Automatic VAT interest still requires Rule 24(4) notice when the rules provide a broader hearing safeguard.

Interest under Section 22(2) of the Andhra Pradesh VAT Act was treated as automatic, and the Act itself did not require prior notice before liability arose. However, Rule 24(4) of the Andhra Pradesh VAT Rules provided a procedural opportunity, and that safeguard had to be followed. Where the rules grant a wider hearing than the parent Act, compliance with the rule is necessary to meet natural justice requirements. The demand was therefore unsustainable without following Rule 24(4), and the dealer was entitled to treat it as a show-cause notice and respond before fresh orders were passed.

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Issues: Whether, in proceedings for levy of interest under Section 22(2) of the Andhra Pradesh Value Added Tax Act, 2005, the dealer was entitled to a prior notice or opportunity of hearing in view of Rule 24(4) of the Andhra Pradesh Value Added Tax Rules, 2005.

Analysis: Interest under Section 22(2) was treated as automatic and the Act itself did not stipulate a prior notice before imposing the liability. However, the Rules framed under the Act provided for an opportunity under Rule 24(4), and that procedural safeguard had not been followed. Where the rule-making authority grants a larger opportunity than the parent enactment, compliance with that procedure is required to satisfy the principles of natural justice.

Conclusion: The impugned demand could not be sustained without following Rule 24(4), and the petitioner was entitled to treat the demand as a show cause notice and reply before fresh orders were passed.

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