Sales tax interest on differential freight tax was not recoverable from return filing date under the unamended scheme.

Under the unamended Rajasthan sales tax scheme, interest was chargeable only on tax due under the return or under a notice of demand, and not on additional tax found payable only after final assessment. Reading Section 7, Rule 25 and Section 11-B together, the Court held that the provision did not authorise interest from the date of filing of the return on differential tax attributable to freight charges, particularly where the dealer had disclosed and paid the tax shown in the return on a bona fide basis. The earlier majority view in Associated Cement Co. Ltd. was disapproved, and the minority view was accepted as correctly stating the law.

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Issues: Whether, under the unamended sales tax provisions, interest could be levied on the differential tax attributable to freight charges from the date of filing of the return when the dealer had paid the tax disclosed in the return on a bona fide basis, and whether the earlier view treating such interest as payable from the return date was .

Analysis: The statutory scheme required a dealer to file returns under Section 7 and to deposit the full amount of tax due on the basis of the return or on the basis of the information shown in the return. The Court read Section 7(1), Section 7(2), Section 7(2-A), Rule 25 of the Rules, and Section 11-B together and held that, before the 1979 amendment, Section 11-B fastened interest only where tax payable under Section 7(2) or 7(2-A) remained unpaid within time, or where tax specified in a notice of demand remained unpaid after the prescribed period. It did not authorise interest from the date of filing of the return on tax that became payable only after final assessment. The Court further held that the statutory language could not be stretched to require payment of interest on an amount that was not yet ascertained at the time of return, especially where the dealer had acted bona fide and had not wilfully withheld material particulars. The reasoning in the majority view in Associated Cement Co. Ltd. was disapproved, and the minority view was accepted as correctly stating the law on the unamended provisions.

Conclusion: Interest under the unamended Section 11-B could not be levied from the date of filing of the return on the differential tax arising from inclusion of freight charges; the assessee was not liable to such interest.

Ratio Decidendi: Under the unamended Rajasthan sales tax scheme, interest under Section 11-B was chargeable only on tax due under the return or under a notice of demand, and not on additional tax found payable only upon final assessment.

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