Interest on reassessment demand is not leviable when tax was paid on time with the return.

Interest under section 18(4)(a) of the M. P. V. A. T. Act was held not leviable where the dealer paid tax due with the return within time and a further demand arose only on reassessment. The provision was construed as applying only to the specific statutory contingencies of default covered by its language, not to an assessee who had complied with the return-based payment obligation and was later found liable for an additional amount on assessment. As no default within the scope of section 18(4)(a) existed, the interest demand and recovery were quashed.

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Issues: Whether interest under section 18(4)(a) of the M. P. V. A. T. Act, 2002 was leviable when the dealer had paid the tax due along with the return in time and the additional demand arose only on reassessment.

Analysis: Liability to interest under section 18(4)(a) arises only in the situations specifically enumerated in the provision. Where the dealer has paid the tax according to the return within time, there is no default merely because a later assessment or adjustment results in a further demand. The provision for interest is attracted by statutory default in payment of tax due as per return, and not by the obligation to anticipate the final assessment. Applying the principle that interest provisions must be construed according to their language and scope, the Court held that the case did not fall within any of the contingencies mentioned in section 18(4)(a).

Conclusion: The levy of interest was not sustainable and the demand of interest and its recovery were quashed; the writ petition was allowed to that extent.

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