Enhanced tax demands require fresh notice and timely payment avoids interest liability under sales tax law.

Under the U.P. Sales Tax Act, tax becomes recoverable only on service of a notice of demand, and any appellate or revisional variation must be reflected in a demand matching the finally determined liability. Interest under section 8(1-A) arises only where tax remains unpaid beyond the prescribed period; for enhanced tax, the second proviso contemplates interest only if the excess remains unpaid for six months after the enhancement order. The commentary states that a revisional restoration of the original assessment after appellate reduction amounts to an enhancement, but where the enhanced amount is paid within time, no default attracting interest arises and no fresh recovery for interest is justified.

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Issues: Whether, on a revisional restoration of the original assessment after a prior appellate reduction, the assessee was liable to pay interest on the enhanced tax in the absence of a fresh notice of demand and where the enhanced amount was paid within time.

Analysis: Under section 8 of the U.P. Sales Tax Act, tax becomes recoverable on service of a notice of demand, and where the assessed amount is varied in appeal or revision, the demand has to conform to the finally determined liability. The provision introduced by section 8(1-A) fastens interest only when the tax remains unpaid beyond the prescribed period, and its second proviso specifically contemplates interest on tax payable under an order of enhancement only if such excess remains unpaid for six months after that order. The later sub-section (9) also indicates that where tax is enhanced on appeal or revision, a fresh notice is required only for the enhanced amount. On the facts, the revisional order restoring the original assessment after appellate reduction amounted to an enhancement within the meaning of section 8(1-A), and the petitioner paid the enhanced amount within the time allowed. No default attracting interest was therefore made out.

Conclusion: The assessee was not liable to pay interest, and the recovery proceedings for interest were illegal.

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