any dealer or other persons has been reduced, the penal interest levied for the non-payment of such tax or other amount shall be proportionately reduced and if any amount of penal interest in excess of such reduced interest has been collected, such excess sha