Pre-demand interest under Haryana sales tax law cannot be levied before tax liability crystallises and demand is raised.

Interest under section 25(5) of the Haryana General Sales Tax Act, 1973 could not be charged for a period before the tax demand was raised, because the liability to pay interest arose only once the demand was made. Where the tax liability remained in dispute and no demand had yet been issued, the prior period did not attract interest. The principle applied was that pre-demand interest is not recoverable when the underlying liability has not crystallised. The assessee was therefore not liable for interest for the earlier period, and the point was decided in favour of the assessee and against the Revenue.

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Issues: Whether interest under section 25(5) of the Haryana General Sales Tax Act, 1973 could be levied for the period prior to raising of demand against the assessee.

Analysis: The assessee's liability to pay interest arose only when the tax demand was raised. The revisional authority had levied interest for a period preceding the demand. The issue was already covered by settled law, including the principle that interest for the prior period cannot be charged where the liability itself was in dispute and demand had not yet been made.

Conclusion: The assessee was not liable to pay interest under section 25(5) of the Haryana General Sales Tax Act, 1973 for the period before the demand was raised, and the issue was decided in favour of the assessee and against the Revenue.

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