Interest on delayed entertainment tax can apply retrospectively where the statute already creates liability from the due date.

Interest on delayed entertainment tax was held payable for periods before Rule 20-A was inserted, because the liability already existed under sections 5(8) and 10(1) of the A.P. Entertainments Tax Act, 1939. Section 16(2-A) enabled retrospective rule-making, and Rule 20-A was read as fixing the rate of interest from the prescribed due date rather than creating a new liability. The court therefore treated the rule as covering earlier defaults and rejected a purely prospective construction. Strict interpretation of taxing provisions did not displace the clear statutory scheme, and the demand for interest was upheld.

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Issues: Whether interest could be levied on belated payment of entertainment tax for the period before rule 20-A of the A.P. Entertainments Tax Rules, 1939 was inserted, having regard to sections 5(8), 10(1) and 16(2-A) of the A.P. Entertainments Tax Act, 1939.

Analysis: The liability to pay interest on delayed payment of entertainment tax existed even before the amendment brought in by Act 24 of 1984 and continued under sections 5(8) and 10(1) of the Act. Section 16(2-A) authorises rules to be made with retrospective effect. Rule 20-A prescribes the rate of interest and expressly provides that interest is payable from the day or date specified for payment, which necessarily covers defaults occurring before the rule was published. The rule is therefore not to be read as merely prospective so as to defeat the statutory liability already in existence. The principles of strict interpretation of taxing statutes did not assist the petitioner because the provision, read as a whole, clearly imposed liability from the due date.

Conclusion: The demand of interest on delayed payment of entertainment tax for the relevant period was valid and is upheld against the assessee.

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