The main legal point established in the judgment is that the levy of interest under the U.P. Trade Tax Act, 1948 is by operation of law and does not require a separate order. Additionally, the court emphasized the necessity of a notice in writing before passing an order of interest and the time limitation for demanding interest.

JUDGMENT :

Dr. A.R. Lakshmanan, J.

This appeal is filed by the Commissioner of Trade Tax, U.P. challenging the final order dated 16-9-1999 passed by the High Court of Judicature at Allahabad in the Trade Tax Revision No.3 of 1999 whereby the High Court allowed the revision of the respondent-assessee.

2. The brief facts pertaining to the present appeal are as under :

By the impugned order, the High Court allowed the revision filed by the respondent and quashed the order of demand of interest on the ground that no notice in writing was issued. It was observed in the judgment that even if the dealer was liable to pay interest on the late payment of amount of tax a notice is necessary for demand of interest. In the instant case, the assessing authority passed the order on 30-7-1990 imposing interest against the respondent. The respondent filed appeal before the Commissioner (Judicial) Sales Tax, now Trade Tax, Allahabad Region, Allahabad. In the appeal, the respondent mentioned that ex parte proceedings imposing interest against the respondent has been passed which is barred by time. The Assistant Commissioner dismissed the appeal of the respondent on 27-7-1991. The respondent filed second appeal before the Sales Tax Tribunal which passed the order dated 21-7-1998 remanding the case to the assessing authority for decision after giving notice to the respondent. The respondent filed a Trade Tax Revision before the High Court against the order of the Tribunal and the High Court by the impugned order dated 16-9-1999 allowed the revision of the respondent. Aggrieved by the impugned order, the State has preferred the above appeal by way of special leave.

3. We heard Mr. R.G. Padia, learned senior counsel appearing for the appellant and Mr. Ranbir Singh Yadav, learned counsel appearing for the respondent.

4. Learned senior counsel appearing for the appellant submitted that the order of the High Court to the extent that a notice of demand was necessary before passing the order of interest is legally not sustainable. He further submitted that the levy of interest is by operation of law and does not require a separate order.

5. Learned counsel appearing for the respondent submitted that the impugned assessment order passed by the assessing authority dated 30-7-1990 does not refer to any notice served upon the dealer before passing the impugned order and, therefore, the said order has been quashed by the Tribunal in respect of remanding the matter. It was also submitted that the rectification order could be passed within three years from the date of the order of the assessment or the order passed in appeal or revision. The impugned order was passed beyond the period of three years and, therefore, the said order is not sustainable. In this background of facts, the following questions of law arise for consideration by this Court :

1. Whether no subsequent proceeding can be initiated against the revisionist as the subsequent proceeding to the assessment is barred by limitation ?

2. Whether to order of the High Court to the extent that a notice of demand was necessary before passing the order of interest is legally sustainable ?

6. We have carefully perused the entire pleadings, orders passed by the authorities and the High Court and the annexure filed along with this appeal.

7. In this case, the assessment order for the assessment year 1977-78 was passed on 6-6-1986 imposing tax liability of Rs. 18053.98 paise. The respondent deposited the tax in two instalments namely, 2,817/- on 26-6-1982 and Rs. 15,236.98 paise on 30-8-1986. The assessing authority passed another order on 30-7-1990 holding that on admitted amount of tax it was liable to pay interest at the rate of 24% p.a. from 1-5-1978 on amount of tax the assessee has not deposited. The assessing authority held that the dealer was liable to pay interest to the tune of Rs. 33,291/-. The respondent-dealer filed first appeal against the said order which was dismissed. Against that order, the second appe