Judgment

SHINGHAL, J.:- This appeal by the State of Uttar Pradesh and three sales tax officers is directed against the judgment of the Allahabad High Court dated February 11, 1970. The High Court has granted a certificate of fitness under clause (c) of Article 133 (1) of the Constitution.

2. Respondent Modi Industries Limited, hereinafter referred to as the dealer, was known earlier as the Modi Sugar Mills Ltd. It manufactured various articles like sugar, oil, vanaspati and soap. It exercised the option under Section 7 (as it stood prior to its amendment by Section 7 of the U. P. Act XIX of 1956) of the U. P. Sales Tax Act, 1948, hereinafter referred to as the Act, to submit its returns of sales-tax on the basis of its turnover of the previous years and filed the returns accordingly. The assessment years for which the returns were filed were 1948-49 and 1949-50, and the corresponding previous years were November 1, 1946 to October 31, 1947, and November 1, 1947 to October 31, 1948 respectively. The rate of sales tax for certain commodities was enhanced during the assessment year 1948-49, with effect from June 9, 1948, and for some other commodities with effect from July 1, 1948. The dealer contended that sales tax on its entire turnover of the two previous years should be assessed at the old rate of 3 pies per rupee and not at the enhanced rate of 6 pies per rupee because the enhancement was made after both the previous years had expired. The Sales Tax Officer rejected that contention and assessed the sales tax at the enhanced rates. The appellate authority however upheld the dealers contention and the matter went up in revision to the Judge (Revisions). He upheld the order of the Sales Tax Officer. The dealer applied for a reference under Sec. 11 (1) and the following two questions of law were referred to the High Court.-

"(1) Whether the enhanced rate under notifications dated 8th June, 1948 and 30th June, 1948 issued under Section 3-A of the U. P. Sales tax Act, 1948 are applicable to the sales of goods mentioned in paragraph 2 above which took place before 8th June, 1948 and 30th June, 1948.

(2) Whether sub-section (ii) of Section 3-A of the U. P. Sales tax Act, 1948, empowers Provincial Government to fix the rate of sales tax in respect of an assessment year or in respect of certain specified sales only."

By its judgment dated July 24, 1961, the High Court answered question No. 1 in favour of the dealer, but declined to answer the other question. The High Court took the view that the dealer who had chosen to be assessed on the basis of its turnover of the previous year was liable to assessment, on the entire turnover of the previous year, at the rate prevailing on the first day of the relevant assessment year and that any change in the rate of the sales tax during the course of the assessment year could not be applied to that assessment. The dealer filed an application under Section 11 (8) of the Act for a direction for the payment of interest on the amount which had become refundable as a result of the judgment of the High Court. The High Court held in its order dated February 22, 1966 that the dealer was entitled to interest at the rate of two per cent on the refundable amount. The dealer accordingly made an application to the Revising Authority on October 11, 1968 to pass an order under sub-section (6) of Section 11 for a refund of Rupees 3,48,420/13 with interest at two per cent per annum. The Additional Judge (Revisions) Sales Tax however dismissed the application by his order dated December 28, 1968, as he took the view that that was not permissible because of the insertion of Section 31 in the Act by the Uttar Pradesh Bikri Kar (Sanshodhan) Adhiniyam, 1962 (U. P. Act III of 1963) hereinafter referred to as the Amending Act. The dealer felt aggrieved and filed a writ petition under Article 226 of the Constitution. It is that petition which has been allowed by the impugned judgment of the High Court dated February 11, 19