Judgment :- J. B. KOSHY, J. Main question to be considered in this case is whether an assessee can be charged with penal interest under section 23(3) of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as "the Act") when he files return in time disclosing full particulars along with tax as per return on the basis of his bona fide calculations and pays difference tax in later on demand, when assessments were made on the basis of subsequent pronouncement of the courts. Section 23(3) of the Act reads as follows : "23. Payment and recovery of tax. - (1) ........ (2)............ (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 therefor in this Act or in any rule made thereunder and in other cases within the time specified therefor in the notice of demand the dealer or other person shall pay, by way of 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) two per cent of such amount for each month or part thereof subsequent to the first three months aforesaid." Interest chargeable under section 23(3) is not a normal interest usually charged for delay in payment but interest at the rate of 24 per cent per annum beyond three months' delay for payment of tax on due dates. Therefore, it is called penal interest even though the word "penal" was omitted from the section by the Finance Act, 1993. Petitioner herein is a firm registered under the Small Scales Department and engaged in the manufacture of PVC pipe and filed a return for the assessment year 1984-85 showing the entire turnover; but, claimed exemption under S.R.O. No. 968 of 1980. Petitioner also produced certificate issued by the District Industries Centre certifying that petitioner is entitled for exemption. The assessing authority accepted the claim for exemption but did not accept the calculation of the petitioner regarding the estimation of taxable turnover and levy of additional tax. Petitioner also produced certificate issued by the District Industries Centre certifying that petitioner is entitled for exemption. The assessing authority accepted the claim for exemption but did not accept the calculation of the petitioner regarding the estimation of taxable turnover and levy of additional tax. The Appellate Tribunal held that since the assessee was entitled to tax exemption under S.R.O. No. 968 of 1980, the assessing authority should not have computed total tax due on the sales turnover of the assessee and rejected the contention of the Revenue that the assessing authority is entitled to compute the tax on the entire turnover which is otherwise taxable and then adjust the tax so computed against the exemption due to the assessee. By exhibit P2 judgment in tax revision case against exhibit P1 decision of the Appellate Tribunal this Court accepted the view of the assessing authority and set aside the Tribunal's order. This Court held as follows :".... At the time when the Appellate Tribunal decided the controversy, this Court had not spoken in the matter. A recent Bench decision of this Court in Deputy Commissioner of Sales Tax (Law) v. K.P. Paper Products 1989 74 STC 16 has clarified the law. It is common ground that ratio laid down by the Bench decision applies to the facts of this case. In the light of the above it is only proper that a re-computation be made in the light of the principles laid down by this Court in the above Bench decision K.P. Paper Products' case 1989 74 STC 16." On re-computation and reassessment and as per the directions of this Court, the amount was paid by the assessee. 3. The decision in K.P. Paper Products case 1989 74 STC 16 (Ker) was pronounced only in the year 1989. Exhibit P2 judgment was also pronounced on August 11, 1989. Before declaration of law by this Court for the year 1987-88, petitioner filed return disclosing the entire turnover and full particulars with tax as per the return. The assessing authority accepted the return and did not make any demands. But, assessments were completed by exhibit P3 demanding balance tax and surcharge. The assessment was made on March 13, 1991 after exhibit P2 judgment even though return was filed when the Appellate Tribunal's judgment was holding the field. The assessing authority accepted the return and did not make any demands. But, assessments were completed by exhibit P3 demanding balance tax and surcharge. The assessment was made on March 13, 1991 after exhibit P2 judgment even though return was filed when the Appellate Tribunal's judgment was holding the field. In petitioner's own case for the year 1984-85 the Appellate Tribunal in the order explained about the mode of calculation of turnover tax when exemption under S.R.O. No. 968 of 1980 is to be calculated and return was filed and calculations were made in accordance with the above decision. When assessment was made and tax and surcharge were demanded by exhibits P4 and P5, it was paid by the assessee. Thereafter, by exhibits P6 and P7 demands were made for penal interest on the amount of tax and surcharge for delayed payment. It is the contention of the petitioner that he has disclosed all the particulars and has filed true return and paid the tax as per the return and no penal interest is leviable because assessments were made subsequently on the basis of a later pronouncement of the court of law. According to the Revenue, penal interest should be paid from the due dates when tax should have been paid, irrespective of the reasons.The Revenue relied mainly on the decision of the Supreme Court in Associated Cement Co. Ltd. v. Commercial Tax Officer, Kota 1981 48 STC 466, a Full Bench decision of this Court in P. C. Abdulla v. Sales Tax Officer, IV Circle, Thrissur 1992 86 STC 259 and Sales Tax Officer, First Circle, Mattancherry v. Maruthi Wire Industries Private Limited 1999 113 STC 19 (Ker); 1998 2 KLT 248. In the Full Bench decision of this Court in P.C. Abdulla's case 1992 86 STC 259 it was held that failure to pay tax along with the return automatically attract penal interest because as per the statutory provisions, tax as per the return has to be paid along with the return [rule 21(7)]. The contention of the assessee therein that tax need be paid only when demand is made in form No. 24 was not accepted and the Bench decision of the Kerala High Court in Joy Varghese v. State of Kerala 1986 62 STC 227 was overruled. The contention of the assessee therein that tax need be paid only when demand is made in form No. 24 was not accepted and the Bench decision of the Kerala High Court in Joy Varghese v. State of Kerala 1986 62 STC 227 was overruled. In the above case considered by the Full Bench monthly return was not filed in time and collected tax was not paid. On such circumstances, the Full Bench of this Court held that tax ought to have been paid along with the return and there is no justification for non-payment of collected tax and non-filing of the return in time and penal interest was payable. It was also held that liability to pay penal interest is automatic. The Full Bench relied on the Supreme Court in Associated Cement Company's case 1981 48 STC 466. In that case, the assessee filed return without including freight charges. Subsequent to the filing of the return, the Supreme Court held that freight charges are not part of sale price. Considering section 11-B of the Rajasthan Sales Tax Act, 1954 which is almost identical to the provisions considered here, the Supreme Court held that penal interest is payable as return was not correct and the Supreme Court decision on inclusion of freight charges only declared the law as in existence from the beginning and tax was payable on freight charges also and, therefore, from the date when tax became due till actual payment penal interest is payable (majority judgment). Bhagwati, J., dissented from the above view as return was filed and accepted by the department and subsequently only the Supreme Court clarified the position and, therefore, penal interest was not payable as admitted tax due was already paid along with the return filed in time bona fide by the assessee.A Constitution Bench of the Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer 1994 94 STC 422 overruled the decision of the majority judgment in Associated Cement Company's case 1981 48 STC 466 (SC) and the judgment of Bhagwati, J., was approved and it was held in the above case that provision for interest is to be construed as substantive law and not a machinery provision and it should be strictly construed. The Supreme Court held that so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there will be no default to pay tax on his part so as to attract liability to pay penal interest. The Supreme Court held as follows : "Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under clause (a) of section 11B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." In this case also, petitioner has filed return in time disclosing all materials along with the admitted tax. No further demand or even provisional demands were made and returns were accepted. Assessments were made only subsequently and on demand without delay the petitioner paid tax as per the assessment. At the time of filing the return, he calculated the tax bona fide on the basis of the Appellate Tribunal's decision which was holding the field. There also, before the Supreme Court decision that freight charges should be included in the price, petitioner filed return bona fide and since at the time of filing the return the contention of the assessee was that he has filed the return bona fide and thereafter on the basis of the subsequent assessments where assessment was made and tax was paid there is no liability to pay penal interest and that plea was accepted by the Supreme Court. Contrary view expressed by the majority decision in Associated Cement Company's case 1981 48 STC 466 (SC) was overruled.It is the contention of the learned Government Pleader that after considering the Supreme Court decision in J.K. Synthetics Ltd.'s case 1994 94 STC 422, this Court in Maruthi Wire Industries case 1999 113 STC 19; 1998 2 KLT 248 held that liability to pay penal interest under section 23 is automatic. In the above decision of the Division Bench (I was also in the Bench), we were considering a case where no return at all was filed. If no return is filed by a dealer, he will not stand on a better footing than one who filed return and paid tax but not disclosed the turnover and not paid full tax or filed return and not paid tax. In the above case, we have held as follows : "In Associated Cement Co. Ltd. 1981 48 STC 466 (SC), majority view was that all the three classes of persons, viz., (i) those who have not filed any return at all and who are later found to be liable to be assessed; (ii) those who have filed true return have not deposited the full amount of tax which they are liable to pay; and (iii) those who have filed a return making a wrong claim that either the whole or any part of the turnover is not taxable and who are subsequently found to have made a wrong claim, would be placed in the same position and they would all be liable to pay interest on the amount of tax which they are liable to pay, but have not paid as required by section 7(2) of the Rajasthan Sales Tax Act. In J.K Synthetics Ltd. 1994 94 STC 422 (SC), the court, however, held that there will be no interest liability, so long as tax was paid as per the assessment made by the assessing authority or as per the return, filed by an assessee. It is only to this extent, the majority view in Associated Cement Co. Ltd. 1981 48 STC 466 (SC) was overruled. It is only to this extent, the majority view in Associated Cement Co. Ltd. 1981 48 STC 466 (SC) was overruled. The facts of the case under consideration is similar to the facts considered by the Supreme Court in J.K. Synthetics Ltd. case 1994 94 STC 422 and as far as this case is concerned, with regard to the assessee who filed return correctly and bona fide and paid tax as per the above the decision in Associated Cement Co's. case 1981 48 STC 466 (SC) and the Full Bench decision in P. C. Abdulla's case 1992 86 STC 259 (Ker) are not applicable as it was overruled in J.K. Synthetic's case 1994 94 STC 422 (SC) by the Supreme Court.In J. K. Synthetics Ltd's. case 1994 94 STC 422 (SC) it was also stated that penal interest is payable if no tax is paid on the basis of the return. If tax is paid on the basis of assessment and demand, there is no liability to pay penal interest. Instant case is not a case where the petitioner has not filed any return or is not paying the tax as per the return. It is also contended by the learned counsel for the petitioner that the Full Bench decision overruled the Bench decision of this Court in Joy Varghese v. State of Kerala 1986 62 STC 227. But, the above decision was upheld by the Supreme Court in the decision reported in State of Kerala v. Joy Varghese 1999 112 STC 651; 1997 5 KTR 372 (SC) where the Supreme Court held as follows : "Having regard to the phraseology of section 23(3) of the Kerala General Sales Tax Act, the liability of the dealer to pay penal interest on the tax assessed or any other amount due under that Act arises only if such tax or amount is not paid 'within the time specified therefor in the notice of demand'. There being no notice of demand, it was held that the liability to pay penal interest did not arise. There being no notice of demand, it was held that the liability to pay penal interest did not arise. It is necessary to emphasise that this is not a case of payment of interest at the ordinary statutory rate but a case of penal interest and it is, therefore, that the Act provides that the liability to pay the same arises only after there has been a failure to comply with the provisions of a notice in that behalf." Whether the entire decision of the Full Bench will go as it is no longer good law on the basis of the decision reported in State of Kerala v. Joy Varghese 1999 112 STC 651; 1997 5 KTR 372 (SC) need not be considered in this case as in this case return with tax as per return was filed bona fide, disclosing all particulars and when assessment order was passed on the basis of the subsequent High Court judgment, on demand difference in tax was also paid. At the time when he filed the return he calculated the tax payable on the basis of the Appellate Tribunal's orders in his own case for previous years. On the facts of the case under consideration there is no justification of imposing penal interest on the basis of the decision in J.K. Synthetics Ltd.'s case 1994 94 STC 422 (SC). The question formulated by me in the beginning of this judgment has to be answered in the negative in favour of the assessee. Imposition of penal interest in such case can no longer be justified on the basis of the Full Bench decision in P. C. Abdulla's case 1992 86 STC 259 (Ker). The ratio laid down in that case is no longer applicable in a case where the assessee bona fide files return along with admitted tax in time and pays differential tax without delay as and when subsequent demands are made on provisional basis or on final assessment in view of the Constitution Bench decision of the Supreme Court in J.K. Synthetic's case 1994 94 STC 422. Therefore, I allow the original petition and set aside exhibits P6, P7 and P9.Petition allowed.