Interim stay on excise licence fee does not erase liability; statutory interest applies once the writ ends.

Interest was payable on arrears of excise licence fee for the period covered by an interim stay, because the stay only suspended recovery and did not extinguish the underlying liability under the U.P. Excise Act, 1910. Section 38A applied to arrears of excise revenue, and once the writ proceedings ended, the beneficiary of the stay could not retain the advantage of withholding payment without compensating the State. Applying restitution and the principle that an act of court should prejudice no one, the SC held that the party had to be restored to the position that would have existed absent interim protection, including statutory interest on the withheld amount.

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Issues: Whether interest was payable on arrears of excise licence fee for the period during which recovery remained stayed by an interim order, after the writ petition was dismissed.

Analysis: The liability to pay licence fee under the U.P. Excise Act, 1910 remained intact notwithstanding the interim stay; the stay only suspended recovery and did not nullify the demand. Section 38A of the Act provides for interest on arrears of excise revenue. Once the writ proceedings came to an end, the interim order merged in the final result, and the party who had benefited from the stay could not retain the advantage of withholding payment without compensating the State. The principles of restitution and actus curiae neminem gravabit required the parties to be restored to the position they would have occupied had the interim protection not been granted.

Conclusion: The respondent was liable to pay interest on the withheld excise licence fee for the stay period. The High Court's view that no interest was payable because of the interim order was erroneous.

Ratio Decidendi: An interim stay only suspends enforcement and, upon dismissal of the substantive proceedings, the beneficiary of the stay must restore the other side to the position it would have occupied but for the interim order, including payment of statutory interest on the withheld amount.

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