Interest on delayed Central sales tax requires substantive statutory authority; State tax machinery cannot create the liability.

Interest on delayed payment of Central sales tax could not be levied by applying the Assam Sales Tax Act, 1947 because the liability to pay interest is substantive and must be created by the charging statute itself. Section 9(2) of the Central Sales Tax Act, 1956 authorises State machinery to assess, collect and enforce Central sales tax for procedural purposes, but it does not enlarge substantive liability. Section 9(2-A) extends only to offences and penalties, not interest. In the absence of a specific provision in the Central Sales Tax Act, 1956, the demand for interest was held unsustainable and was quashed in favour of the assessee.

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Issues: Whether interest on delayed payment of Central sales tax could be levied by applying the Assam Sales Tax Act, 1947 in the absence of a substantive provision in the Central Sales Tax Act, 1956.

Analysis: The liability to pay interest is a matter of substantive law and can arise only where the taxing statute itself makes a substantive provision for such levy. Section 9(2) of the Central Sales Tax Act, 1956 authorises State authorities to assess, reassess, collect and enforce payment of Central sales tax and, for that procedural purpose, to apply the State law. That provision does not enlarge the substantive liability under the Central Act. Section 9(2-A) also applies State provisions relating to offences and penalties, but it does not refer to interest. In the absence of any substantive provision in the Central Sales Tax Act, 1956 requiring payment of interest, the State authorities could not invoke section 35-A of the Assam Sales Tax Act, 1947 to levy interest on delayed payment of Central sales tax.

Conclusion: The demand for interest was not sustainable in law and was liable to be quashed; the issue was decided in favour of the assessee.

Ratio Decidendi: Interest on delayed payment of tax can be levied only if the charging statute itself creates that substantive liability; procedural application of State tax machinery cannot, by itself, impose such interest for Central sales tax.

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