Automatic interest on unpaid tax recoverable without separate assessment or fresh demand under the sales tax statute.

Interest on unpaid sales tax accrued automatically under section 8(1-A) of the U.P. Sales Tax Act and was recoverable as an incident of the existing tax liability. The majority held that the deeming fiction treating interest as part of tax operated for recovery purposes, so no separate assessment order, fresh notice of demand, or independent assessment proceeding was required. The absence of any express statutory provision for a separate appeal or revision against an interest order, and the practical inability to quantify interest before payment, supported this construction. The dissent would have extended the fiction to procedural incidents as well, but the majority answered the question against the taxpayer and in favour of the Revenue.

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Issues: Whether interest under section 8(1-A) of the U.P. Sales Tax Act could be recovered without a separate assessment order and notice of demand.

Analysis: The majority held that section 8(1-A) created a self-contained liability for interest which accrued automatically on default in payment of tax and was recoverable as an incident of the already assessed tax. The legal fiction that interest was to be deemed part of tax was confined to recovery and related consequences, and did not require a fresh assessment proceeding. The absence of an express amendment providing appeal or revision against a separate interest order, and the practical impossibility of quantifying interest before payment, supported the view that no independent assessment order or fresh notice of demand was necessary. The dissenting view held that the fiction extended to the procedural incidents of tax, including notice of demand and recovery certificate specifying the amount of interest.

Conclusion: A separate assessment order and notice of demand were not necessary for recovery of interest under section 8(1-A); the question was answered in the negative, in favour of the Revenue.

Final Conclusion: The majority settled that interest on sales tax arrears could be recovered as part of the existing tax liability without initiating a separate assessment process for interest.

Ratio Decidendi: Where a statute makes interest automatically accrue on unpaid tax and deems it part of the tax for all purposes, the liability may be recovered without a separate assessment order, and the procedural incidents of assessment do not apply unless the statute expressly so provides.

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