Statutory authority for interest on penalty was absent, so the demand for delayed-payment interest was unsustainable.

Interest could not be levied on delayed payment of penalty under the Central Sales Tax Act, 1956 because the Act authorised interest only on delayed tax payment and contained no express provision for interest on penalty. Section 13(2) of the Karnataka Sales Tax Act, 1957 could not be used to expand the charging power under the Central Act or create a substantive liability not found there. The governing principle applied was that interest on a tax-related liability requires clear statutory authority; in the absence of such authority, the demand was unsustainable and was liable to be quashed to that extent.

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Issues: Whether interest could be levied and recovered on delayed payment of penalty in the absence of a specific provision in the Central Sales Tax Act, 1956.

Analysis: Section 9(2-B) of the Central Sales Tax Act, 1956 was held to authorise interest only on delayed payment of tax, not on delayed payment of penalty. Section 13(2) of the Karnataka Sales Tax Act, 1957, which speaks of interest on tax or any other amount due under the Act, could not be invoked to enlarge the charging power under the Central Act. The substantive law governing the levy had to be found in the Central Act itself, and in the absence of an express provision enabling interest on penalty, the demand was unsustainable. The principle that interest cannot be recovered without statutory authority was applied.

Conclusion: The respondent had no authority to collect interest on delayed payment of penalty, and the demand notice was liable to be quashed to that extent.

Ratio Decidendi: Interest on a tax-related liability cannot be levied or recovered unless the governing statute expressly authorises such levy; procedural application of State Act provisions cannot create a substantive charge for interest on penalty where the Central Act does not provide for it.

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