Retrospective sales tax rules and delayed interest demands require express authority and rectification with notice before enhancement.

A statutory levy of interest may arise automatically on tax default, but if interest is omitted from the original assessment and later demanded in a way that enhances the assessed liability, rectification with notice and a reasonable opportunity of hearing is required under section 12. Later demand notices issued without that procedure are unsustainable. A rule-making authority may prescribe interest for defaults within the operative field of the rules, but it cannot confer retrospective effect unless the parent Act expressly authorises retrospectivity. Accordingly, the levy of interest was upheld in principle, while retrospective application of the amended rules and later interest demands made without rectification procedure were disallowed.

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Issues: (i) Whether the amended sales tax rules could be given retrospective effect from 1 January 1968, and whether the rule-making power authorised such retrospectivity. (ii) Whether interest on delayed tax payment, omitted from the original assessment and demanded later, could be levied without rectification proceedings and notice under section 12 of the Act.

Issue (i): Whether the amended sales tax rules could be given retrospective effect from 1 January 1968, and whether the rule-making power authorised such retrospectivity.

Analysis: The statutory scheme authorised the making of rules to carry out the purposes of the Act, but there was no power to give the amended rules retrospective operation. The amended rules, though valid in so far as they prescribed interest for defaults within their operative field, could not govern periods before their publication. Retrospectivity was therefore ineffective for periods prior to 25 June 1969.

Conclusion: The rules were not invalid, but their retrospective operation failed; they applied only prospectively from 25 June 1969.

Issue (ii): Whether interest on delayed tax payment, omitted from the original assessment and demanded later, could be levied without rectification proceedings and notice under section 12 of the Act.

Analysis: Interest accrued by force of statute on default, and its levy formed part of the assessment process. However, where the original assessment had been completed without charging interest and a later demand effectively increased the assessed liability, the matter attracted rectification under section 12. Since enhancement of assessment requires notice and a reasonable opportunity of hearing, later demand notices issued without following that procedure were unsustainable.

Conclusion: Later demand of interest without rectification proceedings and notice was invalid, and the impugned notices were quashed.

Final Conclusion: The challenge succeeded only to the extent that retrospective application of the amended rules was disallowed and later interest demands made without rectification procedure were struck down, while the statutory levy of interest itself was upheld in principle.

Ratio Decidendi: A statutory levy of interest may accrue automatically on tax default, but if it is omitted from the original assessment and its later demand would enhance the assessment, the authority must proceed by rectification with notice and hearing; further, a rule-making authority cannot confer retrospective effect on rules unless the parent Act expressly authorises it.

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