C.N.Ramachandran Nair, J. –

Revision is filed against the order of the Tribunal sustaining balance demand of tax and interest on the respondent/assessee for the assessment year 2001-2002.

2. We have heard the learned counsel appearing for the petitioner and the learned Government Pleader for the State.

3. Assessee, a dealer in paper, remitted tax at 4% on paper sold during the year 2001-2002. However, rate of tax on paper was increased during the financial year from 4% to 8%. Since returns filed and tax paid was at 4% as against 8% payable, assessee was in arrears of substantial amount of tax.

Even before assessment was taken up, the assessee made an application on 20.2.2004 for settlement of liability under the Amnesty Scheme under Section 23B(2) of the KGST Act, which provides for waiver of default interest upto 70%. The application filed for settlement under the Amnesty Scheme produced as Annexure-A shows that the said application was filed by the petitioner under protest. The Assessing Officer passed an order on 26.2.2004 in terms the petitioner's request and accordingly tax and reduced interest was settled at Rs.5,61,682/-. However, when assessment was completed on 16.6.2005 based on return filed through Annexure-D produced before this Court, it is seen that the balance amount of tax due was Rs.5,88,786/-, which is more than the amount of tax stated as due and paid by the petitioner under the Amnesty Scheme. While completing the assessment, the Assessing Officer by applying Section 55C credited the payment towards interest first and then demanded the balance tax and interest. Under the assessment so made demand of tax is Rs.5,88,786/- the interest demanded is Rs.4,41,589/-. The petitioner filed appeal against the assessment without challenging turn over assessed or rate of tax applied but for the purpose of cancellation of demand of tax and interest for the reason that once liability is settled under Section 23B, there is no justification for assessment and demand of tax. The 1st appellate authority remanded the matter granting partial relief to the petitioner, that is, to give Amnesty benefit for the payments made. On Second Appeal filed by the Department, the Tribunal reversed the 1st Appellate Authority's order and restored the assessment on the ground that the petitioner is not entitled to the Amnesty benefit claimed by them.

4. The question to be considered is whether the petitioner, who was allowed to settle liability under the Amnesty Scheme before assessment was rightly declined the benefit in the course of completion of assessment. Inorder to consider this question, we have to necessarily consider the scope of Section 23B of the KGST Act, the relevant portion of which is extracted hereunder.

23B. Reduction of interest in certain cases:-

(1) Notwithstanding anything contained in this Act, or in any judgment, decree or order of any Court or Tribunal, an assessee, who is in arrears to pay tax or any other amount due under this Act upto the period ending on 31st March, 2003 may opt for settling arrears, by availing a reduction of interest, by paying the amount as shown below:-

(i) outstanding tax amount along with 30 per cent of interest already due on the date of payment, if paid on or before 29th February, 2004.

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(4) Where any second appeal or revision filed by the Government is pending against any order or proceedings giving rise to any demand and an assessee has opted to avail himself of the benefit under this section in respect of such demand, such appeal or revision may be continued as if the dealer had not opted for the benefit under this section.

5. Admittedly, when Annexure-A application was filed under Section 23B for settlement, assessment was not completed. When assessment is pending, the tax due and payable by the dealer can be the tax due under the returns filed. The conte