Interest on omitted taxable turnover under the Kerala General Sales Tax Act was upheld for return-based compounding assessment.

Interest under section 23(3A) of the Kerala General Sales Tax Act, 1963 was payable on the differential tax arising from the omission of taxable turnover from the prior year's return under the compounding scheme. The return did not include the purchase turnover of old gold, although the accounts disclosed it, and the subsequent year's compounded tax was computed on that return, creating a shortfall. Section 23(3A) applies where turnover is omitted from a return or escapes assessment, and interest runs from the date the tax would have become due had the turnover been correctly disclosed. The revisional authority was therefore justified in restoring the interest levy.

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Issues: Whether interest was leviable under section 23(3A) of the Kerala General Sales Tax Act, 1963 on the differential tax arising from non-inclusion of taxable turnover in the return filed for the preceding year under the compounding scheme.

Analysis: The appellant had filed the return for the preceding year without including the purchase turnover of old gold assessable under section 5A of the Kerala General Sales Tax Act, 1963, though the accounts disclosed it. The compounded tax for the subsequent year was worked out on the basis of the return filed for the preceding year, and the shortfall arose because the return did not reflect the full taxable turnover. Section 23(3A) applies where a dealer fails to include any turnover in the return filed or where turnover escapes assessment, and interest accrues on the tax due from the date it would have fallen due had the turnover been correctly shown. The revisional authority was therefore justified in restoring the levy of interest.

Conclusion: Interest was rightly levied under section 23(3A) of the Kerala General Sales Tax Act, 1963, and the challenge to the levy failed.

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