Interest demand on tax arrears upheld where principal payment was credited and notice was not a duplicate recovery

A demand notice for recovery of interest on outstanding tax arrears under the Karnataka Sales Tax Act was not invalid merely because the principal arrears had already been paid. The record showed that the payment had been credited and that the impugned notice substantially reflected an earlier communication raising only the interest liability, not a duplicate recovery of principal tax. The challenge based on alleged illegality and non-credit therefore failed, and the writ was treated as lacking bona fides because the true nature of the demand had been suppressed.

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Issues: Whether the demand notice issued for recovery of interest under section 13(2) of the Karnataka Sales Tax Act, 1957 was illegal on the ground that the petitioner had already remitted the principal tax arrears and was allegedly not given credit for the payment.

Analysis: The demand notice was found to relate not to a duplicate recovery of the principal tax arrears, but to the interest payable on the outstanding arrears. The record showed that the amount already paid by the petitioner had been credited and that the impugned demand substantially corresponded to an earlier communication raising the interest liability. The petitioner's assertion of surprise and illegality was therefore held to be without merit, and the writ was characterised as lacking bona fides in view of the suppression of the true nature of the demand.

Conclusion: The demand notice was upheld as lawful and enforceable, and the challenge to it failed.

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