Sales tax deferral interest runs only from the date repayment becomes legally due after BIFR protection ends.

In a sales tax deferral arrangement treated as a Government loan, interest was held recoverable on default, but the protected period while the company was before BIFR could not be counted as time when repayment was legally due. The court noted that recovery was barred during that period and the deferral agreement had not been cancelled. Interest was therefore confined to the post-BIFR period, with liability computed from 06.2.2013 to 24.5.2015, rather than for the entire deferral period claimed by the Department.

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Issues: (i) Whether interest was payable on the sales tax deferral amount availed by the appellant. (ii) From what date the interest liability had to be computed.

Issue (i): Whether interest was payable on the sales tax deferral amount availed by the appellant.

Analysis: The deferral arrangement treated the tax as a Government loan and the agreement specifically provided for repayment with interest on default. The appellant had become a sick industrial company and recovery was barred during the period when the matter remained before the BIFR. The earlier authority that interest runs from the due date of repayment applied, but the facts here were peculiar because the Department had not cancelled the deferral agreement and could not enforce recovery during the protected period.

Conclusion: Interest was payable, but not on the entire deferral period claimed by the Department.

Issue (ii): From what date the interest liability had to be computed.

Analysis: The protected period before the BIFR could not be treated as a period when repayment became due. Once the appellant was de-registered and recovery became permissible, the first enforceable demand followed. The repayment due date was therefore fixed only after the BIFR protection ended, and the actual payment date was later than that due date.

Conclusion: The interest was directed to be computed from 06.2.2013 to 24.5.2015.

Final Conclusion: The appellant succeeded in securing a substantial curtailment of the interest period, and the matter was finally concluded by confining liability to the post-BIFR period while leaving open any separate request for governmental concession.

Ratio Decidendi: In a sales tax deferral arrangement, interest is recoverable from the date repayment first becomes legally due, and a period during which recovery is statutorily barred cannot be counted for fixing that due date.

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