Interest on Differential Sales Tax Cannot Be Levied Where Admitted Tax Was Paid Within Time

Interest under the sales tax regime is confined to tax admittedly payable in the return and not to a later-determined differential liability where the admitted tax was paid within time. Because the assessee had paid the concessional tax within the prescribed period and later discharged the assessed balance after assessment, the demand for interest on the differential amount was unsustainable.

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Issues: Whether interest could be levied on the difference of tax arising from non-production of Form C, where the admitted tax had been paid within time and the balance tax was paid after assessment.

Analysis: The liability to interest under section 8(1) of the U.P. Trade Tax Act, 1948, read with section 9(2A) of the Central Sales Tax Act, 1956, arises only in respect of admitted tax or tax disclosed as payable by the dealer in the return. The expression "tax payable" has to be understood in the context of the relevant provision. Since the assessee had paid the concessional tax within time and thereafter also paid the assessed differential tax, the demand for interest on the differential amount was not sustainable.

Conclusion: Interest was not leviable on the differential tax in the facts of the case, and the issue was answered against the Revenue and in favour of the assessee.

Final Conclusion: The revisions failed because the levy of interest was confined to admitted tax payable within time, and the Tribunal's deletion of the interest demand was upheld.

Ratio Decidendi: Interest under the sales tax regime is chargeable only on tax admittedly payable and not on a later-determined differential liability where the admitted tax has been paid within the prescribed time.

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