Statutory interest continues during a stay order, and the stay period cannot be excluded from sales tax interest computation.

Statutory interest under section 8(1-A) of the U.P. Sales Tax Act accrues automatically on unpaid sales tax arrears and is not suspended by a stay order. The reasoning treats the interest liability as created by statute, so the period during which recovery is stayed by a sales tax authority, the State Government, or the High Court cannot be excluded from the computation unless the statute expressly permits it. The stay therefore does not exempt the assessee from penal interest, and the stay period remains part of the interest calculation.

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Issues: Whether the period during which a stay order remained in operation was liable to be excluded while computing penal interest under section 8(1-A) of the U.P. Sales Tax Act.

Analysis: The liability to pay interest under section 8(1-A) was treated as one created by statute. The reasoning proceeded on the basis that the running of interest is not stopped by a stay order, whether the stay is granted by a sales tax authority, the State Government, or the High Court. The effect of the earlier decisions and the pronouncement of the Supreme Court was that interest accrues automatically and the existence of a stay does not exempt the assessee from that statutory liability.

Conclusion: The period during which the stay order was in force was not liable to be excluded for computing penal interest under section 8(1-A); the answer was against the assessee.

Final Conclusion: The reference was answered by holding that stay of recovery does not suspend the statutory running of interest on unpaid sales tax arrears.

Ratio Decidendi: Liability for statutory interest continues notwithstanding a stay order, and the stay period cannot be excluded from computation unless the statute expressly so provides.

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