Input tax credit adjustment defeats interest and penalty where no tax evasion intent is shown.

Carried forward input tax credit available for adjustment against a reassessed tax demand justified deletion of interest because the principal liability was effectively met through adjustment. Penalty was also unsustainable because the governing provision required evasion or avoidance of tax, and the record disclosed no such intent where the available credit negated any attempt to evade payment. The issue was treated as covered by the High Court's earlier decision on the same legal question, and the deletion of interest and penalty was upheld.

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Issues: Whether interest and penalty could be deleted when carried forward input tax credit was available for adjustment against the reassessed tax demand.

Analysis: The demand of tax was capable of being met by adjusting the available input tax credit carried forward by the assessee. Once such credit was properly available and the principal tax liability was not recoverable after adjustment, there was no basis for levying interest. For penalty, the governing provision required an element of evasion or avoidance of tax, and the record disclosed no such intention where the credit position negated any attempt to evade payment. The issue was treated as covered by the Court's earlier decision on the same legal question.

Conclusion: The deletion of interest and penalty was upheld and the appeal was rejected.

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