Interest on tax arrears needs statutory authority; a subordinate rule cannot create the liability without it.

Interest on delayed payment of sugarcane tax could be levied only if the parent taxing statute contained substantive authority for that charge; a subordinate rule could not by itself create the liability. After the amendment to section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, section 21(3-D)(a) was read as plainly excluding section 21(5) for tax on purchases made after commencement of the amending Act, without any limitation to a particular crushing season. On that basis, rule 45(4) could not independently sustain interest on arrears for the relevant purchases, and the levy was held unsustainable.

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Issues: Whether interest could be levied on arrears of tax under rule 45(4) of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1961 after the amendment to section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961.

Analysis: Section 21(3-D)(a) provided that section 21(5) would not apply in relation to tax levied under section 21(1) on purchases made on or after the commencement of the amending Act. The language was held to be plain and open-ended, without any temporal restriction limiting its operation to a particular crushing season. Interest on delayed payment of tax can be levied only where the charging statute contains a substantive provision authorising such levy. In the absence of such a substantive provision applicable to the relevant purchases, rule 45(4) could not independently sustain levy of interest.

Conclusion: Interest was not leviable on arrears of tax for purchases made after the commencement of the amending Act, and the challenge to the levy succeeded.

Ratio Decidendi: Interest on delayed payment of tax can be imposed only when the taxing statute itself contains a substantive authorisation for such levy, and a subordinate rule cannot create that liability in the absence of statutory support.

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