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TMI Blog2001 (2) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court of Karnataka in Writ Petn. Nos. 17068 to 17070 of 1988 [reported as Vikrant Tyres Ltd. vs. ITO (1993) 115 CTR (Kar) 210 : TC 43R.698] the appellant is before us in these appeals. 2. In respect of asst. yrs. 1977-78, 1978-79 and 1980-81, assessment orders were served on the assessee-appellant and demand notices were issued. The appellant complied with the demands by paying the tax due. The appellate authority on an appeal preferred by the appellant, allowed the same and the taxes paid were refunded to the appellant. The Tribunal dismissed the appeal filed by the Revenue and on a reference made to the High Court, the same came to be allowed thereby upholding all the assessment orders. Thereafter, the Revenue made fresh dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the higher forum. On the above foundation, the writ petitions came to be dismissed. 3. In these appeals, it is contended on behalf of the appellant that s. 220(2) does not apply to the facts of the case in view of the admitted fact that when the original notice of demand was issued, the same was complied with without delay and, subsequently, when the appellant lost its case before the High Court, a fresh demand notice was issued which was also satisfied by the appellant, According to the appellant, once the payment as demanded, has been made, the notice ceases to have any statutory force and does not survive thereafter. It is also contended that s, 3(2) of the Validation Act does not revive or bring back into existence a notice of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from the day immediately following the end of the period mentioned in sub-s. (1) and ending with the day on which the amount is paid : Provided that where as a result of an order under s. 154, or s. 155, or s. 250, or s. 254, or s. 260, or s. 262, or s. 264 or an order of the Settlement Commission under sub-s. (4) of s. 245D, the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded. " A bare reading of this section clearly indicates that if the assessee does not pay the amount demanded under a notice issued under s. 156 of the Act within the time stipulated under sub-s. (1), the said assessee is liable to pay simple int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh demand notices being issued to the assessee ? Admittedly, on a literal meaning of the provisions of s. 220(2) of the Act, such a demand for interest cannot be made. The High Court by a liberal interpretation of the said section and relying upon S. 3 of the Validation Act has held that the Revenue is entitled to invoke s. 220(2) of the Act for the purpose of demanding interest on such retention of money. 7. We are not in agreement with the High Court on the interpretation placed by it on s. 220(2) of the Act in regard to the right of the Revenue to demand interest in a situation where the assessee has promptly satisfied the demand made by the Revenue in regard to the tax originally assessed. 8. It is a settled principle in law that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of legislative intendment or otherwise." If we apply this principle in interpreting s. 220 of the Act, we find that the condition precedent for invoking the said section is only if there is a default in payment of amount demanded under a notice by the Revenue within the time stipulated therein and if such a demand is not satisfied then s. 220(2) can be invoked. 9. The High Court also fell in error in relying on s. 3 of the Validation Act to construe s. 220(2) in the manner in which it has done in the impugned judgment. Sec. 3 of the Validation Act, in our opinion, cannot be relied upon to construe the authority of the Revenue to demand interest under s. 220 of the Act. The said section was enacted to cope up with a different fact-situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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