Interest on disputed sales tax liability is not leviable where the assessee never admitted the tax as payable.

Interest under Section 8(1) of the U.P. Sales Tax Act, 1948 is chargeable only on tax that is admittedly payable, such as tax disclosed in the dealer's accounts, admitted in a return, or otherwise conceded in proceedings. Where the assessee from the outset bona fide disputed liability, paid under protest, and never admitted the tax as due, the levy falls outside Section 8(1) even if assessment was later made or the liability arose from a retrospective amendment. The authority may still examine consequences under Sections 8(1-A) and 8(1-B), but interest under Section 8(1) was not leviable.

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Issues: Whether interest under Section 8(1) of the U.P. Sales Tax Act, 1948 could be levied on tax that the assessee had continuously disputed and never admitted as payable.

Analysis: Section 8(1) fastens liability only on tax admittedly payable, meaning tax disclosed in the dealer's accounts or admitted in a return or other proceeding. The assessee had from the inception disputed its liability to tax on the purchase of opium, including on the grounds that it was not a dealer and that Article 285 of the Constitution of India barred the levy. The tax was paid under protest, and the issue of interest had remained unresolved for years. On these facts, the assessed tax could not be treated as admitted tax merely because assessment had been made or because the liability arose under a retrospective amendment. A bona fide and persistent dispute as to tax liability takes the case outside Section 8(1), though the authority may consider the consequences under Sections 8(1-A) and 8(1-B).

Conclusion: Interest under Section 8(1) was not leviable against the assessee because the tax was not admittedly payable.

Ratio Decidendi: Interest under Section 8(1) of the U.P. Sales Tax Act, 1948 is payable only on tax that is admitted in the return, accounts, or other proceedings, and not on tax whose liability is bona fide disputed from the outset.

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