THE HON’BLE SRI JUSTICE C.V.RAMULU WRIT PETITION NO.2879 OF 2005 Dt:11-11-2010. BETWEEN: M/S.SRI SIDDA RAMESHWARA KHANDASARI SUGAR MILLS, ANANTAPALLI, NIZAMABAD DISTRICT, REP. BY ITS PROPRIETOR SRI RAMKARAN .. PETITIONER AND GOVERNMENT OF ANDHRA PRADESH REP. BY ITS PRINCIPAL SECRETARY INDUSTRIES AND COMMERCE (SUGAR) DEPARTMENT, A.P. SECRETARIAT, HYDERABAD AND OTHERS .. RESPONDENTS THE HON’BLE SRI JUSTICE C.V.RAMULU WRIT PETITION NO.2879 OF 2005 O R D E R : This Writ Petition is filed seeking a Writ of Mandamus to declare the Memo No.15941/Sugar/A1/99, Industries & Commerce (Sugar) Department, dated 21.5.2001 of the 1st respondent insofar as its decision in not allowing the claim for payment of 18% interest on the amount due to the petitioner, as illegal, arbitrary and unjust, and consequently to direct the respondents to pay interest @ 18 % per annum on the amount collected from the petitioner, from the respective dates of collection till the date of payment. The petitioner is a proprietary concern. It appears under the Andhra Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1961, the company was paying purchase tax. Section 21 (5) of The Andhra Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1961 (Amendment Act 25 of 1976) (for short the Act) reads as under: “ 21(5) Arrears of tax shall carry interest at such rate as may be prescribed.” The above Sub-Section (5) of Section 21 of the Act was introduced for levying interest on the arrears of purchase tax due from the companies concerned. The said provision was the subject matter of various writ petitions before this Court. However, the validity of Section 21 of the Act was upheld and aggrieved thereby, six Khandasari Sugar Mills have taken the matter to the Apex Court in Civil Appeal No.903 of 1984 wherein, by a judgment dated 28th April, 1999 the Apex Court has struck down Section 21 of the Act on the ground that there are no substantial provisions under the Act for the purpose of levying interest on the arrears of purchase tax. In obedience to the said judgment of the Apex Court, the respondents issued a Memo dated 21.5.2001 asking the authorities to refund the interest collected on the arrears of purchase tax from the appellants therein. However, in respect of others, a decision was taken (including the petitioner-company herein) for the refund of the amounts of the interest levied on the purchase tax arrears in view of Memo dated 21.5.2001. However, 18% interest was paid by the petitioner- company herein before the Supreme Court has struck down Section 21 of the Act. Therefore, the petitioner-company made a representation on 3.2.2004 in this regard. However, the said representation was turned down and the request of the petitioner-company for payment of 18% interest on the interest paid by it on the arrears of purchase tax, was denied. Therefore, the present writ petition. The respondents have filed counter affidavit wherein it is stated that the petitioner has not got any order either from the Apex Court or from this Court or from the Government and hence the petitioner is not entitled for interest @ 18% per annum on the said amount of interest paid on arrears of purchase tax by the petitioner for the period from 1976 to 1999. It is further stated that the Government vide its Memo No.15941/Sug/A1/99-005938, dated 21.5.2001 has decided in principle to allow the claims of the sugar factories, other than the six sugar factories covered under the G.O.Ms.No.237, Industries and Commerce (Sugar) Department, dated 27.7.1999, and khandasari units, for refund of interest on purchase tax collected both from Cooperative and Private Sugar factories as well as Khandasari factories in the light of the Supreme Court ruling in C.A.No.903/84, dated 28.4.1999, subject to the condition that a detailed verification of their claims be made and adjustment of amounts against any purchase tax dues to the Government and that the government has decided not to allow the claim for payment of 18% interest on interest as these factories are not parties to the S.L.P and hence the department has not entertained the claim of the petitioner for payment/adjustment of interest on interest. The facts of the case are not in dispute. Sub-section (5) of Section 21 of the Act contemplates collection of interest on the arrears of purchase tax and the same was struck down by the Apex Court in C.A.No.903 of 1984, dated 28-4-1999. However, the petitioner was not a party to the proceedings before the Supreme Court. It appears, as per the observations made by the Supreme Court on 23-11-1983, when the SLP had come up for admission, interim stay was refused and that it was observed that in case the appeals are allowed the respondents are liable to pay 18% interest on the amounts collected by them. Now, the controversy is very narrow. The petitioner claims that they are entitled for interest on par with the appellants in C.A.No.903 of 1984 @ 18% interest per annum on the arrears of interest of purchase tax as was being paid to those appellants vide G.O.Ms.No.237, Industries and Commerce (Sugar) Department, dated 27.7.1999. In this connection, it is submitted by learned counsel for the respondents that the petitioner not being a party to the C.A.No.903 of 1984 and that since the observation made by the Supreme Court insofar as payment of 18% interest is not judgment in rem, the petitioner is not entitled for 18% interest on the interest amounts paid by it. In this regard, the observations made by the Supreme Court while allowing the batch of appeals may be necessary to be noticed, which reads as under: “ On the plain wording of clause (a) of sub-section (3D) of Section 21 of the Act as amended, we find it difficult to agree with the High Court. The provisions thereof say that sub-section (5) shall not apply in relation to tax levied under sub-section (1) of Section 21 on purchase of sugarcane. The provisions came into force on the date of the commencement of the Amending Act. The provisions are open ended and are intended to apply upon the commencement of the Amending Act with no limitation in time. This Court in India Carbon Limited & Ors vs. State of Assam (1997 (6) SCC 479) has held after analysing the Constitution Bench judgment in J.K.Synthetic vs. CTO ( 1994 (4) SCC 276) that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax that applied to purchases of sugarcane made subsequent to the date of commencement of the Amending Act, no interest thereon could be so levied based on the application of the said Rule 45 or otherwise. The appeals are allowed. The judgments and orders under appeal are set aside. This Court, by order dated 23rd November, 1983, had refused stay of the judgment and orders under appeal and had directed that in the event the appeals succeeded and the respondents were held liable to refund the amounts recovered on account of refusal of stay, the entire amounts should be refunded within three months from the date of the order with 18% interest from the date of the payment till the amounts were refunded. The appeals having succeeded, the respondents shall refund the amounts that the appellants have paid within three months from today with interest at the rate of 18% per annum from the date of payment till the refund is made. No order as to costs.” Though learned counsel appearing for the respondents would submit that since the petitioner is not a party to the said judgment and that portion of the judgment allowing 18% interest is not a judgment in rem the petitioner is not entitled for interest on par with those appellants, but the fact remains that as the very taxing provision i.e. sub-section (5) of Section 21 of the Act was struck down, the very collection of interest on the purchase tax, was illegal. Therefore, on the general proposition as the petitioner was not a party to the proceedings before the Supreme Court, the interest could not have been denied. The fact remains that the petitioner has not approached the Apex Court, and the Apex Court while refusing to stay the judgment of this court on 23.11.1983 made such an observation. In view of the declaration of sub- section (5) of Section 21 of the Act as illegal it cannot be said that the petitioner is not entitled to interest atleast from the date of the judgment of the Apex Court till the date of payment. Therefore, I am of the considered view that, may be the petitioners were not party to the proceedings before the Supreme Court, but from the date when the Supreme Court had struck down the amended clause, it cannot be said that the petitioners are not entitled for interest @ 18%, as was paid to the appellants therein. Further, I am in agreement with the submission made by learned counsel for the respondents that insofar as the petitioner is concerned, till sub-section (5) of Section 21 of the Act was struck down by the Supreme Court on 28.4.1999, the law stood valid, therefore, the petitioner is not entitled for interest thereon. Viewed thus, the petitioner is entitled for 18% interest on the interest paid from the date of the judgment of the Apex Court i.e. 28.4.1999 till the date of payment and not for the period prior to that since the amount was not refunded to the petitioner along with the six appellants in the above said C.A.No.903 of 1984. The writ petition accordingly is allowed. No order as to costs. Dt:11-11-2010. ( C.V.RAMULU, J ) tnb THE HON’BLE SRI JUSTICE C.V.RAMULU WRIT PETITION NO.2879 OF 2005 DT: 11-11-2010.