Interest on revised tax demand starts only when the liability is determined and demanded, not before notice.

Interest on differential tax found payable in revisional or reassessment proceedings cannot be levied for the period before the demand is raised, because the liability to pay the additional amount arises only when it is determined and demanded. Where the assessee had deposited the revised tax within the time allowed after notice, the pre-demand interest levy was held unsustainable and the writ petitions succeeded, with the impugned interest demand quashed in favour of the assessee.

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Issues: Whether interest could be levied on the differential tax demanded in revisional proceedings where the assessee had deposited the amount within the time permitted after the demand was raised.

Analysis: The tax rate applicable to the goods was altered by ordinance and the assessee had continued to pay tax at the earlier rate. The assessment had initially accepted that rate, but the mistake was later noticed in audit and the matter was revised. The Court followed the principle that an assessee cannot be fastened with interest on additional tax found due only in reassessment or revision for the period before the demand is raised, because the liability to pay such additional amount arises when it is determined and demanded, not from the original return filing date.

Conclusion: The demand of interest on the differential tax was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The writ petitions succeeded and the impugned levy of interest on the revised tax demand was quashed.

Ratio Decidendi: Interest on additional tax determined only in reassessment or revisional proceedings is chargeable from the date the demand is raised, and not for the period prior to such determination when the assessee could not have foreseen the liability.

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