Interest on unpaid tax arises only after quantified liability is determined; pre-assessment demand was unsustainable.

Interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 is payable only on tax that has become due and remains unpaid. Where a return is accepted, the admitted tax becomes immediately payable; where the return is incomplete or incorrect and not accepted, the assessing authority must first determine liability by best judgment under section 13(3), and interest runs only after such quantified liability arises. Here, the returns claiming deferral benefit were not accepted and no section 13(3) assessment was made during the relevant period, so interest could not be demanded for the period before the assessment order. The impugned demand was unsustainable.

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Issues: Whether interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be levied for non-payment of purchase tax before the assessment order was made, when the assessee's returns were not accepted and assessment was ultimately completed under section 12.

Analysis: Section 24(3) is attracted only when tax that has become due and payable remains unpaid. Where a return is accepted, the admitted tax becomes immediately payable. Where the return is incomplete or incorrect and is not accepted, section 13(3) empowers the assessing authority to determine the tax by best judgment, and only then does the quantified liability become due for the purpose of interest. In the present matter, the returns claiming deferral benefit were not accepted, no assessment under section 13(3) was made during the relevant period, and the assessment was completed later under section 12 after the writ proceedings ended.

Conclusion: Interest under section 24(3) could not be demanded for the period prior to the assessment order. The impugned demand was unsustainable.

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