Penal interest on omitted turnover begins when tax becomes due, not only from the date of a revised return.

Penal interest under section 23(3) of the Kerala General Sales Tax Act became payable when tax due on turnover was not paid within the prescribed time, and liability attached by operation of law from the date the unpaid tax should have been remitted. The obligation under rule 21(11) to file the annual return and pay the tax due meant that omission of turnover from the original return created default at that stage. A revised return did not defer the commencement of default, and no demand notice in form 14B was necessary to trigger interest. Penal interest was therefore chargeable from 1 May 1978 on tax attributable to the omitted turnover.

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Issues: Whether penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 was leviable from 1 May 1978 on the additional tax attributable to turnover omitted from the original return, and not merely from the date of filing of the revised return.

Analysis: Section 23(3), as amended with effect from 1 April 1978, made penal interest payable where tax due under the Act or under any rule was not paid within the prescribed time. Rule 21(11) required the dealer, after the close of the year, to submit form 8 showing the taxable turnover and to pay the tax due as per that return. The liability to pay penal interest arose by force of the statute when the tax that ought to have been shown and paid under the return remained unpaid; it did not depend on issuance of a demand notice in form 14B or on the filing of a revised return. The revised return could not postpone the commencement of default for the unpaid tax relatable to excess turnover.

Conclusion: Penal interest was rightly levied from 1 May 1978 on the unpaid tax attributable to the excess turnover, and the contention that it could run only from the date of the revised return failed.

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