Interest on disputed differential tax cannot be levied unless statutory conditions for crystallised liability are satisfied.

Interest under Section 24(3) of the Tamil Nadu General Sales Tax Act could not be sustained on differential tax paid after resolution of a disputed liability, because the tax had not crystallised in the manner required to trigger the statutory levy. The Madras High Court followed its earlier decision, applying the Supreme Court ruling in E.I.D. Parry, and held that where the underlying tax demand remained contested and the conditions for charging interest were not met, interest on the belated differential payment was unsustainable.

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Issues: Whether interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained on the differential tax paid after resolution of the underlying tax dispute.

Analysis: The petitioners' challenge to the revisional orders was covered by an earlier decision of the same Court, which had applied the Supreme Court's ruling in E.I.D. Parry and held that interest was not leviable in similar circumstances. The decisive consideration was that the tax liability had not become crystallised in the manner required to attract interest under the Act, and the demand was therefore unsustainable on the facts.

Conclusion: The levy of interest under Section 24(3) was held to be unsustainable and the petitioners succeeded.

Ratio Decidendi: Interest cannot be demanded on belated payment of differential tax where the liability was disputed and the statutory conditions for levy of interest are not satisfied.

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