The appellants were served with two notices by the Sales Tax Officer, Hapur, for the recovery of Rs. 34, 796.44 and Rs. 12, 850 on account of interest on arrears of sales tax. Two business firms owned by the ancestors of the appellants fell into arrears in respect of sales tax for the years 1952-53 to 1962-63. The appellants, having inherited the properties of the ancestors, were asked to pay the arrears of sales tax. It is the admitted position that the appellants had paid the said arrears. The above-mentioned notices were only in respect of the interest on the amount of arrears so paid. The appellants challenged the notices by way of a writ petition before the High Court. The High Court dismissed the writ petition.


This appeal, via special leave petition is against the judgment of the High Court.


The U.P. Sales Tax Act, 1948, was amended and sub-section (1-A) was added to section 8 of the Act. The amendment was introduced by the U.P. Sales Tax (Second Amendment) Act, 1963, which was enforced with effect from January 25, 1964. Sub-section (1-A) is as under :



"(1-A) If the tax payable under sub-section (1) remains unpaid for six months after the expiry of the time specified in the notice of assessment and demand, or the commencement of the Uttar Pradesh Bikri-Kar (Dwitiya Sanshodhan) Adhiniyam, 1963, whichever is later, then, without prejudice to any other liability or penalty which the defaulter may, in consequence of such non-payment, incur under this Act, simple interest at the rate of eighteen per cent per annum shall run on the amount then remaining due from the date of expiry of the time specified in the said notice, or from the commencement of the said Adhiniyam, as the case may be, and shall be added to the amount of tax and be deemed for all purposes to be part of the tax." *


The appellants contended before the High Court that the abovequoted section 8(1-A) having been enforced with effect from January 25, 1964, the arrears of sales tax which became due as a result of assessment made prior to the said date cannot come within the mischief of the said sub-section. The High Court rejected the contention in the following words :



"Now section 8(1-A), no doubt, was added to the U.P. Sales Tax Act with effect from 25th of January, 1964, but it provides that if any amount on account of sales tax is in arrears, for a period of six months from the date of the service of the notice of demand, or from the commencement of the provision, it shall carry interest at the rate of 18 per cent. Admittedly, the sales tax was in arrears against the petitioners when section 8(1-A) came into force and it remained unpaid after the expiry of six months from 25th of January, 1964, when the provision came into force. Interest, therefore, started automatically running on the arrears irrespective of the years to which they related. There is thus no force in this contention." *


We see no infirmity with the reasoning of the High Court and agree with the same.


The second point raised before the High Court was that notices of demand in respect of the sales tax were not served upon the petitioners and as such they did not become defaulters and were not liable to pay interest. The appellants had admittedly paid-up the entire arrears of sales tax voluntarily. The accrual of interest is automatic and no separate notice of demand was required to be served in that respect. It is clear from section 8(1-A) that the interest becomes payable if the arrears of sales tax remain unpaid for a period of six months after the commencement of the amending Act. It is not disputed that the arrears of sales tax were paid by the appellants six months after the amending Act. Apart from that the High Court relied upon the judgment of this Court in Haji Lal Mohd. Biri Works v. State of U.P. 1973 (32) STC 496 (SC) and rejected the contention. We see no reason to differ with the reasoning and the conclusions of the Hi

gh Court.During the pendency of the appeal in this Court interim stay was operating against the respondents. We allow six months time to the appellants to make payment and we direct that no coercive steps should be taken against the appellants for the recovery of arrears of interest during the said period of six months. With the above observations, the appeal is dismissed with no order as to costs. Appeal dismissed.