Statutory interest on belated tax payment is compensatory and survives a later demand; administrative clarification cannot override the Act.

Interest under the Tamil Nadu Value Added Tax Act is a statutory, compensatory consequence of belated tax payment. Where purchase tax remains unpaid after the due date under the self-assessment regime, interest accrues for the full default period at the prescribed monthly rate, and later departmental action does not defeat that liability. Administrative clarifications cannot override the statute. A limitation-based objection to the interest demand fails because the obligation arises from the delayed payment itself, not from any independent discretionary recovery action. The interest demand was therefore sustained, subject to verification of the calculation.

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Issues: Whether interest could be levied under Section 42(3) of the Tamil Nadu Value Added Tax Act, 2006 on belated payment of purchase tax and whether the demand for such interest was barred by time.

Analysis: The assessment scheme under the TNVAT Act is driven by self-assessment and the returns filed by the dealer. Where tax remains unpaid after the due date specified for payment, Section 42(3) makes interest payable for the entire period of default at the prescribed monthly rate. The Court held that interest follows the tax liability and is compensatory in character. The reliance placed on departmental clarification did not assist the petitioner, since administrative circulars cannot control the statutory mandate. The plea that the demand was time-barred was rejected because the statutory liability to pay interest arose from the belated payment itself and not from any independent discretionary demand.

Conclusion: The petitioner was liable to pay interest under Section 42(3), and the challenge to the demand on the ground of limitation failed.

Final Conclusion: The writ petitions failed, and the impugned interest demands were sustained, while the petitioner was left to respond to the calculation notice and the department was permitted to proceed in accordance with law.

Ratio Decidendi: Under the TNVAT Act, interest on tax paid after the due date is a statutory and consequential liability recoverable for the entire default period, and it is not defeated merely because the demand is raised later.

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