Interest on incomplete sales tax returns was upheld where undisclosed turnover made the return incorrect and bona fide was absent.

Interest under section 27(1) of the Delhi Sales Tax Act, 1975 was leviable where the dealer failed to disclose flight-kitchen sales to foreign airlines in the returns. The Court held that liability to interest arises when full tax due is not paid on a return that is correct, complete and bona fide; the issue is not a mere mismatch between assessed and returned turnover. On the facts, the assessee knew of an advance ruling treating similar supplies as local sales, had earlier paid local sales tax on such transactions, and nonetheless omitted the turnover while creating a delivery order to support export treatment. The omission made the return incomplete and incorrect, so the reference was answered in favour of the Revenue.

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Issues: Whether interest under section 27(1) of the Delhi Sales Tax Act, 1975 was leviable where the assessee failed to disclose flight-kitchen sales to foreign airlines in the returns filed for the relevant assessment years.

Analysis: The liability to pay interest under section 27(1) read with section 21(3) arises when the dealer fails to pay the full amount of tax due according to a return that is correct and complete. The Court held that the question is not merely whether there is a difference between the assessed turnover and the returned turnover, but whether the return filed was truthful, complete, and bona fide on the facts of the case. The assessee knew of the advance ruling treating similar supplies as local sales, had itself been paying local sales tax on such transactions in earlier years, and created a delivery order to support the export-characterisation. In these circumstances, the omission of the disputed turnover rendered the return incomplete and incorrect. The Court distinguished authorities relied upon by the assessee, holding that a debatable issue did not arise on these facts.

Conclusion: Interest was leviable under section 27(1) of the Delhi Sales Tax Act, 1975, and the answer to the reference was in the affirmative and against the assessee.

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