Automatic statutory penalty for late tax payment upheld despite final assessment adjustments and interim stay.

Penalty under section 23(3) of the Kerala General Sales Tax Act was treated as an independent statutory liability arising automatically when assessed tax was not paid within time. Final assessment adjustments under rule 20 did not extinguish that liability, which operated with rule 31 and did not depend on mens rea, wilful default, prior notice, or an opportunity of hearing. An interim stay only restrained recovery and did not stop accrual of the penalty. The penalty demand was therefore held valid and enforceable.

---

---

Issues: Whether penalty under section 23(3) of the Kerala General Sales Tax Act, 1963 could be levied after final assessment and without prior notice or opportunity of hearing, and whether the pendency of an interim stay prevented accrual and recovery of such penalty.

Analysis: Section 23(3) creates an independent statutory liability to pay penalty when the assessed tax is not paid within the prescribed time. Rule 20 governing adjustment after final assessment does not extinguish the separate liability for penalty under section 23(3) read with rule 31. The statutory language makes the liability automatic and mandatory, leaving no discretion to the assessing authority and excluding any requirement of mens rea or wilful default. For the same reason, principles of natural justice do not apply to the imposition of penalty under the provision. An interim stay only fetters recovery; it does not prevent the statutory accrual of the liability.

Conclusion: The penalty demand was valid and enforceable, and the challenge to exhibits P-1 and P-3 failed.

Ratio Decidendi: Where the taxing statute imposes an automatic penalty for non-payment within time, the liability accrues by force of the statute, is independent of final assessment adjustments, and is not controlled by mens rea or prior notice requirements.

---