Composition tax default triggers statutory interest or penalty on delayed payment without needing a prior demand notice.

An assessee who opts for composition tax under the Karnataka Agricultural Income-tax Act must pay the prescribed amount by the statutory due date under the relevant scheme. If the balance is remitted only later, the default arises automatically under the statute and does not depend on a prior assessment order or demand notice. On that basis, section 42 applies to the delayed differential amount, and interest or penalty may be levied as a compensatory consequence of late remittance of tax already due.

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Issues: Whether interest or penalty under section 42 of the Karnataka Agricultural Income-tax Act, 1957 could be levied on the differential composition amount when the assessee, having opted for composition under section 66, paid the balance only after the prescribed date.

Analysis: The composition tax payable by an assessee opting under section 66 was required to be paid by the prescribed date, as read with section 18(1) and rule 32(2). The assessee had not paid the full composition amount within time and discharged the balance only much later. In such a composition case, the default period is governed by the statutory scheme itself and does not depend on a prior assessment order or demand notice. The liability under section 42 follows from the statutory default and the amount demanded operates as a compensatory levy for delayed remittance of tax that was already due.

Conclusion: Section 42 was attracted, and the demand for penalty or interest on the delayed differential amount was valid against the assessee.

Ratio Decidendi: Where an assessee opting for composition tax fails to pay the prescribed amount by the statutory due date, the default and consequent liability under section 42 arise automatically by operation of law, without the need for a prior assessment order or demand notice.

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