Hon'ble Prakash Krishna, J.—Raising a short but interesting point with regard to the liability of the petitioner to pay the interest on its turnover of sale of jewellery articles and bullion, the present writ petition has been filed. The petitioner had opted for payment of composition fee as envisaged under Section 7-D of the U.P. Trade Tax Act and the said composition scheme after three years was turned down by the State of Uttar Pradesh. Whether petitioner having deposited the requisite amount in lieu of the tax under the scheme, can be held as defaulter in payment of admitted tax due so as to hold him liable to pay interest, is the point mooted in the writ petition.

2. The facts are few and are not much in dispute. The petitioner, dealing in silver and gold ornaments, and bullion, is a registered dealer under the U.P. Trade Tax Act as also under the U.P. VAT Act. In exercise of powers conferred under Section 7-D of the U.P. Trade Tax Act, the State of U.P. on 8th of August, 2005 issued a compounding scheme No. Vidhi-1(3)-Sarafa-Sama.Yo.-2005-2006-977/Vyapar Kar under Section 7D of the U.P. Trade Tax Act enabling a dealer to pay an ascertained amount in lieu of tax. On 17th of September, 2005 the Commissioner of Trade Tax issued an amendment to the said scheme which is not very relevant for the purposes of the present writ petition.

3. Under the said compounding scheme dated 8th of August, 2005, it was provided that a dealer opting the scheme would pay a lump-sum amount in lieu of tax. The relevant terms and conditions of the scheme will be noted in the later part of the judgment. Suffice it to say that the petitioner indisputably opted the payment of tax under the aforesaid composition scheme and deposited the prescribed amounts on various dates such as on 13th September, 2005, 14th September, 2005, 8th December, 2005 and 10th of January, 2006 in pursuance of his application dated 25th of August, 2005.

4. The poor response to the aforesaid scheme dissuaded the State Government and it was decided not to give effect to the aforesaid scheme and to drop it. In this scheme it was also provided that if less than 30,000 dealers opt for scheme or requisite amount of tax under the scheme is not collected, the Government would be at liberty not to enforce the scheme. Consequently, on 1st of May, 2008, the State Government decided to scrape the aforesaid composition scheme in respect of dealers in silver and gold ornaments for the Assessment Year 2005-2006.

5. In the light of the above, the Commissioner Commercial Tax also issued a circular dated 14th of May, 2008 informing the authorities under the Act, to act accordingly. The petitioner on 5th of August, 2008 deposited a sum of Rs. 8,90,000/- towards the tax in addition to what had been already deposited earlier in view of the above fact that the composition scheme is no longer in vogue. The difficulty to the petitioner arose by the letter dated 3rd of September, 2008 (Annexure-8) impugned in the writ petition asking it to pay interest on the aforesaid amount of Rs. 8,90,000/- as according to the respondent it was the admitted tax liability of the petitioner. Challenging the legality and validity of the said letter/order, the present petition has been filed.

6. Sri Anoop Kumar Singh, Commercial Tax Officer, Sector-16 and 17, Agra has filed a counter-affidavit on behalf of the respondents, delineating therein the various clauses of the composition scheme. It is admitted that “the Government has decided to withdraw the scheme of compounding and the Commissioner, Commercial Tax vide letter dated 14th of May, 2008 informed about the decision of the Government. Meaning thereby, the compounding scheme for the dealers dealing in silver and gold ornaments and bullion has been cancelled”. The further averment is that within the meaning of Section 8(1) of the U.P. Trade Tax Act, the petitioner is liable to pay the interest on the admitted turnover.

7. In the rejoinder-affidavit, the s