SALES TAX OFFICER, SECTOR I, KANPUR & ANR. versus M/S. DWARIKA PRASAD SHEO KARAN DASS

Citation: [1977] 2 S.C.R. 133 · Decided: 19-11-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed

Judgment (excerpt)

133 
SALES TAX OFFICER, SECTOR I, KANPUR & ANR. 
A. 
v. 
M/S. DWARIKA PRASAD SHEO KARAN DASS 
November 19, 1976 
[H. R. KHANNA AND V. R. KRISHNA IYER, JJ.J 
U11ar Pradesh Sales Tax Act, 1948-Sec. 8(9), S(IA)-Dcmand notice 
for tax a,5sessed-Subseq11ent reduction in lax liability i11 appeal and rcvision-
lf fresh demand notice necessary-Liability to pay interest. on tax due. 
The respondent firm was assessed to sales tax under the Uttar Pradesh Sales 
Tax Act 1948 for the assessment year 1958-59. On an appea,I filed by the res-
pondent the quantum of tax was reduced. 
On a revision filed by the respon-
dent made various payments towards the amount of tax found due from time 
to time. The Revenue initiated proceedings for recoveri;1g the balance of the 
ta•x and realisi11g interest at the rate of 18 per cent. The Revenue did not issue 
any fresh notice of demand after the tax was reduced but originally demand 
notice for the entire sum for which the respondent was assessed wa.s issued. 
Jn a Writ Petition filed by the assessee the High Court quashed the recovery 
proceedings on the ground that a fresh notice of demand 'hould have been 
issued to the respondent in respect of the amount a;; reduced in appeal and 
the revision. 
Allowing the appeal by special, leave, 
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HELD: (1) Section. 8 of the Act was amended by adding sub-section (9) 
thereto by U.P. Sales Tl)X Amendment Act (3 of 1971). The said sub-section 
provides that notwithstanding any judgment, decree etc. where any notice ol' 
assessment and demand in respect of r .. ny tax or other dues is served upon a 
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dealer by an Assessing Authority and where as a result of appeal or revision 
filed by the assessee the amount of tax is reduced it shall not be necessary for 
the Assessing Authority to serve upon the dealer a fresh 11otice. 
The High 
·Court judgment was, therefore, erroneous. [135F, H, 136 A-E] 
Firm Parshuram Rameslnrar Lal v. State of U.P. 331 STC S4!l i:tpproved. 
(2) Section 8(1A) of the Act provides for payment or interest at the rate 
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·of 1~ per. cent on the tax amount remaining due from the expiry of the tim" 
specified m the notice of demand, till the date of payment. 'fhe Court in Hail 
Lal Mohammad vs. State of U.P. has held that the liability to pay the interest 
under section 8(1A) is aiutomatic and arises by operation of law and that it is 
not necessary to mention the amount of interest in the recovery certificate. 
fl34 E-H, 135 A-E] 
Haji Lal Mohd. Biri Works v. State of U.P .. 32 STC 496 followed. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2061/1971. 
· 
(From the Judgment and Order dated the 13th May, 1970 of the 
Allahabad High Court in Civil Misc. Writ No. 1249 of 1970). 
S. C. Manchanda and 0. P. Rana, for the Appellant. 
J. Ramamurthi, ( amicus curiae) for Respondents. 
Tlie Jµd~ent of the Court was delivered by 
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134 
SUPREME COURT REPORTS 
[1977] 2 S.C.R. 
KHANNA, J. 
This appeal on certifiq1te is against the judgment of 
~Allahabad High Court whereby the High Court accepted petition. 
under article 226 of the Constitution of India filed by the respondent 
and quashed the recovery proceedings initiated by the appella~t. 
The respondent~firm was assessed to sales tax under 
the U.P .. 
Sales Tax Act, 1948 (hereinafter referred to as the Act) for 
the 
assessment year 1958-59. 
The respondent went up in appeab and 
the tax demand was reduced in appeal. 
On revision filed by the 
respondent the total demand of sales tax was further reduced. 
The 
respondent made various payments towards the amount of tax found 
du{)_ from him. 
The sales tax authorities initiated proceedings for -
.recovering-the :balance of the tax and realising interest at the rate of 
18 per cent from February 1, 1964 on part of the tax demand. These 
recovery proceedings were challenged by the respondent by means 
of writ petition on the ground that a fresh notice of demand should 
have been issued to him in respect of the amount as reduced 
in 
appeal and revision. 
Unless that was done, the respondent could 
not be treated as a defaulter. 
The liability for payment of interest 
of the respondent was also questioned. 
The High Court accepted 
the first contention and quashed the recovery proceedings. 
We have heard Mr. 
Manchanda 01~ behalf of the appellant. No 
one appeared on 
behalf 
of 
the 
respondent. 
Mr. Ramamurthi, 
however, argued the case amicus curiae. 
After giving 
the matter 
our consideration, 

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