Interest on wrongly exempt turnover upheld where withdrawn exemption left taxable turnover unpaid under sales tax law.

Interest was held payable on tax attributable to turnover that continued to be shown as exempt after the exemption had been withdrawn. Section 23(3) of the Kerala General Sales Tax Act, 1963 covers tax or other assessed amounts not paid within time, and section 23(3A) extends interest to turnover not included in the return or escaping assessment, with interest running from the date the tax should have been paid if the turnover had been correctly disclosed. The failure to revise the return and pay tax on the now-taxable turnover was treated as misclassification leading to nonpayment, so the levy of interest was sustained.

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Issues: Whether interest was leviable on the tax attributable to turnover wrongly shown as exempted turnover after withdrawal of the exemption, under section 23(3) and section 23(3A) of the Kerala General Sales Tax Act, 1963.

Analysis: Section 23(3) provides for interest where tax or any other amount assessed or due under the Act is not paid within the prescribed time. Section 23(3A) extends the charge of interest to cases where turnover is not included in the return or has escaped assessment, so that interest accrues from the date the tax would have fallen due had the turnover been correctly shown. The turnover in question had originally been treated as exempted, but once the exemption was withdrawn, the return ought to have been revised and tax paid. The failure to do so was treated as a case of misclassification resulting in nonpayment of tax on taxable turnover, which attracted the statutory interest provision. The authorities relied on by the petitioner were distinguished on the ground that they arose before the introduction of section 23(3A) or involved different facts.

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

Ratio Decidendi: Where turnover is wrongly continued to be shown as exempt after withdrawal of exemption, the resulting nonpayment of tax is covered by the statutory interest provision for failure to pay tax due on taxable turnover.

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