Interest on reopened sales tax demand is not leviable when the assessee promptly complies and no default occurs.

Interest under the Tamil Nadu General Sales Tax Act was held unsustainable where additional sales tax and surcharge were paid promptly after a reopened assessment, because the assessee was not in default after the demand was raised. The liability arose only after the Supreme Court altered the position on the nature of the goods, and the assessee complied immediately with the reassessment demand. Section 24(3) was read as applying only to amounts remaining unpaid beyond the legally specified time, not to sums satisfied within the relevant period. A waiver granted to similarly placed dealers also supported the conclusion that interest should not be fastened in these circumstances.

---

---

Issues: Whether interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be levied on the assessee when the additional sales tax and surcharge were paid promptly on demand after reopening of assessment.

Analysis: The liability to pay additional sales tax and surcharge arose only after the Supreme Court changed the position regarding the nature of the goods, while the relevant transactions had already concluded during the earlier assessment year. The assessee did not resist the reopened assessment and complied with the demand immediately. Section 24(3) contemplates interest on amounts remaining unpaid after the time specified for payment, and the provision was applied in light of the earlier reasoning that interest is not attracted where the demand raised by assessment is satisfied within the legally relevant time and there is no default in complying with the assessment order. The existence of a waiver granted to similarly placed dealers also supported the conclusion that fastening interest in these circumstances would be inequitable.

Conclusion: The demand for interest was unsustainable and was quashed; the issue was answered in favour of the assessee.

Ratio Decidendi: Interest under the sales tax payment provision is not leviable where the assessee promptly complies with the reopened assessment demand and there is no default in payment after the assessment order.

---