Interest not chargeable where tax cheque was timely tendered and delay in encashment was attributable to the department.

Interest under section 8(1) of the U.P. Sales Tax Act, 1948 was held not chargeable where the assessee tendered payment by cheque within the prescribed time under rule 48(b) of the U.P. Sales Tax Rules, 1948 and the department failed to present the cheque for encashment. The court applied the principle that interest for delayed payment arises only when the default is attributable to the assessee. Because the cheque was duly received in time and the delay in realisation resulted from the department's omission, the assessees were not in default. The recovery proceedings for the relevant assessment year were quashed.

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Issues: Whether interest under section 8(1) of the U.P. Sales Tax Act, 1948 was chargeable when the tax amount was tendered by cheque within time under rule 48(b) of the U.P. Sales Tax Rules, 1948, but the department did not present the cheque for encashment.

Analysis: The payment was admittedly received by the department within the prescribed time. The governing principle applied was that liability for interest arises only when the default in payment is attributable to the assessee. Where a cheque is duly tendered in time and the department fails to present it for collection, the assessee cannot be treated as being in default merely because the cheque was not encashed. On the facts, the delay in realisation was not attributable to the petitioners.

Conclusion: Interest was not chargeable under section 8(1) of the U.P. Sales Tax Act, 1948, and the recovery proceedings for the assessment year 1975-76 were quashed in favour of the petitioners.

Ratio Decidendi: Interest for delayed payment cannot be levied where the assessee has tendered payment in time by cheque and the non-realisation is due to the department's failure to present the cheque, since default must be attributable to the assessee.

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