Statutory interest on accrued tax liability and validating amendment upheld for REP licence tax and additional sales tax.

Interest was upheld on tax relating to sale of REP licences because the underlying tax liability had already accrued and was later confirmed; an interim stay on recovery did not extinguish the statutory liability to interest during the restrained period. The Court distinguished cases where liability had not crystallised. Interest on belated additional sales tax was also sustained because a validating amendment expressly authorised the levy and operated retrospectively, making earlier contrary authority inapplicable. The challenge to interest on both heads failed, and the impugned orders were sustained.

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Issues: (i) Whether interest was leviable under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 on the tax paid towards sale of REP licences after revision of assessment, and (ii) whether interest could be levied on belated payment of additional sales tax in the absence of an express provision.

Issue (i): Whether interest was leviable under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 on the tax paid towards sale of REP licences after revision of assessment.

Analysis: The liability to tax on REP licences had already been recognised by the High Court and was later affirmed by the Supreme Court. The interim stay granted by the Supreme Court only prevented the assessing authority from proceeding further and did not erase the underlying tax liability. The petitioner's payment after the revisional assessment did not alter the fact that the tax had remained due, and the period during which recovery was restrained could not be treated as a period free from statutory interest. The cases relied on by the petitioner were distinguished on the footing that they dealt with different factual and legal situations where the liability itself was not similarly crystallised.

Conclusion: Interest under Section 24(3) was validly leviable and this issue is decided against the assessee.

Issue (ii): Whether interest could be levied on belated payment of additional sales tax in the absence of an express provision.

Analysis: The Court noted the amendment to the Tamil Nadu Additional Sales Tax Act providing for levy of interest on additional sales tax and the validating effect of the amendment. The reliance placed on earlier decisions was rejected because those decisions predated the validating amendment and did not govern the present controversy. The subsequent validating legislation was held to sustain the levy of interest retrospectively.

Conclusion: Interest on additional sales tax was held to be permissible and this issue is decided against the assessee.

Final Conclusion: The challenge to the levy of interest on both the REP licence tax and the additional sales tax failed, and the impugned orders were sustained.

Ratio Decidendi: Where the underlying tax liability has already accrued and is later confirmed, an interim restraint on collection does not extinguish the statutory liability to interest, and a validating amendment may retrospectively sustain the levy of interest on additional sales tax.

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