Admitted tax and post-assessment interest under trade tax law depend on when liability is settled and payable.

Interest under section 8(1) of the U.P. Trade Tax Act was not leviable on tax later assessed in reassessment for warranty claim receipts for 1999-2000 to 2002-03, because that tax had not been admitted or payable under the original assessments and therefore could not be treated as admitted tax; interest was confined to the post-assessment regime under section 8(1B). For 2003-04, the warranty claim turnover was taxed in regular assessment and the liability was already settled against the assessee, so the amount was treated as admitted tax and interest under section 8(1) applied from 1 June 2003. The earlier years attracted relief, while the 2003-04 interest challenge failed.

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Issues: (i) Whether interest under section 8(1) of the U.P. Trade Tax Act, 1948 was leviable on the tax assessed on warranty claim amounts for the assessment years 1999-2000 to 2002-03, and whether such tax could be treated as admitted tax; (ii) Whether interest under section 8(1) of the U.P. Trade Tax Act, 1948 was leviable for the assessment year 2003-04 from June 1, 2003.

Issue (i): Whether interest under section 8(1) of the U.P. Trade Tax Act, 1948 was leviable on the tax assessed on warranty claim amounts for the assessment years 1999-2000 to 2002-03, and whether such tax could be treated as admitted tax.

Analysis: For these years, the original assessments had accepted the assessee's stand that warranty claim receipts were not taxable, and tax was imposed only later in reassessment proceedings under section 21 of the U.P. Trade Tax Act, 1948 following subsequent judicial interpretation. On that basis, the liability was not one that had been admitted by the assessee or was payable at the stage contemplated by section 8(1). The later assessed amount could not, therefore, be characterised as admitted tax for the purpose of charging interest under section 8(1). The liability to interest was confined to the post-assessment regime.

Conclusion: Interest under section 8(1) was not leviable for the assessment years 1999-2000 to 2002-03, and the assessee was liable only to interest under section 8(1B).

Issue (ii): Whether interest under section 8(1) of the U.P. Trade Tax Act, 1948 was leviable for the assessment year 2003-04 from June 1, 2003.

Analysis: For the assessment year 2003-04, the amount received towards warranty claim was assessed to tax in the regular assessment, and by the time from which interest was demanded, the legal position had already been settled against the assessee by an earlier decision of the High Court. In those circumstances, the tax was treated as tax admittedly payable, attracting liability to interest under section 8(1) from June 1, 2003.

Conclusion: Interest under section 8(1) was leviable for the assessment year 2003-04 from June 1, 2003.

Final Conclusion: The assessee obtained relief in respect of interest for the earlier assessment years, but the challenge to the interest demand for the assessment year 2003-04 failed.

Ratio Decidendi: Tax subsequently fastened on a turnover that was not earlier admitted or exigible under the original assessment is not 'admitted tax' for the purpose of section 8(1); interest then follows only under the post-assessment provision, whereas once the liability is settled and payable as admitted tax, section 8(1) applies.

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