Interest on tax arrears cannot be demanded where instalment payment was permitted by a final court order and followed accordingly.

Interest on delayed tax payment is generally compensatory and follows default, but where the court had earlier permitted the admitted sales tax liability to be paid in instalments and that order had attained finality, interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could not be demanded merely because the tax was discharged under that judicially sanctioned instalment arrangement. In these peculiar facts, the interest levy was unsustainable and was set aside, as the payment was made in the manner directed in the earlier proceedings.

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Issues: Whether interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be levied on tax arrears that were paid in instalments pursuant to an earlier court order.

Analysis: Interest on delayed tax payment is ordinarily automatic and compensatory under the Act, and the liability generally follows the default. However, the earlier order had expressly permitted payment of the admitted tax liability in instalments, and that order had attained finality between the parties. In the peculiar facts, the demand for interest was founded only on the instalment-based payment made under judicial permission, not on any independent default outside that order.

Conclusion: The interest demand was not sustainable, and the levy under section 24(3) was set aside in favour of the assessee.

Final Conclusion: The impugned interest demand could not stand because the tax was paid in the manner directed by the Court in the earlier proceedings, and the writ petition was allowed.

Ratio Decidendi: Where a court permits payment of admitted tax liability in instalments and that order becomes final, interest cannot be demanded under the general recovery provision merely on the basis of such instalment payments in the peculiar circumstances of the case.

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