Interest on reassessed VAT differential tax runs from the original due date, not the reassessment order date.

Interest was payable on differential tax arising from reassessment under the Tamil Nadu Value Added Tax Act, 2006, because the dealer's correct return obligation made the tax due without notice and the reassessment only confirmed the balance payable. Section 42(3) was applied to treat interest as running for the entire period of default from the date the tax ought originally to have been paid on the correct turnover, not from the reassessment order. Since the dealer had under-declared turnover and paid the differential amount only after proceedings began, the liability to interest could not be avoided.

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Issues: Whether interest was payable on the differential tax arising from reassessment under the Tamil Nadu Value Added Tax Act, 2006, when the differential tax was paid after the reassessment order but within thirty days of that order.

Analysis: The dealer was obliged to file a correct return under Section 21 of the Tamil Nadu Value Added Tax Act, 2006 and the tax thereunder became due without notice. The reassessment under Section 27(1)(a) read with Section 22(3) confirmed the higher taxable turnover and determined the balance tax payable. Section 42(3) provides that where any amount remains unpaid after the date specified for payment, interest at the prescribed rate is payable for the entire period of default. The default was held to commence from the date on which the tax ought originally to have been paid on the correct turnover, not from the later reassessment order. Since the petitioner had under-declared taxable turnover and paid the differential amount only after proceedings were initiated, the liability to interest could not be avoided.

Conclusion: Interest on the differential tax was held payable for the entire period of default, and the challenge to the demand failed.

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