Strict construction of tax interest rules barred levy beyond 28 February after the prescribed rate ended.

Section 19 of the Assam Agricultural Income-tax Act, 1939 fixed interest at 6% per annum from 1 January to the return-filing date, as extended to 28 February, and allowed a higher rate only if validly prescribed for delay beyond that date. Rule 11(2)(b)(i) to (ix), which sought to impose a sliding scale of 8% to 24% after 1 March, had already been declared ultra vires and void. Applying strict construction of taxing statutes and the rule that there is no equity in tax, the levy of interest beyond 28 February lacked authority of law and was invalid.

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Issues: Whether interest under the Assam Agricultural Income-tax Act, 1939 could be levied beyond 28 February of the relevant financial year, and whether rule 11(2)(b)(i) to (ix) of the Assam Agricultural Income-tax Rules, 1939 was valid.

Analysis: Section 19 of the Assam Agricultural Income-tax Act, 1939 fixed interest at 6 per cent per annum from 1 January to the date of filing the return, as extended up to 28 February, and contemplated a higher rate only if prescribed by rules for delay beyond that date. The rule-making provision in rule 11(2)(b)(i) to (ix), which purported to authorise a sliding scale of interest from 8 per cent to 24 per cent after 1 March, had already been declared ultra vires and void. On a strict reading of the taxing statute, and applying the principle that there is no equity in tax and no room for intendment, no further interest could be imposed in the absence of a valid prescribing rule. The levy beyond 28 February was therefore without authority of law.

Conclusion: Interest could be levied only at 6 per cent per annum up to 28 February 1970, and the levy of interest beyond that date was invalid and quashed.

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