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Issues: (i) Whether penal interest under the Kerala General Sales Tax Act, 1963 could be levied without prior service of a demand notice when the tax liability had been admitted and the tax had not been paid within the prescribed time. (ii) Whether turnover tax became payable only at the end of the year or as soon as the taxable turnover exceeded the prescribed limit.
Issue (i): Whether penal interest under the Kerala General Sales Tax Act, 1963 could be levied without prior service of a demand notice when the tax liability had been admitted and the tax had not been paid within the prescribed time.
Analysis: The liability to pay penal interest arises automatically when the tax assessed is not paid within the time prescribed by the Act or the relevant rule. On admitted liability, the absence of a demand notice does not prevent levy of penal interest. The judgment follows the principle that notice of demand is not an essential pre-requisite for levy and collection of penal interest under the statutory scheme.
Conclusion: The levy of penal interest without a prior demand notice was valid and was not in favour of the assessee.
Issue (ii): Whether turnover tax became payable only at the end of the year or as soon as the taxable turnover exceeded the prescribed limit.
Analysis: Once the taxable turnover crosses the statutory limit, the liability to turnover tax attaches at that moment. The dealer cannot defer payment until the close of the year merely because the turnover is finally ascertained on annual assessment. Payment is exigible during the year itself along with the relevant returns when the threshold is crossed.
Conclusion: Turnover tax was payable during the year on crossing the prescribed limit, and the contention that it arose only at year-end was rejected.
Final Conclusion: The challenge to the notices failed, and the petition was dismissed as the assessee's liability to penal interest and turnover tax was upheld.
Ratio Decidendi: Under the Kerala General Sales Tax Act, 1963, penal interest for delayed payment of admitted tax is automatic and does not depend on prior demand notice, and turnover tax liability attaches immediately upon the taxable turnover exceeding the statutory limit.
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