Interest on rectification-based tax demand not chargeable where the underlying liability was disputed.

Interest under section 8(1) of the U.P. Trade Tax Act, 1948 was held not chargeable on additional tax raised through rectification under section 22, where the dealer had never admitted the liability and the assessing authority had not treated it as payable initially. The operative principle was that interest attaches to tax that is already admitted or unquestionably due, not to a liability created later by rectification-based demand. On that basis, the Tribunal's view was upheld and interest on the additional tax levy was rejected.

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Issues: Whether interest under section 8(1) of the U.P. Trade Tax Act, 1948 could be charged on additional tax levied through rectification orders under section 22 of the U.P. Trade Tax Act, 1948 when the liability itself was disputed.

Analysis: The assessments had originally been completed under the Central Sales Tax Act, 1956 and were later rectified under section 22 of the U.P. Trade Tax Act, 1948, resulting in levy of additional tax under section 3-E of the U.P. Trade Tax Act, 1948. The decisive consideration was that the dealer had not admitted the liability for the additional tax at any stage, and the assessing authority itself had initially not treated it as payable. Section 8(1) of the U.P. Trade Tax Act, 1948 was applied on the footing that interest is chargeable only on tax that was already admitted or unquestionably payable, not on tax brought in by a subsequent rectification-based demand.

Conclusion: Interest was not chargeable on the additional tax levied under section 22, and the Tribunal's view was upheld.

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