R.S. Pathak, J.
1. The petitioner, a public limited company carrying on the business of manufacture and sale of jute goods, was assessed to sales tax under the U.P. Sales Tax Act in the sum of Rs. 4,93,747-2-0 for the assessment year 1948-49 and in the sum of Rs. 2,42,578-5-3 for the assessment year 1949-50. The turnover assessed included sales outside the State of Uttar Pradesh made under railway receipts and on consignment basis. The petitioner appealed against the assessment orders. The appeal for the assessment year 1949-50 was decided first. The Judge (Appeals), by his order of 6th April, 1956, held that the petitioner was not liable to sales tax on sales conducted outside Uttar Pradesh where the goods were despatched under railway receipts or on consignment basis. He directed that the petitioner be given credit for the amount already deposited on. the sales. Accordingly, the petitioner claims a sum of Rs. 37,318-11-6 became refundable to the petitioner. In the appeal for the assessment year 1948-49 the Judge (Appeals) by his order of 10th May, 1956, similarly held that sales tax was not leviable on sales conducted outside Uttar Pradesh. But while setting aside the assessment in respect of the sales under which goods were sent outside Uttar Pradesh on consignment basis he remanded the case to the Sales Tax Officer for determining whether goods sent outside the State of Uttar Pradesh on consignment basis were despatched for the purpose of consumption. The petitioner says that pursuant to this order it became entitled to a refund of Rs. 78,204. Against the appellate orders the Commissioner of Sales Tax proceeded in revision, and the Judge (Revisions), Sales Tax, by his order dated 18th May, 1959, held that the petitioner was not liable to sales tax on the transactions on consignment basis, while in respect of the goods sent under railway receipts he remanded the case to the Sales Tax Officer for further scrutiny. It is the case of the petitioner that in the result the assessment orders of the Sales Tax Officer stood quashed. The Commissioner of Sales Tax obtained a reference to this Court out of the orders of the Judge (Revisions) disposing of the revision applications and on 22nd April, 1963, this Court held that the turnover considered by the Judge (Revisions) was liable to sales tax. The petitioner applied for, and was granted, special leave to appeal to the Supreme Court against the opinion expressed by this Court and the appeal is pending there. Meanwhile, in the assessment proceedings for the assessment years 1956-57 and 1957-58 the petitioner was found liable to sales tax in the sums of Rs. 1,09,186-1-3 and Rs. 7,575.66 respectively. When the assessment orders and the notices of demand were served upon the petitioner, it prayed that the amounts refundable to it in respect of the assessment years 1948-49 and 1949-50 should be adjusted against the tax liability for the assessment years 1956-57 and 1957-58. That request was rejected by the Sales Tax Officer. On 28th October, 1965, the Sales Tax Officer issued two certificates of recovery under Section 8 to the Collector directing him to recover the tax in respect of the assessment years 1956-57 and 1957-58 respectively. Pursuant to the certificates the Collector commenced proceedings for recovery of the amount as arrears of land revenue. By this petition under Article 226 of the Constitution the petitioner prays that the certificates of recovery and the consequent recovery proceedings be quashed.
2. Mr. Jngdish Sarup for the petitioner has raised two contentions before me.
3. The first contention is that the petitioner is not in default and, therefore, the certificates of recovery and the consequent recovery proceedings are without jurisdiction. He urges that inasmuch as the total amount refundable for the assessment years 1948-49 and 1949-50 is greater than the total tax liability in respect of the assessment years 1956-57 and 1957-58, the petitioner cannot be said to be in default. The amount which is refundable to a dealer is, he says, as much a debt as an amount due by the dealer upon a notice of demand served upon him, and there being two co-existing cross debts, when that in favour of the dealer is the greater, it is not possible to say that the dealer is in default. I find it difficult to accept the contention. Section 8(1) reads :
8. Payment and recovery of tax.-(1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any, within such time, not being less than fifteen days of the date of service of the notice of assessment and demand as may be specified in the notice. In default of such payment, the whole of the amount then remaining due shall become recoverable in accordance with Sub-section (8).
4. After making an assessment order the Sales Tax Officer serves the dealer with a copy of the assessment order and a notice of demand requiring the dealer to pay the tax assessed by the assessment order within the period specified in the notice. It is that payment which is contemplated by Section 8(1) when it speaks of the dealer being 'in default of such payment'. The provision does not contemplate a set-off of cross debts. On the contrary, it contemplates actual payment of the amount mentioned in the notice of demand. If that amount is not paid, the dealer is in default. Moreover, my attention has not been drawn to any provision in the U.P. Sales Tax Act, or the Rules made thereunder, entitling a dealer to an adjustment as of right of his tax liability against refunds due to him. The two, the tax liability and the refunds, have been kept apart and there is nothing in the Act or the Rules to bridge the distance between them. In my opinion, it is not possible to say that because an amount is due to a dealer by way of refund in respect of one assessment year he is entitled as of right to have it set-off against the tax assessed against him in respect of another assessment year. The mere circumstance that he has not paid the tax assessed within the period mentioned in the notice of demand is sufficient to classify him as a dealer in default. It has not been disputed that the petitioner has not paid the tax assessed for the assessment years 1956-57 and 1957-58. The conclusion is inescapable that the petitioner is in default, and the Sales Tax Officer is entitled to take proceedings to have the amount due recovered in accordance with Section 8(8). The first contention of the petitioner is rejected.
5. The other contention for the petitioner is that the penal interest to which a dealer is exposed by virtue of Section 8(1-A) must be imposed by the Sales Tax Officer and not by the Collector who takes the recovery proceedings. It seems to me that this question does not arise because the recovery certificates issued on 28th October, 1965, by the Sales Tax Officer stated that if the amount of tax was not recovered before 1st August, 1964 (apparently the date on which the period of six months from the date specified, in the notice of assessment and demand expired), interest at 18 per cent. per annum calculated on the amount then remaining due with effect from 1st February, 1964 (the date on which the period of thirty days prescribed in the notice of assessment and demand expired), till the date of final payment of the dues should also be recovered as arrears of land revenue, in terms of Section 8(1-A). The imposition of penal interest has been effected by the Sales Tax Officer and not by the Collector. All that has been left to the Collector is the arithmetical computation of the actual amount to be recovered by way of interest. That, in my opinion, had necessarily to be left to the Collector because the Sales Tax Officer, when he issued the. recovery certificates, would not be in a. position to anticipate the date when the dues would be paid and consequently the amount of interest leviable thereon. This contention, therefore, must also fail.
6. The petition is dismissed with costs.