Relation back of sales tax interest confirmed: delayed tax liability runs from original assessment, with only temporary relief for disputed amounts.

Interest on delayed sales tax under section 24(3) was treated as a substantive liability that relates back to the original assessment, because final determination after remand does not erase the earlier tax liability. The temporary postponement for disputed amounts during appeal or revision applied only until the dispute was resolved, after which the amount found due was treated as part of the original assessment. Deferred payment protection under section 17A(2) did not continue once the dealer breached the scheme conditions, so exemption from interest was unavailable. The writ petitions therefore failed.

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Issues: (i) Whether interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be levied from the date of the original assessment orders, or only from the date of the fresh assessment orders passed after remand. (ii) Whether the benefit of deferred payment under section 17A(2) excluded liability to interest. (iii) Whether interest could be levied on the disputed portion of tax only after the dispute was finally resolved.

Issue (i): Whether interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be levied from the date of the original assessment orders, or only from the date of the fresh assessment orders passed after remand.

Analysis: Section 24(3) postpones interest only in respect of the amount in dispute during the pendency of appeal or revision and, on disposal, directs that the amount determined shall be treated as if it had been specified in the original assessment order. The provision therefore embodies the doctrine of relation back. On the plain language of the section, the later assessment after remand does not erase the earlier liability; it merely gives effect to the final determination as relating back to the original assessment. The petitioner had also not paid the admitted tax in time, so the theory that interest could run only from the fresh assessment date was not sustainable.

Conclusion: The liability to interest related back to the original assessment orders, and the contention based on the fresh assessment date was rejected, against the assessee.

Issue (ii): Whether the benefit of deferred payment under section 17A(2) excluded liability to interest.

Analysis: Section 17A(2) protects deferred tax from interest only so long as the conditions of the deferral scheme are satisfied. The non obstante clause does not assist a dealer who commits breach of the scheme. Since the petitioner had defaulted in complying with the deferral conditions, the statutory protection ceased to operate.

Conclusion: The deferral-based exemption from interest was unavailable, against the assessee.

Issue (iii): Whether interest could be levied on the disputed portion of tax only after the dispute was finally resolved.

Analysis: The second proviso to section 24(3) postpones interest only during the pendency of the appeal or revision and only in respect of the disputed amount. Once the dispute is finally decided, the liability is worked out on the amount ultimately found due and is treated as if it had formed part of the original assessment. The statutory scheme does not postpone interest on admitted tax, and the petitioner's argument that no interest could arise until final resolution was inconsistent with the text of the provision.

Conclusion: Interest on the disputed amount was payable after final determination, against the assessee.

Final Conclusion: The statutory scheme treated belated payment of sales tax as carrying compensatory interest from the original assessment stage, subject only to temporary postponement for disputed amounts during appeal or revision. The writ petitions therefore failed.

Ratio Decidendi: Under section 24(3), interest on delayed sales tax payment is a substantive statutory liability that is postponed during appeal or revision only for the disputed amount, and the final determination relates back to the original assessment.

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