1987 (5) TMI 363 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether an appeal lies against the calculation of interest made by the Sales Tax Officer under section 8(1) of the U.P. Sales Tax Act.
2. Whether the interest accrued on unpaid tax is considered a part of the tax assessed.
3. Whether an order is necessary for the charge of interest.
4. Whether the charge of interest amounts to an "order" within the meaning of section 9 of the Act.

Detailed Analysis:

Issue 1: Appeal Against Calculation of Interest
A preliminary objection was raised that no appeal lies to the Assistant Commissioner (Judicial) against the calculation of interest made by the Sales Tax Officer under section 8(1) of the U.P. Sales Tax Act. The court examined the Act's provisions to determine how interest is charged and whether an appeal is permissible. The court concluded that the demand of interest by the Sales Tax Officer does not amount to an "order" made by the assessing authority against which an appeal lies.

Issue 2: Interest as Part of Tax Assessed
The assessee argued that the interest accrued is a part of the tax assessed by virtue of sub-section (1-C) of section 8 of the Act. However, the court referred to the case of Haji Lal Mohd. Biri Works, where it was held that the provisions of sub-section (1-C) of section 8, which are deeming in nature, have been added only for the purpose of recovery. The court further referred to the case of Sita Ram Jwala Prasad, which held that the interest accrued is not a part of the admitted tax relevant for the purpose of maintainability of an appeal under section 9 of the Act.

Issue 3: Necessity of an Order for Charge of Interest
The court cited the case of Haji Lal Mohd. Biri Works, which clarified that there is no provision in the Act requiring an assessment order or a notice of demand for interest by the Sales Tax Officer. The liability to pay interest is automatic and arises by operation of law. The court held that neither an order of assessment in respect of the interest nor the issue of a notice of demand for the same by the Sales Tax Officer is necessary.

Issue 4: Charge of Interest as an "Order"
The court analyzed whether the charge of interest amounts to an "order" within the meaning of section 9 of the Act. The word "order" in section 9 must mean a formal expression of any decision of a judicial or quasi-judicial authority. Since the accrual of interest is automatic and not constant, the court concluded that the demand of interest by the Sales Tax Officer cannot be held to be an "order" under section 9. The court opined that the word "order" contemplates the adjudication of a dispute between parties. Consequently, no appeal lies against the amount of interest charged by the Sales Tax Officer.

Conclusion:
The court dismissed the revision, holding that the preliminary objection raised by the learned Standing Counsel was valid. The present revision was deemed incompetent under the law, and the petition was dismissed with costs.