The liability to pay tax arises when the return is filed, and failure to pay the tax due under the Act attracts the provision for payment of interest under Section 23(3) of the K.G.S.T. Act.

H.L. Dattu, C.J.

In this tax revision case filed by the assessee against the order passed by the Sales Tax Appellate Tribunal in T.A. No.543 of 2002 dated 20.3.2003, for the assessment year 1997-98, the following two questions of law are raised for our consideration and decision. They are:-

i Whether on the facts and circumstances of the case, has not the Appellate Tribunal gone wrong in finding that the revision petitioner is liable to interest with reference to the due date of filing the returns as held by the assessing authority?

ii Is it not the order of the Tribunal is against the decision of the Supreme Court in Maruthi Wire Industries (P) Ltd. Vs Sales Tax Officer, 2001 (2) KLT 100?

2. Thequestions of law framed by the assessee can be reframed as under:-

(i) Whether on the facts and circumstances of the case, interest is chargeable under Section 23(3) of

K.G.S.T. Act, 1963 from the date of filing of the return admitting the tax liability, but claiming confessional rate of tax or from the date of assessment and issuance of demand notice in pursuance thereof?

3. The factual matrix in nutshell are: The assessee is a partnership firm and a dealer registered under the provisions of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act, 1963). It is engaged in the trading of chemicals and drugs and an assessee for sales tax on the rolls of Sales Tax Officer, Aluva.

4. Petitioner is opting and paying tax by self-assessment in accordance with Section 17(1) of

.K.G.S.T. Act read with the rules framed thereunder. The assessment had filed monthly and annual returns for the assessment year 1997-98, disclosing the turnover in chemicals and drugs for an amount of Rs.18,38,419.50 to various industrial units. In the returns filed, the petitioner has shown this turnover as taxable as provided under Section 5(3) of K.G.S.T Act. It is not in dispute nor it is disputed by the Revenue that the petitioner has collected tax at 3% from the purchasing industrial units and the collected tax is also remitted before the assessing authority. Section 5(3) of the Act provides for the confessional rate of tax of 3% on the sales of industrial raw materials etc. to industrial units, provided the selling dealer produces declaration in Form No.18 prescribed under

.K.G.S.T. Rules issued by the purchasing industrial unit before the assessing authority. During the relevant assessment year, the assessee had effected sales of industrial raw materials etc. for an amount of Rs.18,38,419.50 to various industrial units, but was able to procure Form No.18 declarations for Rs.14,52,891/- only from various purchasing industrial units. For the balance turnover, the petitioner could not collect Form No.18 declarations, since many of purchasing industrial units had closed their business units. Since the assessment had failed to produce those declaration forms, the assessing authority while quantifying the tax liability for the assessment year 1997-98 has granted the confessional rate of 3% tax only on the turnover covered by Form No.18 declarations and has levied tax at the rate specified in the schedule for the balance turnover and also has imposed interest under Section 23(3) of the Act.

5. The assesses being aggrieved by the levy of interest by the assessing authority had filed first appeal before the first appellate authority in S.T.A. No.1561 of 2001, who by his order dated 35.2002 had allowed the appeal in part and further had directed the assessing authority to calculate the interest payable by the assessee in the light of the law laid down by the Apex Court in Maruthi Wire Industries’ case, 2001 (2) KLT 100.

6. The Revenue being aggrieved by the order passed by the first appellate authority had preferred second appeal in T.A.No.543 of 2002 before the Kerala Sales Tax Appellate Tribunal, Additional Bench ii, Ernakulam, inter alia contending that the assessee is liable to pay interest from the due date of filing of the return and th