Interest on provisional assessment could not be demanded for the pre-1-7-2001 period under the earlier framework.

Interest on finalisation of provisional assessment could be levied only from 1-7-2001, because the applicable provisional assessment framework before that date did not authorise such a demand. Accordingly, interest demanded on a provisional assessment order dated 24-7-1996 for the period prior to 1-7-2001 was unsustainable, and the assessee succeeded on that issue.

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Issues: Whether interest could be demanded on finalisation of provisional assessment for the period prior to 1-7-2001.

Analysis: The liability to pay interest on finalisation of provisional assessment was introduced only with effect from 1-7-2001. For the earlier period, the applicable provisional assessment framework did not provide for such interest demand. The demand raised for the provisional assessment ordered on 24-7-1996, insofar as it related to the period before 1-7-2001, was therefore unsustainable.

Conclusion: The demand of interest for the period prior to 1-7-2001 was not permissible and the assessee succeeded on the issue.

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