Judgment

KHANNA, J.:- This appeal on certificate is directed against the Full Bench decision of Allahabad High Court whereby that court answered by a majority of two to one the following question referred to it by a Division Bench in the negative against the assessee-appellant:

"Whether, in order to recover interest under Section 8 (1-A) of the U. P. Sales Tax-Act, it is necessary for the Sales Tax Officer to make an assessment order in respect of the interest and to issue a notice of demand in respect of such interest."

2. The appellant, a partnership firm, is a large-scale manufacturer of biris. The appellant was assessed to tax under the U. P. Sales Tax Act, 1948 (U. P. Act No. 15 of 1948) (hereinafter referred to as the Act) for the assessment years 1957-58 and 1958-59 a per assessment orders dated June 10, 1959 and February 12, 1963 respectively. On an application sent by the appellant to the Minister of Finance U. P. Government requesting for compounding of tax, an order was issued on May 6, 1959 staying the recovery of tax due from the appellant. The stay order was vacated by order date September 25, 1967. On October, 9, 1967 the Sales Tax Officer sent a recovery certificate to the Collector Allahabad for a sum of Rs. 1,65,684.43 for the recovery of arrears of sale tax for the year 1957-58. The recover certificate also mentioned that interest at the rate of 18 per cent per annum calculated on the amount of tax with effect from February-1, 1964 till the date of final payment should also be recovered as arrears of land revenue in terms of the provisions of Section 8 (1-A) of the Act. On October 25 1967 another recovery certificate recovering a sum of Rs. 26,238.08 in respect of the year 1958-59 on account of arrears of sales-tax was sent by the Sales Tax Officer to the Collector Allahabad. It was mentioned in the certificate that the aforesaid amount would carry interest at the rate of 18 per cent per annum calculated with effect from February 1, 1965 till the date of final payment and the same too should be recovered as arrears of land revenue in terms of the provisions of Section 8 (1-A) of the Act.

3. The case of the appellants firm is that the amount of the sales tax mentioned in the two recovery certificates was paid by it. The appellant, however, contested its liability to pay interest amounting to Rs. 1,38,000 or the amount of sales tax under S. 8 (1-A) of the Act. A petition under Article 226 of the Constitution was consequently filed by the appellant in the High Court challenging the recovery of the interest amounting to Rs. 1,38,000. The main ground which was taken by the appellant in this connection was that without making an assessment order and without issuing a notice of demand the Sales Tax Officer had no jurisdiction to initiate proceedings for the recovery of interest. Reliance in this connection was placed on behalf of the appellant upon an earlier Division Bench decision in the case of Beni Ram Mool Chand v. Sales Tax Officer, (1969) 29 STC 423 (All) wherein the Division Bench has held that issuance of notice of demand was a condition precedent to the recovery of penal interest. As the correctness of that decision was challenged, the Division Bench hearing the writ petition of the appellant referred the question reproduced earlier to the Full Bench. The Full Bench by a majority of two to one, as already mentioned, answered the question in the negative and against the appellant.

4. Before dealing with the contentions advanced in this Court, we may refer to the relevant provisions of the Act. Section 3 of the Act creates liability to sales tax. Under this section every dealer is liable to pay tax on his turnover which shall be determined in such manner as may be prescribed. Section 7 provides for determination of turnover and assessment of tax. Section 8 deals with payment and recovery of tax. Sub-sections (l), (1- A) and (8) of S. 8 read as under:

"8. Payment and recovery of tax. -(1) The tax assessed under th