Interest on delayed tax payment under sales tax law applies to pre-amendment assessments where the demand remains unpaid.

Section 11-D(2) of the Punjab General Sales Tax Act, 1948 was treated as a recovery and compensatory provision, not a fresh charging provision. Interest on delayed payment of assessed tax became payable once the tax remained unpaid after the provision came into force and the notice period expired, even if the assessment year pre-dated the amendment. The rule against retrospective operation of taxing amendments was held inapplicable because the provision governed interest on existing arrears rather than creation of new tax liability. The reference was answered in favour of the Revenue.

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Issues: Whether section 11-D(2) of the Punjab General Sales Tax Act, 1948 applies to a demand for interest raised after its insertion in respect of assessments relating to years prior to the amendment.

Analysis: The provision for interest on delayed payment of assessed tax was treated as part of the recovery machinery and not as a charging provision creating a fresh tax liability. The liability to pay interest arose once the tax, though relating to an earlier assessment year, remained unpaid after the statutory provision had come into force and after the period specified in the notice of demand expired. The rule against retrospective operation of taxing amendments governing assessment of income was held inapplicable, because the present provision dealt with compensatory interest on default in payment of tax already assessed. The reasoning was supported by the principle that interest on arrears can run automatically from the date of default irrespective of the year to which the tax relates.

Conclusion: Section 11-D(2) of the Punjab General Sales Tax Act, 1948 applies to assessments framed or demands created after its insertion, even where the assessment year is prior to the amendment, and the reference is answered in favour of the Revenue.

Ratio Decidendi: A statutory provision imposing interest on delayed payment of assessed tax is a recovery and compensatory measure, and it applies to unpaid tax demands existing after the provision comes into force, even if the underlying assessment relates to an earlier year.

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