Bona fide sales timing dispute barred interest under U.P. sales tax law once the overruled precedent lost force.

Interest under section 8(1) of the U.P. Sales Tax Act was not leviable where the dealer had disclosed its tax position in the return on a bona fide understanding that the relevant sales were not completed in the year in question. That bona fide contention meant there was no default in the statutory obligation to pay the tax as returned. The earlier restoration of interest rested on a Supreme Court decision that was later overruled, and once that precedent ceased to be good law, the basis for treating the dealer as in default disappeared.

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Issues: Whether interest under section 8(1) of the U.P. Sales Tax Act was leviable where the dealer's contention that the relevant sales were not completed in the year under consideration was found to be bona fide.

Analysis: The dealer had disclosed the tax position in its return on the basis of its understanding of when the sales were completed. The earlier finding that the contention was bona fide meant that there was no default in the statutory obligation to pay the tax which, according to the dealer, was due on the basis of the return. The levy of interest had been restored only by following an earlier Supreme Court decision that was later overruled. Once that precedent was no longer good law, the basis for treating the dealer as in default disappeared.

Conclusion: Interest under section 8(1) was not leviable on the dealer in these circumstances.

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