Statutory interest requires assessment or demand; dishonoured cheques alone cannot create liability under sales tax law.

Interest under Section 24(3) of the Tamil Nadu General Sales Tax Act could not be levied without an assessment or a legally enforceable notice of demand, because the statutory liability arises only on amounts remaining unpaid after the due date or instalment date. Dishonour of cheques collected during inspection did not by itself create that liability, and a statement recorded by Enforcement Wing officials could not supply the missing jurisdictional basis. In the absence of even a provisional assessment or demand notice, the interest demand was without jurisdiction and unsustainable, and the assessee succeeded.

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Issues: Whether interest under Section 24(3) of the Tamil Nadu General Sales Tax Act could be levied in the absence of an assessment or notice of demand, merely because cheques collected during inspection were dishonoured and the dealer had allegedly accepted liability.

Analysis: Interest under Section 24(3) is statutory and becomes payable only on amounts remaining unpaid after the date specified for payment under Section 24(1) or in the case of instalment payments. The liability contemplated by the provision presupposes an assessment or a legally enforceable demand. Where there was no assessment, even provisional, and no notice of demand, dishonour of cheques by itself could not create the statutory liability for interest. A statement recorded by Enforcement Wing officials was not sufficient to supply the jurisdictional basis for levy of interest.

Conclusion: The demand for interest was without jurisdiction and was unsustainable; the issue was decided in favour of the assessee.

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