Reassessment interest runs only from the demand date when fresh tax liability is crystallised, not from the return date.

Interest on additional tax arising from reassessment under the Punjab General Sales Tax Act, 1948 accrues only when the reassessed liability is quantified and demanded, not from the date of the original return. The earlier view permitting interest from the return date was treated as no longer applicable after the later Constitution Bench ruling. Because a reassessment creates a fresh liability payable only on demand, the obligation to pay interest begins from the date the demand crystallises. The interest demand based on the earlier return date was therefore unsustainable and the position was settled in favour of the assessee.

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Issues: Whether interest leviable on reassessment under the Punjab General Sales Tax Act, 1948 accrues from the date of return or only from the date of demand.

Analysis: The liability to pay interest was examined in the context of a reassessment creating an additional demand. The earlier view that interest could run from the date of return was held to be no longer applicable in view of the later Constitution Bench ruling, and the court applied the principle that an assessee cannot be made liable for interest on an amount which becomes payable only after reassessment. In such a situation, the obligation to pay interest arises only when the demand is quantified and made payable.

Conclusion: Interest on the additional tax demand arising from reassessment is payable from the date of demand and not from the date of return, in favour of the assessee.

Final Conclusion: The legal position was settled in favour of the assessee, and the interest demand linked to reassessment could not be sustained from the earlier return date.

Ratio Decidendi: Where reassessment creates a fresh tax liability, interest becomes payable only from the date on which the liability is demanded and crystallised, not from the date of the original return.

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