Interest on disputed purchase tax was not leviable where purchases from registered dealers were not first purchases under sales tax law.

Interest under Section 8(1) of the U.P. Sales Tax Act was examined in relation to purchase tax assessed on purchases from registered dealers where the dealer had not disclosed the turnover as taxable in the accounts or return and had disputed liability under Section 3-D. The analysis states that the levy arose because the assessing authority treated the purchases as first purchases for want of Form 3-C(2), but the Tribunal found the purchases were in fact from registered dealers and therefore not first purchases liable under Section 3-D. On that basis, the tax could not be treated as tax admittedly payable within the meaning of the Explanation to Section 8(1), and interest was not leviable.

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Issues: Whether interest under Section 8(1) of the U.P. Sales Tax Act could be levied on purchase tax assessed on purchases made from registered dealers, when such purchases were not shown as taxable turnover in the dealer's accounts or return and the dealer had disputed liability under Section 3-D.

Analysis: The turnover in question was not disclosed by the dealer as taxable turnover in the accounts maintained or in the return filed under the Act. The levy arose only after the assessing authority treated the purchases as first purchases for want of Form 3-C(2), but the Tribunal found that the purchases were in fact made from registered dealers and were therefore not first purchases liable to tax under Section 3-D. On those facts, the tax levied could not be treated as tax admittedly payable within the meaning of the Explanation to Section 8(1). The case relied upon by the Revenue was distinguished because the disputed purchases there were not shown to have been made from registered dealers.

Conclusion: Interest under Section 8(1) of the U.P. Sales Tax Act was not leviable. The revision petition failed and stood dismissed.

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