Return-based tax liability governs interest under Karnataka sales tax law; rectification alone cannot trigger interest without provisional assessment.

Interest under Section 12-B(2) of the Karnataka Sales Tax Act was treated as payable only where the dealer defaulted in advance tax payment or paid less than the tax reflected in the returns. The Karnataka HC noted that the scheme of Section 12-B links interest to the return-based tax liability, not to a later enhancement arising from rectification under Section 25-A. Where no provisional assessment under Section 12-B(3) had rejected the returns as incorrect or incomplete, and the tax paid matched the returns filed, the rectification-based demand for interest could not be sustained.

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Issues: Whether interest under Section 12-B(2) of the Karnataka Sales Tax Act, 1957 could be levied on the basis of rectification orders under Section 25-A when no provisional assessment had been made under Section 12-B(3) and the tax paid matched the returns filed.

Analysis: The liability to pay interest under Section 12-B(2) arises only where there is default in payment of advance tax for a month or quarter beyond the prescribed period, or where the tax paid is less than the tax payable on the basis of the returns. The scheme of Section 12-B, read as a whole, shows that interest is linked to the dealer's own return-based tax liability and not to a subsequent enhancement arising from rectification of assessment. In the absence of a provisional assessment under Section 12-B(3) rejecting the returns as incorrect or incomplete, and where the tax already paid corresponded to the returns filed, the rectification-based demand for interest could not be sustained.

Conclusion: Interest under Section 12-B(2) was not leviable on the rectification demand in the absence of provisional assessment under Section 12-B(3); the revision petitions failed.

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