The petitioner is aggrieved by Exhibit P6 notice issued for realisation of arrears, being the turnover tax under the Kerala General Sales Tax Act, 1963 [for brevity “KGST Act”] for the year 2009-10.
2. The assessment and the demand are not disputed.
Revenue recovery proceedings were initiated as per Exhibit P2. The petitioner approached this Court with Exhibit P3, wherein it was contended that payments made already were not given credit to. The petitioner specifically averred in the said writ petition that an amount of Rs.2,55,778/- paid by the petitioner in the subject year was not given credit. This Court, by Exhibit P3 judgment, directed to give credit to such amount, if payment is proved; and also granted four equal monthly instalments to pay off the balance liability. Subsequently, pursuant to Exhibit P3 judgment, Exhibit P4 Rectified Order was issued on 14.03.2013. The allegation of the petitioner, that, payments made were not credited, stood substantiated by Exhibit P4 order. Rectification was made and a demand for Rs.7,46,427/- and interest at Rs.3,12,172/- was raised. The petitioner remitted that amount as per the instalments granted by this Court before the Inspecting Assistant Commissioner, who is the Recovery Officer.
3. The petitioner is aggrieved by Exhibit P6, which demands more amounts as interest and collection charges coming to Rs.82,824/-. In fact, when a rectification was made as per Exhibit P4, the earlier revenue recovery notice cannot at all be continued. If the petitioner had not paid the amounts as per the instalments granted by this Court, definitely the Department ought to have modified the demand and initiated separate recovery proceedings. Hence, by Exhibit P3 judgment, the earlier revenue recovery proceedings cannot be proceeded with. The petitioner has also, admittedly, complied with the instalments granted by this Court as per Exhibit P3, when rectification of demand was made.
4. It is trite that under Section 55C of the KGST Act, appropriation has to be made first towards interest and the balance available towards principal outstanding. Hence, satisfaction of interest first and the balance against the demand of Rs.7,46,427/- towards TOT is justified. But, the Assessing Officer shall not calculate any interest prior to 14.03.2013. The amount payable as on 14.03.2013 is crystallized in the order Exhibit P4 and definitely future interest could be computed as per the appropriation made under Section 55C and a statement issued to that extent of the payments made in instalments. Hence, subsequent to Exhibit P4, when instalments are made, as directed in Exhibit P3; first the interest due should be satisfied. While any portion of the interest remains due, the tax demand would carry interest. On the interest being satisfied, payments should be credited to the tax demand. There shall be a direction to the 1st respondent to compute such amounts and give a statement to the petitioner within three weeks from today and if the petitioner remits the said amounts within three weeks therefrom, there shall be no further demand made.
5. With respect to collection charges claimed at Exhibit P6, the learned Government Pleader would contend that the petitioner was motivated to pay the amounts only on revenue recovery proceedings having been initiated and though the amounts were paid to the Inspecting Assistant Commissioner, being the Recovery Officer notified by the Government, the State is entitled to collection charges. As was noticed earlier, the petitioner did not satisfy the demand as per the revenue recovery proceedings initiated earlier only on account of having not been given proper credit for the payments made in the subject year. The allegations stood proved by the rectified order [Exhibit P4] passed. In such circumstance, it cannot be said that the revenue recovery proceedings were proper. It is also to be noticed that a Division Bench of this Court in Vijayan N.P. v. Tahsildar [2012 (4) KHC 151 (DB)] found that if payments were voluntary and based on interim orders issued by this Court, no collection charges could be demanded. In the present case, there was a mistake in computation and the petitioner approached this Court. The mistake in computation was rectified, as directed by this Court and the instalments also paid, as directed by this Court. In such circumstance, no collection charges could be recovered from the petitioner. It is so declared, on the facts revealed. Therefore, while giving computation statement as directed above, the Department shall not demand any collection charges from the petitioner.
The writ petition is disposed of as above. Parties are left to suffer their respective costs.
vku/-
Sd/- K.Vinod Chandran Judge.
( true copy )