Interest on unpaid sales tax can apply despite a bona fide export exemption claim when the exemption fails.

Interest under section 8(1) of the U.P. Sales Tax Act, 1948 applies where tax shown in returns or accounts remains unpaid within time, because the statutory explanation covers tax disclosed in the books or admitted in any return or proceeding. A dealer's claim that sales were in the course of export did not, by itself, remove the unpaid turnover from the category of tax admittedly payable when the exemption claim failed before the authorities. The court distinguished cases involving rate changes or classification disputes and held that a bona fide but unproved exemption claim does not bar interest under the provision. The Tribunal's deletion of interest was therefore unsustainable.

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Issues: Whether interest under section 8(1) of the U.P. Sales Tax Act, 1948 was leviable on the dealer's unpaid tax where the dealer had claimed exemption on the ground that the sales were in the course of export, and whether bona fide dispute barred such interest.

Analysis: The statutory scheme required a dealer to file returns and deposit the tax due on the turnover shown therein. Under section 8(1), simple interest became payable on the tax admittedly payable if it was not deposited within time, and the explanation broadened the expression to include tax disclosed in the accounts or admitted in any return or proceeding under the Act. The dealer's claim to exemption failed before the authorities, and the rejected turnover therefore remained part of the taxable turnover disclosed in the books. The court distinguished cases dealing with changes in rate of tax or classification disputes, holding that a mere bona fide assertion of exemption on an unproved export claim did not take the case outside the statutory expression "tax admittedly payable".

Conclusion: Interest under section 8(1) was leviable, and the deletion of interest by the Tribunal was not sustainable.

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