JUDGMENT Hari Swarup, J.
1. These writ petitions raise common questions of law and are based on similar facts. We accordingly decide them by a common judgment.
2. The petitioners were dealers in country liquor. On their turnover for the assessment year 1969-70, the Sales Tax Officer made assessments and demanded the tax. The assessment was challenged through writ petitions filed by the petitioners. This court, while admitting the writ petitions, issued interim orders restraining the respondents from recovering the sales tax assessed on the petitioners. Ultimately, the petitions were dismissed and the taxation was held valid. After the petitions were dismissed, the authorities proceeded to recover from the petitioners the tax as well as the interest payable thereon by virtue of Section 8(1-A) of the U.P. Sales Tax Act (hereinafter referred to as the Act). Present petitions have been filed challenging the recovery from the petitioners of the amount of interest which became due for the period during which the recovery of sales tax had remained stayed under the orders of the court mentioned above.
3. A Division Bench of this court, in view of certain observations appearing in some decisions of this court, referred the cases for decision by a larger Bench and that is how the writ petitions have come up before us. During the pendency of the present writ petitions, however, the question which arises in the present cases was considered and decided by the Supreme Court in the case of Haji Lal Mohammad Bin Works v. State of U.P.A.I.R. 1973 S.C. 2226.
4. Section 8(1) and 8(1-A) of the Act run as under:
8. (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).
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 Bikri-Kar (Dwitiya Sanshodha) 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.
5. The interest is being claimed by the respondents under Section 8(1-A) of the Act. The petitioners deny their liability for the period the recovery of tax had remained stayed under orders of this court. The contention is that the effect of the stay order was that during the period the injunction remained in force, the petitioners ceased to be in default with the result that no interest became due under Section 8(1-A).
6. In our opinion, this argument is not open after the decision of the Supreme Court in the case of Haji Lal Mohammad Biri Works A.I.R. 1973 S C. 2226. With reference to this decision the contention raised by the learned counsel appearing for the petitioners is that the matter which is in issue in these petitions was not directly and substantially in issue in the case before the Supreme Court, as in that case the stay order had been granted not by the High Court in exercise of its jurisdiction under Article 226 of the Constitution, but by the State Government while the matter was pending before it in proceedings initiated for compounding of the dealer's tax liability. It is further argued that the decision of the Supreme Court on this point is in the nature only of an observation and does not amount to a declaration of law within the meaning of Article 141 of the Constitution.
7. We are not satisfied that the matter arising in these petitions is not the same which arose before the Supreme Court, or that the decision of the Supreme Court does not amount to a declaration of law on the point. The Supreme Court in its judgment dealt with the matter in the following terms:
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 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 8(1-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.
9. It is apparent that the argument was expressly advanced before the Supreme Court; it was entertained, considered and finally decided. In these circumstances, it cannot be doubted that the Supreme Court had declared the law on the subject within the meaning of Article 141 of the Constitution.
10. In our opinion, when the Supreme Court said that there was nothing in the language of Section 8(1-A) of the Act which prevented the running of interest because of the operation of any stay order, it meant to lay down that no order staying recovery of tax, passed either by the Government or any authority including the High Court, will prevent the running of interest. We have come to this conclusion because the Supreme Court has based its judgment on the interpretation of Section 8(1-A) and has held that it does not permit the stoppage of the accrual or running of interest. According to the judgment, interest accrues and continues to run automatically by force of law contained in Section 8(1-A) of the Act. This court cannot, therefore, enter into the merits of the controversy to find out if the interest ran during the period of stay or not.
11. The point raised in these petitions is clearly covered by the decision of the Supreme Court and the petitioners must be held to be liable to pay the interest which ran on the amount by reason of Section 8(1-A) of the Act during the period the recovery of tax had remained stayed due to the interim stay orders granted by this court in petitions under Article 226 of the Constitution. After the tax had been held to be validly imposed and the petitioners had failed to pay the same within time, the liability to pay interest had clearly accrued and the authorities are committing no error of law in recovering the same from the petitioners.
12. It was then urged that even though the interest may have run in accordance with the provisions of Section 8(l-A), it was not payable because it had run during the period the respondents had been injuncted from recovering the tax. We find the argument wholly untenable. Once the interest accrues and begins to run it becomes a liability dischargeable by the assessee. Liability accrues as soon as the tax is not paid within the time prescribed. It goes on running till the liability is discharged as required by the Act. Section 8(1-A) gives the character of a tax to the interest that runs under the provisions of the section. It becomes payable as tax and can be recovered as a tax by the revenue authorities. Once the liability accrues by reason of running of interest, we find it difficult to follow how it will not become a liability in the nature of a tax dischargeable by the assessee.
13. In Writ Petition No. 7734 of 1972, a further argument was raised by the petitioner to the effect that he was not liable to pay interest because the respondents had refused to accept the amount of tax tendered by him. The contention in the petition in this respect is vague and has been sworn on the basis of record which has not been described. The allegation has been denied in the counter-affidavit, and the rejoinder affidavit does not make any positive averment of the alleged tender. The respondents could not have prevented the payment if the petitioner had made the deposit in the Government treasury. The point, therefore, does not arise on the material on record.
14. In the result, all these petitions fail and are dismissed with costs.