Interest on modified sales tax demand runs from the original due date despite appeal or stay of recovery.

On modification of an assessment under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954, interest on unpaid tax continues to run from the original statutory due date on the modified tax amount. The appellate order does not create a fresh period for interest; it only requires recomputation of interest on the revised liability. A notice in form XXVIII is treated as intimation of the modified demand, not a new demand triggering interest anew. A conditional stay of recovery merely suspends enforcement while operative and does not extinguish the tax liability or stop the statutory accrual of interest.

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Issues: Whether, on modification of an assessment in appeal under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954, interest on the unpaid tax is to be computed only from the date of the appellate order and whether the grant of stay of recovery postpones or extinguishes liability to interest.

Analysis: The statutory scheme treated the original assessment as continuing where the appellate order merely modified it. The relevant provisions required interest to be determined or redetermined on the basis of the modified tax amount, but they did not alter the period for which interest ran. Under the 1941 Act, interest under section 10A(3) ran from the first day of the month next following the date specified in the demand notice, and section 10A(4) only required recomputation on the modified amount; the same structure applied to section 8A(3) and section 8A(4) of the 1954 Act. The notice in form XXVIII was treated as an intimation of the modified liability and not as a fresh demand starting a new period for interest. The conditional stay order also did not extinguish the demand or suspend the statutory running of interest; it only restrained recovery during its operation.

Conclusion: Interest remained chargeable from the original statutory due date on the modified tax amount, and not merely from the date of the appellate order. The contention that the stay order or appellate modification postponed the commencement of interest was rejected.

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