Advance tax interest cannot be levied without provisional assessment where liability is determined only in final assessment.

Interest under Section 7(2) of the Karnataka Tax on Entry of Goods Act, 1979 is not attracted merely because tax is found short-paid in the final assessment; the provision operates on a prior statutory determination of tax payable under the advance payment scheme. Where no provisional assessment was made and liability was quantified only in the regular assessment, the short payment could not by itself justify interest, and the statute pointed instead to penalty provisions. The Tribunal's deletion of interest was upheld in favour of the assessee, and the revision petition failed.

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Issues: Whether interest under Section 7(2) of the Karnataka Tax on Entry of Goods Act, 1979 could be levied on tax determined only in the regular assessment, in the absence of a provisional assessment.

Analysis: Section 7(1) requires monthly advance payment of tax, while Section 7(2) provides for interest on default or short payment. Reading Section 7 as a whole, and applying the same construction adopted for the corresponding provision in the Karnataka Sales Tax Act, 1957, the liability to interest under Section 7(2) depends on a prior determination of the tax payable in the manner contemplated by the statute. Where the Assessing Authority has not made a provisional assessment and the tax liability is quantified only in the final assessment, the short payment cannot, by itself, attract interest under Section 7(2). In such a case, the statute indicates resort to the penalty provisions rather than interest.

Conclusion: Interest under Section 7(2) was not leviable on the facts of the case, and the Tribunal's deletion of interest was upheld in favour of the assessee.

Final Conclusion: The revision petition failed, and the order setting aside the levy of interest was sustained.

Ratio Decidendi: Interest for short payment under the advance tax scheme is not attracted where the tax is determined only upon final assessment and no provisional assessment has been made under the statute.

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