Automatic interest on unpaid sales tax arrears applies after amendment, without needing a separate demand notice.

Section 8(1-A) of the U.P. Sales Tax Act, 1948 was construed to apply to tax arrears that remained unpaid after the amendment came into force, even if the original liability arose earlier; the decisive factor was continued non-payment after the statutory period, so the challenge based on the pre-amendment origin of the arrears failed. The provision also made interest accrue automatically once the statutory conditions were met, so no separate notice of demand was required for interest to become payable. The statutory interest liability followed directly from the unpaid arrears under the Act.

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Issues: (i) Whether section 8(1-A) of the U.P. Sales Tax Act, 1948 applied to sales tax arrears that had become due before the amendment came into force. (ii) Whether liability to pay interest on the arrears required a separate notice of demand.

Issue (i): Whether section 8(1-A) of the U.P. Sales Tax Act, 1948 applied to sales tax arrears that had become due before the amendment came into force.

Analysis: The amended provision provided for simple interest on unpaid tax arrears once the prescribed period had elapsed after the expiry of the demand period or after commencement of the amending Act, whichever was later. The liability attached to arrears remaining unpaid after the amendment came into force, and the relevant date for operation of the provision was the continued non-payment of the arrears, not the year in which the original tax liability arose.

Conclusion: The provision applied to the arrears in question, and the challenge based on the pre-amendment origin of the liability failed.

Issue (ii): Whether liability to pay interest on the arrears required a separate notice of demand.

Analysis: The interest under section 8(1-A) accrued automatically once the statutory conditions were satisfied. Since the arrears had remained unpaid for the required period, no further notice was necessary for interest to become payable. The obligation to pay interest followed directly from the statute and did not depend on a separate demand notice.

Conclusion: No separate notice of demand was required, and the appellants remained liable for interest.

Final Conclusion: The statutory interest demand was upheld, and the appeal failed.

Ratio Decidendi: Where a taxing statute makes interest payable automatically on unpaid arrears after a specified period, the liability is attracted by continued non-payment under the statute itself and does not depend on a separate notice of demand.

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