Interest on admitted tax depends on the law when the return was due; later changes do not by themselves create liability.

For interest under section 8(1), "tax admittedly payable under the Act" refers to tax correctly calculable on the turnover disclosed in the return on the law prevailing when the return was due, not tax later increased by assessment, retrospective legislation, or a later judicial interpretation. Section 8(1) and section 8(1-B) operate in different fields: a later assessment and the time granted for payment of assessed tax do not remove interest already attracted for default in paying admitted tax. Interest is not chargeable where the dealer's return-time calculation was bona fide and legally correct under the then existing law, but it remains leviable where exemption or concessional treatment was not proved by the prescribed statutory conditions or forms.

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Issues: (i) Whether, for the purpose of levy of interest under section 8(1), the expression "tax admittedly payable under the Act" means tax calculated by the dealer on the turnover disclosed in the return in accordance with the law as it stood when the return was due, or tax finally determined on assessment or by subsequent change in law or interpretation; (ii) whether the liability to pay interest under section 8(1) ceases merely because tax is later assessed and a fresh period for payment is granted under section 8(1-B); (iii) whether interest can be levied where the dealer's calculation was made bona fide under the prevailing legal position, but the tax later becomes payable because of retrospective legislation, later judicial interpretation, or failure to establish an exemption or concessional claim by prescribed forms.

Issue (i): Whether, for the purpose of levy of interest under section 8(1), the expression "tax admittedly payable under the Act" means tax calculated by the dealer on the turnover disclosed in the return in accordance with the law as it stood when the return was due, or tax finally determined on assessment or by subsequent change in law or interpretation.

Analysis: The expression was treated as referring to the tax payable on the disclosed turnover as the dealer was required to calculate it at the time of filing the return. The scheme of section 8 distinguished between tax admittedly payable before assessment and tax assessed thereafter. The dealer was not expected to anticipate a later reversal of the legal position, and a calculation made in accordance with the law then prevailing could not be treated as wrong merely because a later decision or amendment increased the liability. The amount later found due because of a subsequent change was treated as tax in excess, not as the tax admittedly payable for the purpose of sub-section (1).

Conclusion: The expression "tax admittedly payable under the Act" means tax properly calculable on the basis of the law prevailing when the return was due, not tax later enhanced by subsequent change in law or interpretation.

Issue (ii): Whether the liability to pay interest under section 8(1) ceases merely because tax is later assessed and a fresh period for payment is granted under section 8(1-B).

Analysis: The two sub-sections operate in different fields. Section 8(1) deals with default in payment of tax admittedly payable within the time prescribed for return, while section 8(1-B) deals with non-payment of tax assessed, reassessed, or enhanced within the time allowed in the demand notice. Assessment does not erase the earlier default, and the further time granted after assessment is only a concession for payment of assessed tax. It is not a fresh opportunity to avoid interest already attracted under section 8(1).

Conclusion: The liability under section 8(1) is not wiped out by subsequent assessment or by the time granted under section 8(1-B).

Issue (iii): Whether interest can be levied where the dealer's calculation was made bona fide under the prevailing legal position, but the tax later becomes payable because of retrospective legislation, later judicial interpretation, or failure to establish an exemption or concessional claim by prescribed forms.

Analysis: Where the dealer computed tax honestly and in accordance with the law as it then stood, later retrospective changes or later judicial pronouncements do not render the earlier calculation mala fide. Interest was therefore not chargeable on amounts becoming payable only because of such later events. However, where exemption or concessional treatment depended on prescribed forms or proof of a statutory condition, and the dealer failed to establish compliance, the calculation was not in accordance with the Act and interest could be levied.

Conclusion: Interest was not leviable on tax arising only from retrospective change or later interpretation where the dealer acted bona fide, but it was leviable where the dealer failed to satisfy the statutory conditions for exemption or concession.

Final Conclusion: The petitions were disposed of on the footing that interest under section 8(1) could not be fastened on bona fide tax calculations made in accordance with the then prevailing law, though it could be sustained where statutory conditions for exemption or concessional treatment were not proved; relief was granted only to the extent indicated in the individual petitions.

Ratio Decidendi: For levy of interest on tax admittedly payable, the relevant inquiry is whether the dealer's return-time calculation was bona fide and legally correct on the law then prevailing; later retrospective changes or later interpretations do not by themselves create liability, but non-compliance with statutory conditions for exemption or concession does.

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