Interest on disputed sales tax liability not leviable where the dealer's exemption claim was rejected but liability was never admitted.

Interest under section 8(1) of the U.P. Sales Tax Act, 1948, is chargeable only on tax that is "admittedly payable", meaning tax disclosed in the dealer's accounts or returns, or otherwise accepted in proceedings under the Act. A rejected exemption claim does not by itself make a disputed tax liability admitted. Where the dealer had claimed exemption on the basis of purchases made for a recognised principal dealer and the liability remained contested, the tax could not be treated as an admitted liability. Interest under section 8(1) was therefore not leviable.

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Issues: Whether interest under section 8(1) of the U.P. Sales Tax Act, 1948, was leviable on the tax imposed when the dealer had claimed exemption and the tax was not admitted liability.

Analysis: The expression "tax admittedly payable" in section 8(1) covers only tax shown in the dealer's accounts or returns, or otherwise admitted by him in proceedings under the Act. The dealer had claimed exemption on the footing that purchases were made for a principal dealer holding recognition under section 4B, but that claim was rejected. Rejection of an exemption claim does not by itself convert the disputed tax into admitted liability. Interest under section 8(1) therefore cannot be charged where the tax liability itself was contested and not admitted.

Conclusion: Interest under section 8(1) was not payable, as the tax was not an admitted liability.

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