V.P Gopalan Nambiyar, C.J:— The writ petitioner/appellant was an assessee to sales tax from whom arrears of sales tax were due in respect of assessments for the years 1970-71 to 1973-74. The arrears amounted to Rs. 1,07,667. He seems to have approached the Government for permission to pay up the arrears in instalments and exhibit P2 order dated 9th October, 1972, was passed by the Secretary to Government of the Revenue Department allowing him the facility of instalment payment of sales tax and employees provident fund at the rate of Rs. 5,000 each (total monthly payment of Rs. 10,000). The petitioner has averred that the instalments as permitted by exhibit P2 order were paid from 1972 and the arrears were liquidated by July, 1974. He has produced exhibit P3 statement showing the payments made and the dates on which they were made. The averments made in this respect have not been controverted. Exhibits P4 to P7 orders were passed by the Sales Tax Officer imposing penalty on the writ petitioner for default of payment of the arrears of sales tax. By exhibit P4, a penalty of Rs. 11,091.98 was imposed by order dated 29th November, 1973. Exhibit P5 is dated 12th November, 1974, and it imposed a penalty of Rs. 5,479.42. Exhibit P6 is dated 9th November, 1974, and the penalty imposed was Rs. 5,184.46. Exhibit P7 is dated 18th November, 1974, and the penalty imposed was Rs. 1,313.17. Exhibit P4 order was carried up in revision and dismissed by exhibit P8 dated 27th February, 1975. The writ petition, which has given rise to this appeal, was preferred to quash exhibits P4 to P8 and for consequential reliefs. The learned Judge observed in the first paragraph of the judgment that exhibit P9 was the petition for stay filed by the petitioner in revision and exhibit P10 is the order thereon, by which the stay petition was rejected and that the writ petition was to quash exhibit P10 order. This is a mistake, as the petitioner prayed clearly to quash exhibits P4 to P7. The learned Judge disposed of the writ petition in the following fashion:
“3. Neither party is in a position to affirm whether the revisions are still pending. If the revisions have been disposed of, no relief need be granted to the petitioner in regard to exhibits P5 to P7. The petition will stand dismissed. In case the revisions have not been disposed of yet, then the revisions may be disposed of expeditiously and, until such disposal of the revisions against exhibits P5 to P7 orders, status quo as to collection of penalty thereunder will continue.
4. There is a challenge to exhibit P8 order. That it is time-barred is evident and the petitioner has no answer to the plea that it is time-barred. Hence the challenge to exhibit P 8 cannot succeed.”
2. The challenge to exhibit P8 order is time-barred.
3. But exhibits P5 to P7 revisions, dismissed on 26th July, 1975, were communicated on 18th August, 1975. Limitation is not urged against these orders.
4. Counsel for the petitioner contended that, in view of exhibit P2 order, which was duly complied with, the penalty was not imposable at all and that exhibits P4 to P7 orders cannot therefore be sustained. It was also represented that by the time of the learned Judge's judgment, the revisions against exhibits P5 to P7 had been dismissed by order dated 26th July, 1975, and communicated on 18th August, 1975. The answer made on the side of the learned Government Pleader was that exhibit P2 order of the Government is not an order statutorily sanctioned or recognised and, therefore, the same cannot avail the petitioner against the liability to pay penal interest or the penalty. We may note the provisions of section 23(3) and section 24 of the Sales Tax Act:
“23. Payment and recovery of tax.—……………
(3) If the tax assessed or any other amount due under this Act or any instalment thereof is not paid by any dealer or other person within the time specified therefor in the notice of demand or in the order permitting payment in instalments or within the time allowed for its payment by the appellate or revising authority, the dealer or other person shall pay, by way of penal interest, in the manner prescribed, in addition to the amount due, a sum equal to—
(a) one per cent of such amount for each month or part thereof for the first three months after the date specified for its payment;
(b) two per cent of such amount for each month or part thereof subsequent to the first three months aforesaid.
24. Recovery of penalty.—Penalty payable under this Act shall be deemed to be tax under this Act for the purpose of collection and recovery, and shall be recoverable without prejudice to the institution of any proceeding for an offence under this Act.”
5. It is unnecessary to refer to the Rules, which provide for the form in which a notice of demand for penal interest is provided for. The learned Government Pleader is right in his submission that there is no provision in the Sales Tax Act, which enables the Government to pass an order allowing the benefit of instalment payment to an assessee under the provisions of the Sales Tax Act and in respect of an order of assessment passed by the Sales Tax Officer. The same view seems to have been taken by the Supreme Court in Haji Lal Mohd. Biri Works v. State of U.P [1973] 32 S.T.C 496 at 499 S.C. under the provisions of section 8(1-A) of the U.P Sales Tax Act, 1948, which is almost similarly worded. The court observed at page 499:
“There is no provision in the Act which makes it obligatory on the part of the Sales Tax Officer to make an assessment in respect of the interest which the amount of sales tax would carry under section 8(1-A) of the Act. There is also no provision in the Act which requires the issue of a notice of demand in respect of the interest by the Sales Tax Officer to the assessee before the Sales Tax Officer forwards recovery certificate to the Collector. Reference has been made by Mr. Sen to sub-section (1-A) of section 8, according to which interest shall be added to the amount of tax and shall be deemed for all purposes to be part of the tax. The above deeming provision, in our opinion, has been added only for the purpose of recovery. The object apparently was that the amount of interest should be recovered in the same manner as the amount of sales tax. The amount of sales tax and other dues under sub-section (8) of section 8 can be recovered as arrears of land revenue. It was with a view to put the matter beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that sub-section (1-A) provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax.
According to section 8(1-A), simple interest at the rate of 18 per cent per annum shall run on the amount of arrears of sales tax from the date specified in that sub-section. It would thus appear that the liability to pay interest is automatic and arises by operation of law…………”
6. A Division Bench of this Court also took the same view in Burmah Shell Co. Ltd. v. Sales Tax Officer. The court observed:
“The language of section 23(3) appears to make the payment contemplated by the section an absolute liability on the assessee. If the tax assessed is not paid within the time allowed, whatever be the reason for the non-payment, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in addition to the amount due, a sum equal to half per cent of such amount for each month or part thereof, for the first three months, and one per cent of such amount for each month or part thereof, subsequent to the three months. There is no question of the taxing authority exercising any discretion under the statute; no discretion is contemplated or vested in the authority; the penalty at the particular rate mentioned in the section automatically clinches on the failure to pay the amount within the time mentioned in the section. If there is no discretion left in the assessing authority by the statute itself, there is no question of the exercise of discretion being quasi-judicial and no question of giving notice to the assessee before the exercise of discretion. As we have stated already, the penalty is in the nature of interest by way of damages payable on the defaulted amount at the particular rate mentioned in the section itself. Therefore, the decisions cited by the counsel of the petitioner cannot have any application to the case. Looking at the case, once again, from the angle of natural justice, we would point out that the statutory provision, we mean section 23(3), excludes the application of the rules of natural justice and, in such cases, we cannot ignore the mandate of the legislature; the mandate of the legislature is clear in the language of the section; we cannot read into the concerned provision the rules of natural justice; that will not be consistent with the language of the section: vide Union of India v. J.N Sinha 1970 2 SCC 458.”
7. The learned Government Pleader is therefore right in his submission that, strictly, on the provisions of the statute, there is no provision enabling the Government to pass an order of the type exhibit P2. But the fact remains that such an order was passed and, for a period of 22 months, the assessee has been respecting that order and paying the instalments as required or permitted by the order. We cannot, especially in the absence of any counter-affidavit on the side of the department, easily take it that the department or the Sales Tax Officer was not aware of the existence of such an order or of a sanction for the instalment payments that the assessee made for a fairly long period of 22 months. Whatever that be, in the same spirit of being a stickler for the letter of the statute, counsel for the assessee argued with force, that if there be no provision in the statute to warrant an order by the Government like exhibit P2, equally, there is no warrant for the officer to draw up a formal order of the type of exhibit P4 (or P5 to P8) imposing a penalty on the petitioner. This position taken up by the assessee seems to be correct on the language of the statute and has the support of the two decisions, which we have noticed in regard to similarly worded statutory provisions. The decisions point out that the accrual of penal interest is automatic on the occurrence of defaults (see also the Mysore High Court's decision in Abdul Shakur Umar Sahigara & Co.'s case). It may be that without drawing up any formal order imposing a penalty under section 23(3) of the Act, the authorities may be able to recover the penalty under section 24, as the liability to pay penal interest is automatic as explained in these decisions. If so, it would be open to the department to pursue such steps for recovery of penal interest as they might be advised to take. There is no provision in law or under the statute to pass orders of the type of exhibits P5 to P7. We cannot therefore sustain the same. (We leave out exhibit P4, as the challenge to the same is time-barred).
8. We allow this appeal and modify the judgment of the learned Judge. O.P No. 3575 of 1975 will stand allowed to the extent that the orders dated 26th July, 1975, on exhibits P5 to P7 revisions will stand quashed. We repeat that nothing said in this judgment should be understood as precluding the sales tax authorities, if so entitled and so advised, from proceeding to recover the penal interest in accordance with law. We affirm the finding of the learned Judge regarding exhibits P4 and P8 orders. The original petition will stand dismissed as far as these orders are concerned. There will be no order as to costs.
9. We cannot help observing that this appeal seems really unnecessary. The learned Judge passed his judgment on the footing that exhibits P5 to P7 revisions were pending. They had been disposed of even when the learned Judge delivered judgment. It might have been enough to have the matter posted before the learned Judge “to be spoken to”, or to apply for review.
10. Issue carbon copy of this judgment to all counsel on usual terms.
11. Ordered accordingly.