No 543 NT of 1970
Appeal by certificate from the Judgment and order dated December 2 1969 of the Allahabad High Court in Civil Misc
No 955 of 1969
AK Sen Yogeshwar Prasad section K Bagga Shakeel Ahmed and Mrs section Bagga for the appellant
section C Manchanda and O P Rana for the respondents
The Judgment of the Court was delivered by KHANNA J
This appeal on certificate is directed against the Full Bench decision of Allahabad High Court whereby that court answered by a majority of two to one the following question referred to it by a Division Bench in the negative against the assessee appellant  Whether in order to recover interest under section section 1 A of the UP Sales Tax Act it is necessary for the Sales Tax Officer to make an assessment order in respect of the interest and to issue a notice of demand in respect of such interest The appellant a partnership firm is a large scale manufacturer of biris
The Appellant was assessed to tax under the UP Sales Tax Act 1948 UP Act No 15 of 1948  hereinafter referred to as the Act for the assessment years 1957 58 and 1958 59 as per assessment orders dated June 10 1959 and February 12 1963 respectively
On an application sent by the appellant to the Minister of Finance UP Government requesting for compounding of tax an order was issued on May 6 1959 staying the recovery of tax due from the appellant
The stay order was vacated by order dated September 25
On October 9 1967 the Sales Tax Officer sent a recovery certificate to the Collector Allahabad for a sum of Rs 196568443 for the recovery of arrears of sales tax for the year 1957 58
The recovery certificate also mentioned that interest at the rate 1 of 18 per cent per annum calculated on the amount of tax with effect from February 1 1964 till the date of final payment should also be recovered as arrears of land revenue in terms of the provisions of section 81 A of the Act
On October 25 1967 another recovery certificate for recovering a sum of Rs 2623808 in respect of the year 1958 59 on account of arrears of sales tax was sent by the Sales Tax Officer to the Collector Allahabad
It was mentioned in the certificate that the aforesaid amount would carry interest at the rate of 18 per cent per annum calculated with effect from February 1 1965 till the date of final payment and the same too should be recovered as arrears of land revenue in terms of the provisions of section 81 A of the Act
The case of the appellant firm is that the amount of the sales  tax mentioned in the two recovery certificates was paid by it
The appellant however contested its liability to pay interest amounting to Rs 136000 on the amount of sales tax under section 81 A of the Act
A petition under article 226 of the Constitution was consequently filed fly the appellant in the High Court challenging the recovery of the interest amounting to Rs 138000
The main ground which was taken by the appellant in thisconnection was that without making an assessment order and without issuing a notice of demand 27 the Sales Tax Officer had no jurisdiction to initiate proceedings for the recovery of interest
Reliance in this connection was placed on behalf of the appellant upon an earlier Division Bench decision in the case of Beni Ram Mool Chand vs The Sales Tax Officer1 wherein the Division Bench had held that issuance of a notice of demand was it condition precedent to the recovery of penal interest
As the correctness of that decision was challenged the Division Bench hearing the writ petition of the appellant referred the question reproduced earlier to the Full Bench
The Full Bench by a majority of two to on  as already mentioned answered the question in the negative and against the appellant
Before dealing with the contentions advanced in this Court we may refer to the relevant provision of the Act
Section 3 of the Act creates liability to sales tax
Under this section every dealer is liable to pay tax on the turnover which shall be determined in such manner as may be prescribed
Section 7 provides for determination of turnover and assessment of tax
Section 8 deals with payment and recovery of tax Sub sections 3 1 A and 6 of section 8 read as under 8
Payment and recovery of tax 1 The tax assessed under this Act shall be paid in such manner and in such instalments if any
and within such time not being less
than fifteen days from the date of service of the notice of assessment and demand as may be specified in the notice
In default of such payment the whole of the amount then remaining due shall become recoverable in accordance with sub section 8
1 A If the tax payable under sub section 1 remains unpaid for six months after the expiry of the time specified
in the notice of assessment and demand or the commencement of the Uttar Pradesh BikriKar Dwitiya Sanshodhan Adhiniyam 1963 whichever is later then without prejudice to any other liability or penalty which the defaulter may in consequence of such non payment incur under this Act simple interest at the rate of eighteen per cent per annum shall run on the amount then remaining
due from the date of expiry of the time specified in the said notice or from the commencement of the said Adhiniyam as the case may be and shall be added to the amount of tax and be deemed for all purposes to be part of the tax Provided that where as a result of appeal revision or reference or of any other order of a competent court or authority the amount of tax is varied the interest shall
be recalculated accordingly Provided further that the interest on the excess amount of tax payable under an order of enhancement shall run from the date of such order if such excess remains unpaid for six months after the order
x x x x 1 1969 23 STC 423
28 8 Any tax or other dues payable to the State Government under this Act or any amount of money which a person is required to pay to the assessing authority under sub section 3 or for which he is personally liable to the assessing authority under sub section 6 shall be recoverable as arrears of land revenue
 It may be mentioned that sub section 1 A of section 8 reproduced above was added by UP Sales Tax Second Amendment Act 1963 UP Act 3 of 1964
The above provision was apparently added with a view to tighten up the machinery for collection of sales tax and as a deterrent measure so that
the dealers may not evade or delay the payment of tax UP Act 3 of 1964 also added section 33 to the Act
The material part of section 33 reads as under In respect of any sum recoverable under this Act as arrears of land revenue the assessing authority may forward to the Collector a certificate under his signature specifying the sum due
Such certificate shall be conclusive evidence of the existence of the liability of its amount and of the person who is liable and the Collector on receipt of the certificate shall proceed to recover from such person the amount specified therein as if it were an arrear of land revenue Mr Sen on behalf of the appellant has argued that it was essential for the Sales Tax Officer to make an assessment order in respect of the interest before he could issue recovery certificate against the appellant
In any case according to Mr Sen recovery certificate in respect of the interest could not be issued till such time a notice of demand in respect of the interest had been issued by the Sales Tax Officer to the appellant firm
These contentions in our opinion are not well founded
There is no provision in the Act which makes it obligatory on the part of the Sales Tax Officer to make an assessment in respect of the interest which the amount of sales tax would carry under section 81 A of the Act
There is also no provision in the Act which requires the issue of a notice of demand in respect of the interest by the Sales Tax Officer to the assessee before the Sales Tax Officer forwards recovery certificate to the Collector
Reference has been made by Mr Sen to sub section 1 A of section B according to which interest shall be added to the amount of tax and shall be deemed for all purposes to be part of the tax
The above deeming provision in our opinion has been added only for the purpose of recovery
The object apparently was that the amount of interest should be recovered in thesame manner as the amount of sales tax
The amount of sales tax and other dues under sub section 8 of section 8 can be recovered beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that subsection 1 A provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax 29 According to section 81 A simple interest at the rate of 18 per cent per annum shall run on the amount of arrears of sales tax
from the date specified in that sub section
It would thus appear that the liability to pay interest is automatic and arises by operation of law
The amount of interest on the date of payment of tax is not constant but increases from day to day
The amount of interest can
therefore be not predicated till such time as the arrears of sales tax are paid and it is consequently not possible to specify a definite figure in respect of the interest in the recovery certificate
At the time the arrears of sales tax are paid there can be no difficulty in finding the amount of interest which has
become due
The amount of tax on which interest is to accrue the rate of interest the date from which interest is to commence and the date up to which interest is to be counted are all known
It is therefore a matter of more arithmetical calculation to arrive at the figure of interest
We find nothing in any of the provisions of the Act as may warrant making of another assessment order by the Sales Tax
Officer regarding the amount of interest or making it obligatory for him to issue a demand notice in respect of the interest before sending the recovery certificate to the Collector
We are also not impressed by Mr Sen s argument that the Sales Tax Officer should specify the amount of interest in the recovery certificate
As the amount of interest would go on increasing every day fill the recovery of the sales tax it is plainly not possible to specify the exact amount of interest in the recovery certificate
The exact amount of interest can only be known on the day the arrears of sales tax are paid
No elaborate procedure is required for determining the amount of interest because as mentioned earlier it is a matter of simple arithmetical calculation
There was some argument before us on the point as to when UP Act 3 of 1964 came into force
This Act received the assent of the President on January 25 1964 but was published in the official Gazette on February 1 1964
It was submitted on behalf of the appellant that the Act came into force on the date it received the assent of the President
As against that Mr Manchanda on behalf of the respondents stated that the Act came into force on February 1 1964
the day it was published in the official Gazette
The stand taken by Mr Manchanda in this respect is correct because according to clause b of sub section 1 of section 5 of the UP General Clauses Act 1904 UP Act No 1 of 1904 where any Uttar Pradesh Act is not expressed to come into force on a particular day then in the case of an Uttar Pradesh Act made after the Commencement of the Constitution it shall come into operation on the day on which the assent there to of the Governor or the President as the case may require is first published in the official Gazette
It may also be mentioned that in para 33 of the writ petition filed in the High Court the appellant  too had taken the stand that the UP Act 3 of 1964 had come into force on February 1 1964
Argument has also been advanced by Mr Sen that the interest on arrears of sales tax could not be realised for the period during which 30 the recovery of sales tax was stayed
We find it difficult to accede to this contention because there is nothing in the language of section 81 A of the Act which prevents the running of interest because of the operation of any stay order
Indeed the liability to pay interest is created by the statute and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest
Mr Sen has pointed out that the amount of sales tax payable by the appellant was reduced on appeal and the appellant is entitled to a consequential relief on that account
This is a matter which is outside the ambit of the question which has been dealt with in the judgment under appeal
In case the appellant is entitled to any relief on account of reduction of the amount of sales tax in appeal it would be for him to agitate the matter in appropriate proceedings
The appeal consequently fails and is dismissed with costs


Summary:
The appellant firm was assessed to sales tax for the assessment years 1957 58 and 1958 1959
On an application made by the appellant for the composition of tax the recovery of the tax for 1957 58 was stayed
The stay order was vacated oh September 25
Thereafter the sales tax officer issued a certificate to the Collector for the recovery of arrears of sales tax for the said assessment years
In the certificate it was mentioned that 8 interest per annum on the arrears of tax was also to be recovered as arrears of land revenue in terms of the provisions of section 81 A of the UP Sales Tax Act  1948 as amended by Act 3 of 1964
in a writ petition under article 226 of the Constitution the appellant challenged the recovery of interest mainly on the ground that there was no assessment order in regard to the interest and no notice of demand had been issued
The High Court dismissed the petition
Appeal in this Court was filed with certificate
Dismissing the appeal HELD  i The provision in sub section 1 A of section 8 according to which interest shall be added  to the amount of tax and shall be deemed for all purpose to be part of tax has been added only for the purpose of recovery
The object apparently was that the amount of interest should be recovered in the same manner as the amount of sales tax
The amount of sales tax and other dues under sub section 8 of section 8 can be recovered as arrears of land revenue
It was with a view to nut the matter beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that sub section 1 A provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax
It is a matter of mere arithmetical calculation to arrive at the figure of interest
There is nothing in any of the provisions of the Act as may warrant making of another assessment order by the sales tax officer regarding the amount of interest or making it obligatory for him to issue a demand notice in respect of the interest before sending the recovery certificates to the Collector
28G 29C iiThe argument that the sales tax officer should specify the amount of interest in the recovery certificate could not be accepted
As the amount of interest would go on increasing every day till the recovery of the sales tax it is plainly not possible to specify the exact amount of interest in the recovery certificate
29D iiiAccording to clause b of subsection 1 of section 5 of the UP General Clauses Act 1904 where any UP Act is not expressed to come into force on a particular day than in the case of a UP Act made  after the commence ment of the Constitution it shall come into operation on the date on which the assent thereto of the Governor or the President as the case may require is first published in the official gazette
In the present case the President s assent to UP Act 3 of 1964 was published in the official Gazette on February 1 1964 and hence it must be held to have come into force on that day and not on the date on which the President s assent was given 29F ivThere is nothing in the language of section 81 A of the Act which prevents the running of interest because of the operation of any stay order
Indeed the liability to pay interest is created by the statute and the Sales tax Officer has no discretion to grant any exemption from the payment of interest
30A 26