Purchase tax upheld, but pre-assessment interest cannot be levied before assessment creates an additional tax demand.

Purchase tax under section 9 of the Haryana General Sales Tax Act was upheld because binding precedent supported the levy in the relevant factual setting. Interest, however, could not be charged for the period before the assessment order, since the statutory liability to interest arose only when assessment created the additional demand and not from the original return or transaction. The tax demand was therefore sustained, but the pre-assessment interest component was set aside and the assessment demand directed to be recomputed accordingly.

---

---

Issues: (i) Whether purchase tax liability under section 9 of the Haryana General Sales Tax Act, 1973 was sustainable; (ii) Whether interest could be levied for the period prior to passing of the assessment order.

Issue (i): Whether purchase tax liability under section 9 of the Haryana General Sales Tax Act, 1973 was sustainable.

Analysis: The challenge to the levy of purchase tax was covered by binding precedent holding the levy valid in the relevant factual setting. The petitioners did not press this contention beyond the contrary effect of the governing Supreme Court decision.

Conclusion: The purchase tax liability was upheld and the challenge failed.

Issue (ii): Whether interest could be levied for the period prior to passing of the assessment order.

Analysis: The liability to pay interest under the Act arose only on the additional liability determined by assessment and not from the date of the original transaction or return. The governing principle was that tax paid on return did not attract interest until assessment created the additional demand.

Conclusion: Levy of interest for the period prior to the assessment order was set aside in favour of the assessee.

Final Conclusion: The assessment was sustained on the tax liability, but the pre-assessment interest component was removed, and the demand was to be recomputed accordingly.

Ratio Decidendi: Where the statute ties interest to assessed additional liability, interest cannot be charged for the period before assessment merely on the basis of the returned tax liability.

---