Hon’ble Tarun Agarwala, J.—By means of this writ petition, the petitioner has challenged the order dated 1st June, 2012 issued by the Assistant Excise Commissioner, Ghaziabad demanding a sum of Rs. 5,92,20,339.94 paise towards penal interest for late deposit of excise duty for the period September, 1963 to March, 1973.

2. The facts leading to the filing of the writ petition is that the petitioner is a Company engaged in the manufacture and sale of Beer and Indian made foreign liquor. The Excise Commissioner issued 10 orders between the period 28th June, 1963 to 24th November, 1973 levying an amount of Rs. 81,94,310/- as excise duty and fine on wastage of Beer in excess of 10% under Section 28A of the U.P. Excise Act, 1910 (hereinafter referred to as the Act). The petitioner, being aggrieved by the various orders, filed revisions before the State Government, which was dismissed on 12th April, 1978. The petitioner, thereafter, filed a bunch of writ petitions before the High Court, which was heard and allowed by a judgment dated 15th March, 2002. The writ Court held that the order of the Excise Commissioner demanding excise duty on wastage of Beer was unwarranted and, accordingly, quashed the demand notices. The State of U.P., being aggrieved by the judgment of the High Court, filed a special leave petition before the Supreme Court, which was entertained and was converted into a civil appeal. The Supreme Court while admitting the appeal, rejected the application for stay of the judgment of the High Court. The Supreme Court eventually allowed the appeal of the State Government by judgment dated 23rd September, 2011 reported in 2011 (3) SCC 588 and quashed the judgment of the High Court. The Supreme Court held that the demand towards wastage of beer was justified.

3. Pursuant to the decision of the Supreme Court dated 23rd September, 2011, the petitioner deposited the demand of Rs. 81,94,310.20 paise on 3rd November, 2011. The petitioner thereafter received the impugned order dated 1st June, 2012 demanding penal interest amounting to Rs. 5,92,20,339.94 calculating penal interest at the rate of 18% per annum. The petitioner, being aggrieved by the said demand, has filed the present writ petition.

4. We have heard Sri Dhruv Agarwal, the learned Senior Counsel assisted by Ms. Himadri Batra, the learned counsel for the petitioner and Sri Avinash Chandra Tripathi, the learned Standing Counsel for the State.

5. The learned Senior Counsel contended that there is no provision for imposition of penal interest under the Act and, therefore, the demand was wholly illegal and liable to be quashed. Further, the provision of payment of interest was inserted under the Act by U.P. Act No. 7 of 1985 with effect from 28th March, 1985. Consequently, no interest was payable for any demand prior to 1985. The learned Senior Counsel however urged that in any case, no amount was payable upto the date of the decision of the Supreme Court and, therefore, no interest was payable. The learned Senior Counsel submitted that the demand of the Excise Commissioner was quashed by the High Court and, consequently, no interest was payable from the date of the demand till the date of the order passed by the High Court and even, thereafter till the date of the order of the Supreme Court. The learned Senior Counsel contended that immediately after the decision of the Supreme Court and within the stipulated period as provided under Section 38A of the Act, the amount was paid within three months and, consequently, no interest was payable.

6. In support of his submission, the learned counsel has placed reliance upon various decisions, which will be considered hereinafter.

7. On the other hand, the learned Standing Counsel submitted that the principle of merger will apply. It was contended that the order of the High Court merged with the order of the Supreme Court, as a result, upon the setting aside the judgment of the High Court, the original demand revived. Since