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Issues: (i) whether interest on the unpaid sales tax was payable under section 8(1-A) of the U.P. Sales Tax Act, 1948; (ii) whether a fresh notice of demand was necessary after the tax demand was reduced in appeal and revision.
Issue (i): whether interest on the unpaid sales tax was payable under section 8(1-A) of the U.P. Sales Tax Act, 1948.
Analysis: The liability to pay interest under section 8(1-A) is automatic and arises by operation of law once the tax remains unpaid after the stipulated period. The interest is added to the tax and becomes recoverable as part of the tax. Since notice of assessment and demand had been served, the assessee could not avoid liability for interest merely because the amount was later altered in appellate proceedings.
Conclusion: The issue was decided against the assessee and in favour of the Revenue.
Issue (ii): whether a fresh notice of demand was necessary after the tax demand was reduced in appeal and revision.
Analysis: Section 8(9) of the U.P. Sales Tax Act, 1948, as introduced by the amending Act, expressly provides that where the tax or other dues are reduced in appeal, revision, or other proceeding, it is not necessary to serve a fresh notice. Pending recovery proceedings may continue in relation to the reduced amount from the stage reached before disposal of the proceedings.
Conclusion: The issue was decided against the assessee and in favour of the Revenue.
Final Conclusion: The recovery proceedings were valid, the challenge to the demand failed, and the writ petition stood dismissed.
Ratio Decidendi: Interest under section 8(1-A) of the U.P. Sales Tax Act, 1948, is statutorily automatic, and section 8(9) negates the need for a fresh demand notice where the assessed tax is reduced in appeal or revision.
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