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1992 DIGILAW 90 (KER)

Abdulla v. Sales Tax Officer

1992-03-06

JAGANNADHA RAO, KRISHNAMOORTHY, PARIPOORNAN

body1992
Judgment :- Paripoornan, J. Identical question of law arises for consideration in both the cases. The interpretation of S.23(3) of the Kerala General Sales Tax Act. 1963 (in short. the act) arises for consideration. A Bench of this Court referred O.P.No. 3501 of 1986 to a Full Bench. noticing that there is a conflict between the Division Bench decision in Haridas v. Asst. Commissioner of Sales Tax (44 STC 26 =1979 KLT 212) and the decision of a Division Bench in Joy Varghese v. State of Kerala (62 STC 227). That is how O.P.No. 3501 of 1986 is coming up before the Full Bench. Writ Appeal 16 of 1988 is preferred against a judgment of a learned single judge of this Court rendered in O.P.No. 10425 of 1984. dated 24th August 1987. The O.P. was dismissed with certain directions. The challenge in the said O.P. was against Ext. P1 order of the Sales Tax Officer. Trivandrum. dated 12-3-1984. levying penal interest in the sum of Rs. 47.959.91. which was affirmed in Ext. P4 revisional order by the Deputy Commissioner of Sales Tax (South Zone). Quilon. dated 6-6-1984. Penal interest was levied for non-payment of collected tax. For July and September 1980 the collected tax of Rs.23645.89 was not paid till 19-1-1984. Similarly the collected tax of Rs. 42.272/- for the months of December 1980 and January and February 1981 was not paid till 19-1-1984. In the circumstances. penal v interest was worked but as per S.23(3) of the Act in the sum of Rs. 47.959.91. The levy of penal interest was taken up in revision. The Deputy Commissioner of Sales Tax by order dated 6-6-1984. affirmed the levy of penal interest aforesaid. The challenge against Exts. P1 and P4 did not succeed before the learned Single Judge. who by judgment dated 24-8-1987 dismissed the O.P. with some directions. Aggrieved by the said decision the petitioner in the O.P. filed the writ appeal. No. 16 of 1988. A Bench of this Court. by order dated 11-2-1988. referred the matter to a Full Bench for consideration in view of the general importance of the question. In O.P.No. 3501 of 1986 the attack is against levy of penal interest under S.23(3) of the Act for the assessments made on the assessee-petitioner in the O.P.- under the Central Sales Tax Act for the assessment years 1982-83.1983-84 and 1984-85. For the years 1982-83 by Ext. In O.P.No. 3501 of 1986 the attack is against levy of penal interest under S.23(3) of the Act for the assessments made on the assessee-petitioner in the O.P.- under the Central Sales Tax Act for the assessment years 1982-83.1983-84 and 1984-85. For the years 1982-83 by Ext. P1. dated 13-9-1984. the petitioner was directed to remit a penal interest of Rs. 27.800.68 for non-payment of collected tax of Rs. 85.754.64. Similarly. by Ext. P4 dated 4-1-1986. for the year 1983-84 penal interest was levied in the sum of Rs. 23.380.80 for non-payment of collected central sales tax of Rs. 60.488.75 for the period from 1-5-1984 to 31-12-1985. So also by Ext. P6 dated 4-1-1986. for the year 1984-85 the assessee-petitioner was directed to pay penal interest of Rs. 4.638/-for non-payment of collected Central Sales Tax for the period from 1-5-1985 to 31-12-1985. collected tax being Rs. 35.675.64. A learned Single Judge of this Court referred the matter to a Division Bench. by order dated 21-10-1986. Later. a Division Bench of this Court. by order dated 26-3-1987 referred the matter to a Full Bench for consideration. That is how O.P.No. 3501 of 1986 has come up before the Full Bench. 2. In both the cases the penal interest levied under S.23(3) of the Act is attacked as illegal and without jurisdiction. The ground of attack is the same in both the cases. The plea is that service of a notice of demand in form No. 24 is an essential prerequisite for the levy of penal interest under S.23(3) of the Act. The above plea is sought to be substantiated by the Bench decision of this Court in Joy Varghese case (62 STC 227). 3. We heard counsel The short question that is posed for consideration in both the cases is whether service of a notice of demand is essential for the levy and collection of penal interest specified in S.23(3) of the Act. According to the Revenue. the service of a notice of demand. as stated by the petitioners. is unnecessary to fasten liability on the assessees for payment of penal interest under S.23(3) of the Act. Both sides placed before us a few decisions in support of their respective pleas. 4. In order to appreciate the rival pleas advanced before us. According to the Revenue. the service of a notice of demand. as stated by the petitioners. is unnecessary to fasten liability on the assessees for payment of penal interest under S.23(3) of the Act. Both sides placed before us a few decisions in support of their respective pleas. 4. In order to appreciate the rival pleas advanced before us. we have first to bear in mind that in both the cases the assessees had opted to pay the sales tax as per their monthly returns. R.21(7) of the Kerala General Sales Tax Rules. 1963 (in short. the rules) and Rules 21(10) govern such payment. Rules 18(1) and (3) deal with annual return and final assessment. For the purpose of resolving the controversy in these cases. we have to construe S.23(1)(3) of the Act and Rules 18(1) & (3). 21(7) read with 21(10). and 31 of the Rules and Form No. 24. FormNo.14 deals with notice of provisional annual demand relevant under R.18(3) and R.21(2). Similarly. form No. 14-D deals with a notice for provisional monthly demand under R.21(10). The core of the controversy is that a service of notice of demand as stipulated in Form No. 24 is a necessary pre-requisite for levy and collection of penal interest under S.23(3) of the Act. read with the Rules. We shall Extract S.23(1) & (3) of the Act. and Rules 18(1) & (3). 21(7) & (10) and 31 of the Rules and Form Nos. 14.14-D and 24 of the 'Rules. S.23(1) & (3) of the Act:-- "23. Payment and recovery of tax:--(1) The tax assessed or any other amount demanded under this Act shall fe paid in such manner and in such instalments. if any. and within such time. as may be specified in the notice of demand. not being less than twenty-one days from the date of service of notice. If default is made in paying according to the notice of demand. the whole of the amount outstanding on the date of the default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or other amount under this Act: Provided that the time limit of twenty one days for a notice under this sub-section shall not apply to casual traders. (3) If the tax or any other amount assessed or due under this Act is not paid by any dealer or other person within the time prescribed therefore in this Act or' in any rule made thereunder and in other cases within the time specified therefore in the notice of demand. or within the time allowed for its payment by the appellate or revisional authority. as the case may be. or if payment is permitted in instalments by any of the authorities empowered in this behalf. any such instalment is not paid within the time specified therefore. the dealer or other person shall pay. by way of penal interest. in the manner prescribed. in addition to the amount due. a sum equal to. (a) one per cent of such amount for each month or part thereof for the first three months after the date specified for its payment; (b) one per cent of such amount for each month Rules 18(1) & (3) of the Rules: "18. Annual return and final assessment- (1) Every dealer liable to pay tax under the Act. irrespective of the quantum of his total turnover and every dealer whose total turnover for the year is not less than the minimum specified in S.5 or S.5A. shall. on or before the first day of May in every year. submit to the assessing authority of the area in which his principal place of business is situated. a return in Form 8 showing the total turnover and taxable turnover for the preceding year. the amounts by way of tax or taxes due on the taxable turnover during the year. (3) Every dealer liable to submit a return in Form 8 under sub-rule (1) or (2) shall submit along with the return a receipt from a Government Treasury (or at least note in the return the name of the Treasury and the number and the date of the receipt. in which case he shall produce the receipt before the assessing authority whenever required to do so). crossed cheque or crossed demand draft in favour of the assessing authority for the full amount of tax or taxes due for the year on the basis of the return or for the full amount of tax or taxes actually collected by him. whichever is higher after deducting therefrom the provisional tax if any. paid already for the year. crossed cheque or crossed demand draft in favour of the assessing authority for the full amount of tax or taxes due for the year on the basis of the return or for the full amount of tax or taxes actually collected by him. whichever is higher after deducting therefrom the provisional tax if any. paid already for the year. failing which the assessing authority shall serve upon the dealer a demand notice in Form 14 and the dealer shall pay the sum demanded within the time and in the manner specified therein." Rules 21(7) & (10) of the Rules: "21. Submission of monthly returns xx xx (7) Every dealer who is liable to pay tax under the Act and whose taxable turnover in a year is not less than ten thousand rupees. including those liable to be assessed under S.7 and every dealer who is required so to do by the assessing authority by a notice. shall submit so as to reach the assessing authority within 25 days of the publication of the Kerala General Sales Tax (Amendment) Rules. 1983 in the Gazette or receipt of the notice. as the case may be. a return in Form 9 showing the total and taxable turnover preceding to the publication of the Kerala General Sales Tax (Amendment) Rules. 1983. in the Gazette. the amount or amounts actually collected by way of tax or taxes and the amount of tax due on the taxable turnover for each of the months preceding to the publication of the Kerala General Sales tax (Amendment) Rules. 1983 in the Gazette beginning from April 1982. Along with the return or returns for the preceding month or months. he shall also submit a receipt from a Government Treasury (or atleast note in the return the name of the Treasury and the number and date of receipt. in which case he shall produce the receipt before the assessing authority whenever required to do so). a crossed cheque or a crossed demand draft in favour of the assessing authority for the full amount of the tax or taxes payable on the taxable turnover for the preceding month or months to which the return (s) relate (s). Thereafter. he shall submit so as to reach the assessing authority on or before the 15th day of every month. Thereafter. he shall submit so as to reach the assessing authority on or before the 15th day of every month. a return in Form 9 for the preceding month together with proof, in any of the modes mentioned above, of payment of the full amount of the tax due for that month. (10) If the return is submitted without a treasury receipt. crossed cheque or crossed demand draft for the full amount of the tax payable in favour of the assessing authority. the assessing authority shall serve upon the dealer a notice inform 14D and the dealer shall pay the sum demanded within the time and in the manner specified therein." rule 31 of the rules: "31. Mode of payment of penalty:-(1) The penal interest payable under sub-section (3) of S.23 shall be remitted into the Government Treasury or paid by means of crossed cheque or crossed demand draft in favour of the assessing authority concerned either separately or along with the tax. (2) The assessing authority concerned may calculate the penal interest payable under sub-section (3) of S.23 from time to time and may issue a notice in Form 24. On receipt of the notice the dealer shall pay the penal interest due in the manner specified in sub-rule (1). Explanation:-The dealer or other person concerned shall however be liable to pay the penal interest under sub-section (3) of S.23 whether he receives a notice under this sub-rule or not." Form No. 14 of the Rules:- Take notice that on the basis of the return in Form 9 furnished by you for the month of 19 you are liable under Kerala General Sales Tax Act. 1963 (15 of 1963) to pay tax of Rs (Rupees) (in words) for the month and you have still to pay a/ the (further) sum of Rs (Rupees) (in words) only. This amount shall be paid along with penal interest, if any, due under S.23(3) within 30 days from the date of service of this notice by crossed cheque or crossed demand draft in favour of the undersigned or by remittance into the Government Treasury at failing which. the amount will be recovered as if it were an arrear of land revenue and/or fine imposed by a Magistrate and you will also be liable to pay the penalty prescribed under S.45A of the Act. the amount will be recovered as if it were an arrear of land revenue and/or fine imposed by a Magistrate and you will also be liable to pay the penalty prescribed under S.45A of the Act. The above demand is only provisional and any further amount to be paid by you or any refund to be made to you will communicated after final assessment. Turnover reported in the return. Whereas you have defaulted to make payment of the sum of Rs (in figures) rupees (in words) being the balance of tax due from/assessed on you as per the demand notice served on within the date fixed for payment thereof; And whereas by reason of your default to make payment of the arrears of such balance of tax/ tax. a further sum of Rs....( in figures) rupees (in words) has been imposed on you as penal interest under S.23(3) of the said Act. You are hereby directed to pay the sum of Rs.... (in figures) Rupees (in words) being the balance of tax due/ tax and a sum of Rs (in figures) rupees (in words) being the penal interest imposed on you as aforesaid on or before by crossed cheque or crossed demand draft in favour of the undersigned or by remitting into the Government Treasury. failing which the sum shall be recoverable from you as an arrear of land revenue and/or as a fine imposed by a Magistrate. Place: Date: Signature of the Assessing authority. (with the seal of office) 5. S.23 of the Kerala General Sales Tax Act. 1963. was amended by Act 12 of 1976. Act 21 of 1978 and Act 6 of 1988. S.23(3) of the Act as it stood before Act 12 of 1976 along with R.31. and Forms 11 and 24 came up for consideration before a bench of this Court in Surma/7 Shell Oil Storage and Distributing Co. of India Ltd. v. The Sales Tax Officer (32 STC 429). In that case the assessee was paying tax under R.21 method. The payments had to be made before the 10th of every month. The assessee company committed default on twelve occasions. Such delay in the payments ranged from one day to nine days. The plea of the assessee was that the delay was not wilful. There was no mens rea for the default. Levy of "penalty" as specified in S.23(3). The payments had to be made before the 10th of every month. The assessee company committed default on twelve occasions. Such delay in the payments ranged from one day to nine days. The plea of the assessee was that the delay was not wilful. There was no mens rea for the default. Levy of "penalty" as specified in S.23(3). without giving notice to the assessee was unauthorised. Negativing the said pleas. T.C. Raghavan. C.J.. speaking for the Bench. stated the law thus: at page 434 (32 STC 429 at p. 434):- "The language of S.23(3) appears to make the payment contemplated by the section an absolute liability on the assessee. If the tax assessed is not paid within the time allowed. whatever be the reasons for the non-payment. the dealer or other person shall pay. by way of penalty. in the manner prescribed. in addition to the amount due a sum equal to half per cent of such amount for each month or part thereof. for the first three months. and one per cent of such amount for each month or part thereof. subsequent to the three months. There is no question of the taxing authority exercising any discretion under the statute; no discretion is contemplated or vested in the authority; the penalty at the particular rate mentioned in the section automatically clinches on the failure to pay the amount within the time mentioned in the section. If there is no discretion left in the assessing authority by the statute itself. there is no question of the exercise of discretion being quasi-judicial and no question of giving notice to the assessee before the exercise of discretion. As we have stated already. the penalty is in the nature of the interest by way of damages payable on the defaulted amount at the particular rate mentioned in the section itself." At page 435 the learned Chief Justice again observed thus: "even if we construe the penalty under the section as a criminal imposition (which. we confess. we are not able to do). still the language of the section makes it abundantly clear that the intention of the Legislature was to make it an absolute liability without any mens rea ............ the present case will come within the last category. where. though t he proceeding is criminal in form. still. we confess. we are not able to do). still the language of the section makes it abundantly clear that the intention of the Legislature was to make it an absolute liability without any mens rea ............ the present case will come within the last category. where. though t he proceeding is criminal in form. still. it is only a summary mode of enforcing a civil right" S.23(3)" of the Kerala General Sales Tax Act. 1963. came up for consideration again before another Division Bench of this Court in V. Haridas v. The Assistant Commissioner. Sales Tax (assessment )1979 KLT 212 = (44 STC 26). In that case arrears of sales tax were due from an assessee in respect of assessments for the years 1970-71 to 1973-74. On the assessee' s motion the Government allowed him to pay the amount in instalments. The assessee paid the instalments in time and the arrears were liquidated. In spite of prompt payment of the instalments. penalty (penal interest) was imposed for non-payment of arrears due. The plea of the assessee was that the assessee had paid the arrears in instalments as per Government order. Ext. P2. and so no penalty was imposable. The Division Bench noticed the earlier decision in Burmah Shell Co. Ltd. case (32 STC 429) and held that the liability to pay interest is automatic and arises by operation of law. It was further held that there was no provision enabling the Government to pass an order granting instalment payment. The Division Bench held that the officer was not required to draw any formal order. imposing the penalty on the assessee. since the accrual of penal interest is automatic on the occurrence of the default. V.P. Gopalan Nambiar C.J.. delivering the judgment of the Bench in V.Haridas case 1979 KLT 212 = (44 STC 26) at p.30. slated the law thus: "It may be that without drawing up any formal order imposing a penalty under S.23(3) of the Act. the authorities maybe able to recover the penalty under S.24. as the liability to pay penal interest is automatic as explained in these decisions. If so. it would be open to the department to pursue such steps for recovery of penal interest as they might be advised to take. Thee is no provision in law or under the statute to pass orders of the type of exhibits P5 to P7." (Exts. If so. it would be open to the department to pursue such steps for recovery of penal interest as they might be advised to take. Thee is no provision in law or under the statute to pass orders of the type of exhibits P5 to P7." (Exts. P5 to P7 orders were passed by the Sales Tax Officer imposing penalty on the petitioner for default of payment of arrears of sales tax). 6. The levy or claim of interest for failure to pay the tax along with the returns. as enjoined by the statute. came up for consideration before the Supreme Court in Associated Cement Co. Ltd. v. Commercial Tax Officer. Kota (48 STC 466). In that case the assessee had filed returns for the period August 1. 1973 to July 31. 1974. i.e. the assessment year 1974-75. In the said return the assessee had not included in the taxable turnover the freight charges paid in respect of the goods. The assessee was under the bona fide belief that it was not so includable in the light of the same decisions of High Courts and the Supreme Court. In the light of a later Supreme Court decision rendered on August 22.1978. the assessee filed a revised return in respect of an assessment year in question. 1974-75. before the assessing authority on 28th October. 1978 including the freight charges in the taxable turnover. The assessee also deposited along with the revised returns the balance sales tax payable under the Act. The liability of the assessee to pay the interest on the tax paid in respect of freight charges between the date on which it was payable along with the original return and the date of actual payment along with the revised returns came up for consideration. Ss.7(1) & (2) and 11B(a) & (b) of the Rajasthan Sales Tax Act. as it stood at the relevant time. was considered by the Supreme Court. which ran as follows: 7. Submission of returns:- (1) Every registered dealer. and such other dealer. as may be required to do so by the assessing authority by notice served in the prescribed manner. shall furnish prescribed returns. for the prescribed periods. in the prescribed forms. as it stood at the relevant time. was considered by the Supreme Court. which ran as follows: 7. Submission of returns:- (1) Every registered dealer. and such other dealer. as may be required to do so by the assessing authority by notice served in the prescribed manner. shall furnish prescribed returns. for the prescribed periods. in the prescribed forms. in the prescribed manner and within the prescribed time to be assessing authority: Provided that the assessing authority may extend the date for the submission of such returns by any dealer or class of dealers by a period not exceeding fifteen days in the aggregate. (2) Every such return shall be accompanied by a treasury receipt or receipt of any bank authorised to receive money on behalf of the State Government. showing the deposit of the full amount of tax due on the basis of return in the Government treasury or bank concerned." " 1 IB. Interest on failure to pay tax. fee or penalty: --(a) If the amount of any tax payable under sub-sections (2) and (2A) of S.7 is not paid within the period allowed. or (b) if the amount specified in any notice of demand. whether for tax. fee. or penalty. is not paid within the period specified in such notice. or in the absence of such specification. within 30 days from the date of service of such notice. the dealer shall be liable to pay simple interest on such amount ai one per cent per month from the day commencing after the end of the said period for a period of three months and atone and a half per cent per month thereafter during the time he continues to make default in the payments:" Construing the above provisions. the Court held thus in the majority decision: "We arc concerned in this case with the liability of the assessee to pay interest on the amount of tax which had remained unpaid. Tax. interest and penalty are three different concepts. Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute. Penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Tax. interest and penalty are three different concepts. Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute. Penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Interest is ordinarily claimed from an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual amount of tax withheld and the extent of delay in paying it. It may not be wrong to say that such interest is compensatory in character and not penal." (We are not concerned herein with the other aspects decided in the said case) 7. The levy of interest under S.23(3) of the Act again came up before a Bench of this Court in Joy Varghese v. State of Kerala (62 STC 227). In the said case the assessee failed to pay the tax on the basis of the return filed by him under R.18(1) of the Rules. The said rule provided for filing a return in Form No. 8. showing the total turnover and taxable turnover for the preceding year and the amounts by way of tax and or taxes collected during the year and still due on the taxable turnover. R.18(3) proceeded to say that along with the return in Form No. 8 the dealer shall submit a receipt from the Government Treasury for the full amount of tax or taxes due for the year on the basis of the return. ailing which. the assessing authority was enabled to serve a notice of demand on the dealer in FormNo.14. when the dealer shall pay the demanded sum in the manner required. The Court construed R.18(1) and the other provisions and held that the dealer is required to make his own assessment and state the total taxable turnover as also the tax payable by him in the return. which is required to be submitted in Form No. 8. within the specified time. It was further held that if the dealer failed to submit evidence regarding payment s . enjoined in R.18(3). an obligation is cast on the assessing authority under R.18(3) to serve a demand notice in Form No. 14 and the clear implication is that if the dealer complies with the terms in the demand in Form No. 14. It was further held that if the dealer failed to submit evidence regarding payment s . enjoined in R.18(3). an obligation is cast on the assessing authority under R.18(3) to serve a demand notice in Form No. 14 and the clear implication is that if the dealer complies with the terms in the demand in Form No. 14. he shall not incur the liability to pay the penalty prescribed under S.23(3) of the Act. The Division Bench held that it is clear that the failure to make the payment. is that payment which is required to be made in accordance with the notice of demand contemplated under sub-rule(3) of R.15 of the Rules. issued under R.14 and it is the failure on the part of the dealer to pay the amount in accordance with the demand in Form No. 14. that attracts liability to pay the penal interest under S.23(3) of the Act. Placing heavy reliance on the above said decision. it was argued by assessee's counsel that the service of nice of demand is an essential pre-requisite for levy and collection of interest under S.23(3) of the Act. Our attention was also invited to a decision of the Bombay High Court in Commissioner of Sales Tax v. Machinery Sales Service (77 STC 131). where the said court has followed the Kerala decision in Joy Varghese case (62 STC 227). The Bombay High Court dissented from a Bench decision of the Gujarat High Court in Motilal Joitaram Patel v. Sales Tax Officer (1975 Tax L.R.1589). 8. With great respect to the learned judges who rendered the decision in Joy Varghese case (62 STC 227). we are of the view. that the said decision does not lay down the law correctly. Our reasons therefor are as follows: According to the Division Bench. the provisions of S.23(3) of the Act. read with R.18(1) & (3) of the Rules requires the dealer to make his "own assessment" and state the taxable turnover as also the tax payable by him in the ret urn. which is required to be submitted in Form No. 8 within the specified time. The statutory provision also enjoined on the dealer to submit evidence regarding payment of lax in accordance with the return. Having stated that the statutory provisions required the dealer to make "his own" assessment (self assessment) and pay the tax so assessed. which is required to be submitted in Form No. 8 within the specified time. The statutory provision also enjoined on the dealer to submit evidence regarding payment of lax in accordance with the return. Having stated that the statutory provisions required the dealer to make "his own" assessment (self assessment) and pay the tax so assessed. the Division Bench placed undue reliance on Form No. 14 to hold that the payment. which is required to be made. is only in accordance with notice of demand issued in Form No. 14. and it is only the failure on the part of the dealer to make payment in accordance with the demand in Form No. 14 that attracts the liability to pay penal interest under S.23(3) of the Act. S.23(3) itself provides for different contingencies. in when. the penal interest is payable. The con tangencies envisaged therein are distinct and different. One of the contingencies envisaged is that if the dealer fails to pay the tax assessed (his own assessment or self assessment) that itself will attract the liability to pay the penal interest. The section also provides for other contingencies. including the non-payment of tax within the time specified therefor in the notice of demand issued. With great respect. the Division Bench ignored the first limb of section 23(3). namely that "if the tax assessed". thereby conveying that if the dealer as per his own assessment (self assessment) did not pay the tax as enjoined in the Rules. i.e. along with the returns filed. that itself makes him liable to pay the penal interest. In such a situation where by self assessment the tax becomes due on the filing of the return. a further notice of demand in Form No. 14 is irrelevant or a surplus age. Failure to pay the tax as per own assessment itself entails consequences provided by S.23(1) read with S.23(3) of the act. Secondly. the Division Bench placed reliance on R.18 similar to R.21. which is applicable herein; but totally ignored R.31. which has decisive impact in the matter of mode of payment of penal interest under S.23(3) of the Act (rule 31 is extracted in page 11 supra). R.31 was not noticed at all. According to us. R.31 totally dispenses with service of a notice of demand for payment of interest due under S.23(3) of the Act. Thirdly. which has decisive impact in the matter of mode of payment of penal interest under S.23(3) of the Act (rule 31 is extracted in page 11 supra). R.31 was not noticed at all. According to us. R.31 totally dispenses with service of a notice of demand for payment of interest due under S.23(3) of the Act. Thirdly. in Joy Varghese case the attention of the Division Bench was not invited to the earlier two Bench decisions of this Court. rendered in burma/ 7 Shell Oil Storage and Distributing Co. of India Ltd. v. The Sales Tax Officer (32 STC 429) and Hafidas case 1979 KLT 212 = (44 STC 26). The earlier two Bench decisions have unambiguously laid down the law that the liability to pay the penal interest automatically clinches on the failure to pay "the tax assessed" within the lime mentioned in the statement. and the liability to pay penal interest is automatic. The officer is not even required to draw or pass a formal order. levying the interest payable under S.23(3) of the Act. On a plain reading of S.23(1) read with S.23(3) of the Act. as it stood at the relevant time. it is evident that if "the tax assessed" is not paid by any dealer within the time specified therefor in any rule. the dealer shall pay penal interest. In this case the assessees had opted for rule 21 assessment. By filing the return. they had made their own assessment. The tax so assessed should have been paid by the dealer along with the returns as enjoined in R.21(7) of the Rules. If there is any default and non-payment of the tax so assessed. as enjoined by the Rule. the liability to pay penal interest automatically arises. The dealer need not be served with any demand notice. Even without receipt of a notice. the dealer shall be liable to pay the penal interest. This. in short. is the effect of S. 23(1) read with S.23(3) and R.21(7) read with R.31 of the Rules. Form No. 14D. as also Form No. 24. provided by the Rules to the extent they militate against the statutory provisions. S.23(1) read with S.23(3) of the Act. and rules 21(7) and 31 of the Rules should bow down to the parent provisions. The implication sought to be made out. by a reference to Form No. 14D and Form No. 24. as also Form No. 24. provided by the Rules to the extent they militate against the statutory provisions. S.23(1) read with S.23(3) of the Act. and rules 21(7) and 31 of the Rules should bow down to the parent provisions. The implication sought to be made out. by a reference to Form No. 14D and Form No. 24. that the service of a notice of demand is a pre-requisite for levy and recovery of penal interest under S.23(3) of the Act. is not acceptable. It will be contrary to S.23(1) read with S.23(3) of the Act and also Rules 21(7) & (10) and 31 of the Rules. Such statutory provisions should prevail in preference to the entries in the statutory Forms. Form Nos. 14.14D and 24 should be toned down in the light of S.23(1) read with S.23(3) of the Act and R.31 of the Rules. In this view of the matter. we hold that the decision in Joy Varghese case (62 STC 227) does not lay down the correct law on the subject. 9. The decision of the Bombay High Court. reported in Machinery Sales Service case (77 STC 131). at page 141. cited with approval Joy Varghese case (62 STC 227) is distinguishable. We should at once state that in the Bombay Act there was no provision similar to rule 31 of the Rules. Moreover. S.36(3) of the Bombay Act requires mens rea. The aspect of "self assessment" was not in issue. nor considered. therein. Moreover. under S.38(4) of the Bombay Act. a notice. to be issued by the Commissioner. was mandatory. For the above reasons. the Bench decision of the Bombay High Court. reported in Machinery Sates Service case (77 STC 131) is distinguishable and will not apply to the facts of these cases. We over-rule the decision in Joy Varghese case (62 STC 227). 10. We hold that the service of a notice of demand is not an essential prerequisite for the levy and collection of penal interest under S.23(1) read with S.23(3) of the Kerala General Sales Tax Act. read with R.31 of the Kerala General Sales Tax Rules. In this view of the matter. the penal interest. sought to be collected in these cases. is valid and proper. We dismiss O.P.No. 3501 of 1986 and W.A.No. +16 of 1988.