Taxable turnover and disputed-liability interest: excise duty included in turnover, but admitted-tax interest not attracted.

Central excise duty paid by the purchaser was treated as part of taxable turnover and remained liable to tax. On interest, the provision governing admitted tax was held inapplicable where the assessee had consistently and bona fide disputed liability from the outset; in that situation, interest could not be levied under section 8(1), though the provision for disputed liability under section 8(1-B) could still apply. The tax levy on excise duty was sustained, while the interest demand was confined to the disputed-liability provision.

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Issues: (i) Whether central excise duty paid by the purchaser formed part of the taxable turnover and was liable to tax; (ii) Whether interest on the disputed tax amount could be levied under section 8(1) of the U.P. Trade Tax Act, or whether only section 8(1-B) applied.

Issue (i): Whether central excise duty paid by the purchaser formed part of the taxable turnover and was liable to tax.

Analysis: The question was treated as covered by the earlier decision in the connected matter, and the same view was applied here. On that footing, the amount of central excise duty paid by the purchaser was regarded as forming part of the turnover.

Conclusion: This issue was decided against the assessee and in favour of the revenue.

Issue (ii): Whether interest on the disputed tax amount could be levied under section 8(1) of the U.P. Trade Tax Act, or whether only section 8(1-B) applied.

Analysis: Interest under section 8(1) was held to arise only where the tax is admitted or due in the relevant statutory sense. Where the assessee has consistently and bona fide disputed liability from the beginning, the amount cannot be treated as admitted tax. In such a case, the levy of interest under section 8(1) is not attracted, though interest under section 8(1-B) may still be available.

Conclusion: This issue was decided in favour of the assessee and against the revenue.

Final Conclusion: The tax levy on central excise duty was sustained, but the demand of interest under section 8(1) was set aside and confined to section 8(1-B).

Ratio Decidendi: Interest for non-payment cannot be levied under the provision governing admitted tax where the assessee has bona fide and continuously disputed the liability; in such cases, the specific provision for disputed liability alone applies.

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