Compensatory interest under sales tax law applies only after tax becomes due and statutory return procedures are properly followed.

Interest under the Tamil Nadu General Sales Tax Act is compensatory and becomes enforceable only when tax has become due in accordance with the statutory scheme. Rule 18(3) governs provisional acceptance of returns filed without proof of payment and determines when tax is treated as due and recoverable. The article notes that the demand notices were issued without proper application of section 24(3) read with rule 18(3), and that the earlier construction of section 24(3) required due consideration. The notices levying interest were quashed and the matter was remitted to the assessing authority for fresh disposal after hearing the petitioner.

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Issues: Whether interest could be levied under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 without proper application of rule 18(3) of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: Section 24(3) treats interest as a compensatory levy for belated payment of tax that has become due, but the liability must arise in accordance with the statutory scheme. Rule 18(3) governs provisional acceptance of returns filed without proof of payment and specifies when the tax becomes due and how it may be recovered. The assessment records and demand notices showed that the authorities had not properly applied both provisions before demanding interest. The Court also held that the earlier ratio on the construction of section 24(3) required due consideration in the present case.

Conclusion: The notices levying interest were quashed and the matter was remitted to the assessing authority for fresh disposal in accordance with section 24(3) and rule 18(3), after giving the petitioner an opportunity.

Ratio Decidendi: Interest under the sales tax statute is compensatory and automatic only when tax has become due and the statutory procedure governing returns and recovery has been duly followed.

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