Interest on tax default limited to completed months where long-settled revenue practice governed the ambiguous provision.

Under the unamended section 11B of the Rajasthan Sales Tax Act, 1954, interest for default in tax payment was confined to completed months and could not be levied for a fraction of a month. The provision was treated as ambiguous and was construed in line with the long-standing administrative and quasi-judicial practice of the revenue authorities, which had consistently applied interest only to full months of default. The Court also noted that the section had been repealed and replaced by materially different wording, so the settled interpretation should not be disturbed. The petitions were dismissed, with each party left to bear its own costs.

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Issues: Whether, under the unamended section 11B of the Rajasthan Sales Tax Act, 1954, interest for default in payment of tax could be levied for a fraction of a month or only for completed months.

Analysis: The unamended provision used the expression "during the time he continues to make default" and had to be construed in the light of the consistent administrative and quasi-judicial practice of the Board of Revenue, which had, for about a decade, treated liability to interest as arising only for completed months. The Court noted that although another interpretation was possible, the provision was ambiguous and the long-settled interpretation should not be disturbed, especially because the provision had already been repealed and replaced by a materially different section. The Court also distinguished the language of section 271(1)(a) of the Income-tax Act, 1961, where the expression "every month" clearly points to completed months, but held that the taxing provision in question could not be read more broadly so as to include fractions of a month.

Conclusion: Under the repealed section 11B of the Rajasthan Sales Tax Act, 1954, interest was chargeable only for completed months of default and any fraction of a month had to be ignored. The petitions were dismissed, leaving the parties to bear their own costs.

Ratio Decidendi: Where a taxing provision has long been consistently interpreted and acted upon by the revenue, and the provision has since been repealed and replaced by materially different wording, the settled interpretation should ordinarily be maintained; under the unamended section 11B, interest on delayed tax payment was confined to completed months.

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