1973 (10) TMI 43

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....rit 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. A Division Bench of this court, in view of certain observations appearing ....

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....all 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." 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 ....

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....ring 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." 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. In our opinion, when the Supreme Court sai....

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....ay have run in accordance with the provisions of section 8(1-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 fol....