Adjustment of excess sales tax against later liability bars interest where the statutory refund or set-off mechanism applies.

Excess sales tax accepted by the department for an earlier assessment year can be adjusted against later tax liability under Rule 18(7) of the Tamil Nadu General Sales Tax Rules, 1959, where the final assessment shows excess payment and no arrears remain. On that statutory footing, a notice treating the later demand as unpaid and levying interest under section 24(3) for delay was not sustainable. The authority must first give effect to the excess payment already accepted and then determine whether any balance remains due in accordance with law.

---

---

Issues: Whether excess sales tax paid for an earlier assessment year could be adjusted against subsequent tax liability, and whether interest under section 24(3) could be levied on the basis that the subsequent tax was not paid in time.

Analysis: Rule 18(7) of the Tamil Nadu General Sales Tax Rules, 1959 requires the assessing authority, after final assessment, to examine the amount due after deducting tax already paid in advance and, where excess tax remains and there are no arrears, to issue the prescribed notice for refund or adjustment. The excess payment had already been accepted by the department in the earlier proceedings, and the statutory scheme therefore entitled the dealer to have that amount adjusted against future liability. In such circumstances, the subsequent notice treating the amount as unpaid and invoking interest for delay was not sustainable.

Conclusion: The demand of interest and the impugned notice were held unsustainable, and the dealer was entitled to adjustment of the excess tax amount against the later returns.

Final Conclusion: The writ petition was disposed of by directing the assessing authority to give effect to the excess payment already accepted and then proceed only if any balance remained due in accordance with law.

Ratio Decidendi: Where excess tax paid and accepted by the department is available for adjustment under the statutory rules, the authority cannot treat the corresponding later demand as unpaid in time so as to levy interest for delay.

---