The main legal point established in the judgment is that interest under tax laws is charged to compensate the revenue for the loss caused due to late payment, and if no loss has been caused to the department or the revenue, no interest can be charged.

PRAKASH KRISHNA, J. - These two revisions are directed against the common order of the Tribunal dated August 20, 1994 passed by the Trade Tax Tribunal, Aligarh, in two connected Second Appeals Nos. 577 of 1992 (1982-83) U.P. and 578 of 1993 (1982-83) Central. The assessment years involved in these two revisions are assessment years 1982-83 (U.P.) and (1982-83) Central. The applicant is a private limited company, engaged in the business of manufacturing and selling of P.T.F.E. (Teflon) insulated wires and cables, etc.

The factual scenario which is almost undisputed and leading to the revisions is as follows :

The applicant was required to deposit a sum of Rs. 36,000 as security for the release of certain goods which were intercepted at check-post vide notice dated September 30, 1982. The required amount was deposited on October 1, 1982 and the goods were got released. Placing reliance upon a circular letter/notification No. Check Post 376-(81-82)-1402 Sales Tax, dated December 10, 1981, the applicant adjusted the aforesaid amount of Rs. 36,000 towards the admitted tax payable by him in the following manner :

1. Towards tax of January, 1983 (U.P.) Rs. 2,548.09 2. Towards tax of January, 1983 (Central) Rs. 12,356.59 3. Towards tax of February, 1983 (Central) Rs. 21,045.32 ---------------- Total Rs. 36,000.00 ----------------

The adjustment was claimed, as stated above on the assumption that the department has failed to initiate and complete the penalty proceedings within the period of three months. However, the aforesaid adjustment as claimed by the dealer in the monthly returns of January and February (U.P.) and (Central) was not disputed by the department at that stage. Subsequently the assessment orders for the assessment years 1982-83 (U.P.) and (Central) were passed on September 30, 1986. The department also converted the security amount of Rs. 36,000 into penalty with the result the dealer on January 7, 1987 deposited Rs. 36,000, which was earlier adjusted towards the admitted tax liability for the months of January and February (U.P.) and (Central). The assessing authority by two miscellaneous orders both dated February 25, 1991 demanded interest, under section 8(1) of the U.P. Sales Tax Act, 1948 (hereinafter it shall be referred to as "the Act") for the period March 1, 1983 to January 7, 1987 for U.P. on Rs. 2,548.09 and similarly in Central. The appellate authority as well as the Tribunal have confirmed the demand of interest on the ground that the dealer could not claim adjustment in pursuance of the aforesaid circular of the Commissioner, as by subsequent circular it was clarified by the Commissioner that the adjustment could be claimed only after the expiry of three months of the passing of the penalty order and no time-limit was prescribed by the aforesaid circular to complete the penalty proceedings within the period of three months.

These orders are under challenge in the aforesaid revisions. There is one more important aspect of the case. During the pendency of the second appeal before the Tribunal the order levying penalty for violation of section 28-A was set aside by this Court in Sales Tax Revision No. nil of 1992 decided on September 16, 1992. A true copy of the judgment of this Court has been annexed as annexure No. 2 to the revisions. It is clear from the order of the Tribunal that this fact was brought to its knowledge and has been noticed by it, while narrating the facts of the case.

Heard the counsel for the parties and perused the record.

The learned counsel for the dealer submitted that as the order of penalty was ultimately set aside by this Court, the adjustment of Rs. 36,000 as claimed by it was perfectly justified. The initial order of penalty has been merged in the order of the High Court and as such the order of the