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Judgment
V.K. Singhal, J.-In this writ petition, validity of levy of penalty under Section 13(2) of the K.S.T. Act, has been assailed on two grounds. Firstly, that the assessment orders were challenged before this Court in W.P. No. 19201 of 1994 and by an interim order 7-3-1994, operation of the assessment order was stayed. Ultimately, the writ petition was dismissed and even the Writ Appeal No. 181 of 1992 was also rejected on 15-11-1995. It is stated that the Assessing Authority was not justified in demanding penalty under Section 13(2)(ii) of the K.S.T. Act. It is submitted that, under Section 13(2)(ii), there should be a default in making payment of tax. Since the stay was granted by this Court, there was no default on the part of the petitioner. Secondly, it is stated that, under Section 13-A of the Karnataka Sales Tax Act, the interest is payable at 12% and that too, in the circumstances, when the amount is not refunded within 90 days from the date of the order. It has no reference to the date of deposit of tax. Proviso to Section 22 also contemplates that no interest is to be paid if the refund arises because of the appeal order and no direction to that effect could be given. It is also stated that, if an appeal is filed before the Tribunal under Section 22 of the Act, the Tribunal is not competent to grant stay in second appeal, and even in the revisional jurisdiction, the High Court has no power to grant stay and the amount so recovered from an assessee ultimately found refundable without any interest. The disposal of the appeals and revisions takes number of years. Charging the penalty under Section 13(2)(ii) at 24% for the first three months and 30% for the period thereafter is discriminatory. Reliance is placed on the judgment given in the case of Khazan Chand v State of Jammu and Kashmir and Others, AIR 1984 SC 762, wherein, the provisions were upheld, because, the same rate of interest was made applicable by Jammu and Kashmir Sales Tax Act, for default. Since in the present matter, the rate of interest is at variance, the provisions are arbitrary and hit by Article 14 of the Constitution of India.
On behalf of the respondents reliance is placed on the judgment given in Sant Lal Tek Chand v State of Haryana and Another, (1990)76 STC 283 (P and H), wherein, it was found that, during the period the writ petition remaining pending in spite of the fact that the stay was granted and interest/penalty has to be paid which is as a matter of fact, automatic.
I have considered over the matter.
The provisions of Section 13 contemplates a default in not making the payment of tax due under the Act. The default continues even when the stay is granted by a Competent Authority. It is only the operation of that order which is temporarily stayed. If, ultimately, the appeal/revision or writ is accepted, the position may be different. Otherwise, the result would be that, the action under Section 13(2)(ii) would be taken even in a case where the demand was under stay. The other contention raised on discrimination has also no substance. It is for the Legislature to think as to what provision should be made. Simply, because, the interest had to be payable by the Department is lesser than the penalty/interest by the petitioner, the provisions of Section 13(2)(ii) cannot be considered as discriminatory. They are applicable in different set of circumstances to different persons.
No case for interference is made out.
Writ petition is dismissed.