Extended tax payment in instalments can negate default, preventing interest from being levied on the original demand period.

Where a tax authority validly extends the time for payment and allows instalments, compliance with that instalment schedule can replace the original due date as the effective payment date. In that situation, no default survives for the period covered by the original demand notices, and interest cannot be levied on the basis of alleged delay under those notices. The commentary explains that once the instalment order is lawfully made and fully honoured, the statutory foundation for a separate interest demand falls away because the payment obligation is treated as satisfied within the extended time.

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Issues: Whether, after the tax dues were permitted to be paid in instalments and were fully discharged, interest could still be levied on the footing of delay under the original demand notices.

Analysis: Under Section 25(3) of the Assam General Sales Tax Act, 1993, the competent authority had power to extend the time for payment and permit payment by instalments. Once that power was exercised and the petitioner complied with the instalment schedule, the effective date for payment stood altered to the last instalment date. On that footing, no default survived in relation to the original demand notices, and the interest demand raised thereafter under Section 22 had no legal basis.

Conclusion: The interest demand was invalid and the impugned notices were liable to be quashed, in favour of the petitioner.

Ratio Decidendi: When the statutory authority validly extends the time for tax payment and permits instalments, timely compliance with the instalment order negates default for the original demand period, and interest for delayed payment cannot be levied on that basis.

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