(1) Where a dealer fails to make payment of any tax payable after assessment by the date specified in the notice issued under section 47 for payment thereof, he shall pay a simple interest at the rate of twelve per centum for the period of default, calculated from the date next following the date specified in such notice upto the date of full payment of such tax or upto the date preceding the date of commencement of proceedings under section 52, whichever is earlier, upon so much of the amount of tax payable by him according to such notice as remains unpaid.

(2) A dealer liable to pay interest under sub-section (1) of this section or sub-section (8) of section 40 shall, in the prescribed manner, pay into a Government Treasury or the Reserve Bank of India the amount of interest payable by, or due from, him by such date as may be prescribed.

(3) Where as a result of an order under section 79, section 80, section 81, section 82 or section 83 the amount of tax payable is modified, the interest payable under sub-section (1) of this section or sub-section (8) of section 40, as the case may be, shall be determined or re-determined on the basis of such modified amount for each British calendar month of default from the first day of the month next following the date specified in the notice originally issued under section 47 for payment thereof up to the month preceding the month of full payment of such tax or up to the month preceding the month of commencement of proceedings under section 52, whichever is earlier, upon so much of the amount of modified tax as remains unpaid, and the excess interest paid, if any, shall be refunded.

(4) Interest under sub-section (1) shall be payable in respect of assessment, notices for which under section 47 are issued, on or after the appointed day.