Saving clauses preserve past tax liabilities, but they do not create fresh penal interest on arrears under the repealed law.

A saving clause in a repealing statute preserves the substantive rights, obligations and liabilities arising under the earlier law for the period when it operated. On that basis, penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 could not be imposed on sales tax arrears that accrued under the repealed General Sales Tax Act, 1125, because the later provision was treated as creating a new substantive liability and not merely a recovery mechanism. The procedural part of the saving clause continued pending or recovery actions, but it did not extend to fresh penal liability for past arrears. Recovery of the admitted tax and surcharge remained open.

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Issues: Whether penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 could be levied on arrears of sales tax relating to a period when the General Sales Tax Act, 1125 was in force.

Analysis: Section 61 of the Kerala General Sales Tax Act, 1963 repeals the 1125 Act but preserves rights, titles, obligations and liabilities already acquired, accrued or incurred under the repealed law. The saving provision maintains the substantive position governing the tax period when the earlier Act was operative. The part of section 61 deeming pending actions and authorising recovery of arrears under the new Act was treated as procedural and confined to the machinery of assessment and recovery. It did not create a fresh substantive liability for the past period. Penal interest under section 23(3) is a new liability and cannot be read into arrears that arose when the repealed Act governed the field.

Conclusion: Penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 was not recoverable for arrears relating to the period governed by the General Sales Tax Act, 1125.

Final Conclusion: The demand for penal interest was unsustainable, though recovery of the admitted balance tax and surcharge remained open.

Ratio Decidendi: A repealing saving clause preserves the substantive liabilities and immunities existing under the repealed statute for the period of its operation, and a later enactment cannot impose a new penal liability on past tax arrears unless the legislature clearly so provides.

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