Deferred trade tax moratorium ends on closure of the unit, making interest payable for delayed deposit of the tax.

The moratorium on deferred trade tax under Section 8(2-A) and the eligibility certificate under Section 4-A operated only within the limits of Rule 43 of the U.P. Trade Tax Rules, 1948. Where the manufacturing unit discontinued business or became ineligible for exemption, the moratorium ceased and the deferred tax became payable in a lump sum within three months. As the unit closed on 23.12.2002, liability to deposit the deferred tax arose from that date, and failure to pay within the stipulated period attracted interest for the period of default. The demand of interest was upheld.

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Issues: Whether, after closure of the manufacturing unit, the petitioner remained liable to pay interest on the deferred trade tax under the moratorium scheme.

Analysis: The eligibility certificate under Section 4-A and the moratorium under Section 8(2-A) operated only within the limits prescribed by Rule 43 of the U.P. Trade Tax Rules, 1948. Rule 43 provided that the moratorium would cease on discontinuance of business or when the unit became ineligible for exemption, and the deferred tax would then become payable in lump sum within three months. The petitioner's unit had closed on 23.12.2002, so the liability to deposit the tax arose from that date, and failure to deposit within the stipulated period attracted interest for the period of default.

Conclusion: The petitioner was liable to pay interest on the deferred tax after closure of the unit, and the demand of interest was upheld.

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