Compounding under sales tax law does not waive additional tax liability, and delayed payment attracts statutory interest.

A dealer who opts for compounding under section 7 of the Kerala General Sales Tax Act, 1963 remains liable to pay additional sales tax under section 5D, because compounding is only a convenience in lieu of regular assessment and does not waive the statutory tax liability. Where that tax or any other amount due is not paid within the prescribed time, section 23(3) makes interest payable for the delay. Accordingly, penal interest was leviable on the delayed payment of additional sales tax, and the challenge to the demand failed.

---

---

Issues: Whether penal interest was leviable for delayed payment of additional sales tax payable under section 5D of the Kerala General Sales Tax Act, 1963 by a dealer who had opted for compounding under section 7 of the Act.

Analysis: Additional sales tax under section 5D was held to be payable even in the case of a dealer assessing tax at compounded rates under section 7. Compounding was treated as a accepted for the assessee's convenience in lieu of regular assessment, and it did not exempt the dealer from the statutory obligation to pay tax due within time. Section 23(3) provided that where tax or any other amount due under the Act was not paid within the prescribed time, interest became payable for the delay.

Conclusion: Penal interest was leviable on delayed payment of additional sales tax, and the challenge to the demand failed.

Ratio Decidendi: A dealer who opts for compounding under section 7 remains liable to pay additional sales tax under section 5D, and delay in payment attracts statutory interest under section 23(3) of the Kerala General Sales Tax Act, 1963.

---