Statutory interest on delayed tax deposit follows withheld contractor payments, and later deposit does not erase liability.

Where tax is deducted from contractors' bills under the statutory withholding mechanism, failure to deposit the deducted amount within the prescribed time triggers liability for simple interest under the Tripura VAT Rules. The rules require deposit in the Government Treasury within seven days of the following month, and belated deposit does not remove the statutory consequence once the retention beyond time is admitted or established. The deductor therefore remains liable for interest on the withheld sums until lawful deposit, and the contractors are entitled to recover such statutory interest.

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Issues: Whether the Food Corporation of India was liable to pay statutory interest on the amount deducted from the petitioners' bills but not deposited within the period prescribed by Rule 7(3) of the Tripura Value Added Tax Rules, 2005.

Analysis: Rule 7 requires the person making payment to deduct tax from the relevant bills and deposit the amount in the Government Treasury within seven days of the month following the deduction. Rule 7(11) fastens liability to pay simple interest at the rate contained in Section 45 of the Tripura Value Added Tax Act, 2004 when the deducted amount is not deposited as required. On the admitted and unrebutted material, the deducted amounts were not deposited within the statutory time limit, and belated deposit could not erase the statutory consequence. The liability to pay interest therefore attached to the person who retained the deducted sums beyond the prescribed period.

Conclusion: The Food Corporation of India was liable to pay statutory interest to the petitioners on the deducted amounts not deposited within time, and the petitioners were entitled to such interest.

Ratio Decidendi: Where tax is deducted from a contractor's bills under the statutory withholding mechanism and the deductor fails to deposit the amount within the prescribed time, the deductor becomes liable to pay the statutory interest mandated by the rules, irrespective of any later deposit.

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