Penal interest under Kerala sales tax law runs only after assessment or self-assessment creates liability, not from the return due date.

Penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 arises only after an actual assessment or self-assessment has created an assessed tax liability, so the mere failure to file a return does not deem assessment to have occurred on the return due date. Where no return is filed, the later assessment order and demand notice fix the point from which penal interest can run. Accordingly, the levy could not be charged from the original return due date and was sustainable only for the period after service of the assessment demand on tax remaining unpaid.

---

---

Issues: Whether penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 was leviable from the due date for filing the return when no return had been filed and the assessment demand was served later.

Analysis: Section 23(3) fastens liability for penal interest on default in payment of assessed tax within the prescribed time. The provision contemplates an assessment, whether by self-assessment on filing of a return or by statutory assessment by the assessing authority, as the foundation for the liability. Where no return is filed and no self-assessment arises, it cannot be treated as though an assessment had already been made on the date the return ought to have been filed. The later assessment order and demand notice therefore determine the point from which penal interest can run, and the earlier due date for filing the return does not by itself attract the levy.

Conclusion: Penal interest was not payable from the return due date. The demand was sustainable only for the period after service of the assessment demand on the tax remaining unpaid on that date.

Ratio Decidendi: Liability to penal interest under section 23(3) arises only after an actual assessment or self-assessment has created an assessed tax liability, and no fiction of assessment can be applied merely because the assessee failed to file a return.

---