Heard learned counsel for the petitioner and also learned Standing Counsel.

The petitioner has challenged the validity of the recovery certificate dated 19th September, 1980, for Rs. 32,125. 90 as interest for the assessment year 1974-76, under section 8 (1) of the U. P. Sales Tax Act, 1948 (annexure 7 to the writ petition ).

According to the petitioner after the decision in the case of Mod Serajuddin [1975] 36 STC 136 (SC); 1975 UPTC 482 (SC) transaction in question is not being treated as a transaction in the course of export, even though earlier the respondents-authority also were treating it to be so. After the decision the respondents started proceeding for levying tax under the relevant provision of the Acts. The dealers in order to salvage from the onerous liability likely to be fastened on them approached the Central Government through representation for redress. The representations were also by different associations of exporters. In consequence thereof the Central Government amended the relevant provision through Act No. 103 of 1976 amending section 5 of the Central Sales Tax Act, 1956 by adding sub-section (3) retrospectively from 1st April, 1976. However, since large number of dealers were likely to be affected even after the amendment from the period 1st April, 1976, further representations were made by the Foot-wears Export Federation of India and other associations with the Commissioner of Sales Tax. The Commissioner thereafter issued the Circular No. Vidh. 1 (74-75) 10-253, dated 12th April, 1977, granting remission of sales tax, penalty, etc. , in respect of such dealers who exported footwears through State Trading Corporation. The circular is annexure 3 to the writ petition.

In pith and substance it is the interpretation of this circular which we are called upon to decide. Before coming to circular it is necessary to give certain facts. The petitioners are carrying on the business of purchase and sale of footwears and entered into a contract on 12th October, 1973, with State Trading Corporation (hereinafter referred as "stc) under which the petitioner was required to supply the footwears for export to U. S. S. R.

It is only to fulfil the promise of this contract the petitioners company has to purchase the footwears for despatch of the same to Moscow through their agent. For the assessment year, 1974-75 the petitioner was assessed to purchase tax on the purchase of Rs. 6,90,889 creating total liability of Rs. 34,544. 45. According to the petitioner the sale and purchase tax on the supply of footwear to STC by the petitioner for the purpose of export to the foreign buyer of Moscow, on account of the belief, both of the petitioners and respondent-authority was exempt and thus he did not deposit tax initially, as the petitioner felt no liability of purchase tax on such supply for the proposed export in view of the law as understood then. After passing the assessment order for 1974-75 on 25th October, 1978, the petitioner approached the respondent for granting remission of purchase tax and since this did not materialise, having no option he deposited the entire purchase tax as assessed. It is thereafter a demand has been raised by passing order under section 8 (1) of the U. P. Sales Tax Act imposing interest on the said amount of purchase tax totalling Rs. 32,125. 92 with effect from 1st June, 1975. Thereafter recovery certificate under section 8 (8) of the U. P. Sales Tax Act was also issued for recovering the said amount, hence the petitioner filed the present writ petition.

It is pertinent to mention here for the same assessment year, namely, 1974-76 under the Central Sales Tax Act also respondent No. 2 passed orders on 25th October, 1978, in respect of sale made by the petitioner to the foreign buyer imposing Rs. 1,42,825. 50 as tax under section 9 of the Central Sales Tax Act, but in view of the circular of the Commissioner of Sales Tax, no notice of demand was issued for recovery of the said