Interest on disputed tax liability is not wholly automatic; rectification requires a patent mistake apparent from the record.

Interest under section 8(1) of the U.P. Sales Tax Act is intended to secure timely tax payment and compensate the Revenue, but it is not wholly automatic where the assessee raises a bona fide and genuine dispute on taxability. The text also states that rectification under section 22 is confined to a patent mistake apparent from the record, not an issue requiring detailed reasoning or competing views. On that basis, the levy of interest could not be sustained without first examining whether the statutory conditions for rectification were satisfied, and the matter was remitted for fresh consideration in the proper legal framework.

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Issues: (i) Whether interest under section 8(1) of the U.P. Sales Tax Act could be levied as an automatic consequence of default in payment of tax admittedly payable, even where the assessee disputed taxability on bona fide grounds; (ii) whether the levy of interest could be sustained through rectification proceedings under section 22 of the U.P. Sales Tax Act on the basis that the alleged liability was a mistake apparent from the record.

Issue (i): Whether interest under section 8(1) of the U.P. Sales Tax Act could be levied as an automatic consequence of default in payment of tax admittedly payable, even where the assessee disputed taxability on bona fide grounds.

Analysis: Section 8(1) imposes interest where tax admittedly payable is not deposited within the prescribed time, and the provision is designed to secure timely collection of tax and compensate the Revenue for deprivation of the tax amount. However, the liability to interest is not to be treated mechanically in every case of default. Where the assessee's stand on taxability is bona fide and the dispute is genuine, the question arises whether the amount can truly be described as tax admittedly payable. The applicability of interest therefore depends on the factual and legal setting in which the default occurred.

Conclusion: The liability to interest under section 8(1) is not to be treated as wholly automatic in every case of default, and a bona fide dispute on taxability remains relevant.

Issue (ii): Whether the levy of interest could be sustained through rectification proceedings under section 22 of the U.P. Sales Tax Act on the basis that the alleged liability was a mistake apparent from the record.

Analysis: Section 22 authorises rectification only of a mistake apparent from the record, which must be patent and obvious and not one requiring prolonged reasoning or choice between possible views. In the present matter, the controversy involved whether interest at all accrued on the facts and whether the matter fell within the rectification power. The order under challenge did not properly examine the scope of section 22, and the Tribunal also failed to address the rectification jurisdiction in its correct perspective. Since the dispute was not confined to an obvious clerical or arithmetic error, the invocation of rectification required closer scrutiny.

Conclusion: The levy of interest could not be upheld without first examining whether the case truly involved a mistake apparent from the record under section 22.

Final Conclusion: The matter was sent back for fresh consideration because the Tribunal failed to decide the rectification issue and the related question of interest liability in the proper legal framework.

Ratio Decidendi: Rectification is permissible only for a patent mistake apparent from the record, and a disputed liability to interest arising from contested taxability cannot be sustained without first determining whether the statutory conditions for rectification are satisfied.

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