ORDER
1. These appeals arc against the order of the Calcutta High Court dated December 22, 1997. Briefly stated the facts are as follows :
2. The appellants filed their returns, one under the Bengal Finance (Sales Tax) Act, 1941 and another under the West Bengal Sales Tax Act, 1954. In both cases assessment orders were passed wherein additional demands were made. The appellants filed appeals (under Section 20 of the 1941 Act and 12 of the 1954 Act). In those appeals stay of recovery was granted, however, the appellants were directed to deposit certain amounts. Those amounts were deposited. Ultimately in the appeal (pertaining to the return under the 1941 Act), an order came to be passed directing recomputation on the basis set out in that judgment. In the other appeal (pertaining to the 1954 Act), the amount of tax due was reduced.
3. The respondents then issued fresh demand notices in both the cases. However, in these notices interest was claimed from March 1993 to September 1996. Against the demand for interest, the assessee filed an appeal which was dismissed. By the impugned judgment the writ petition filed by them has been dismissed.
4. The question before this Court is whether the assessee could be considered to be a defaulter and liable to pay interest.
5. The sections under the 1941 Act and the 1954 Act are identical. Therefore we reproduce the relevant portion of Sections 10A and 20 of the 1941 Act.
“10A. Interest payable by dealer.–(1) Where a registered or certified dealer furnishes a return referred to in Section 10 in respect of any period by the prescribed date or thereafter, but fails to make full payment of tax payable in respect of such period by such prescribed date, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of such month next following the prescribed date up to the month preceding the month of full payment of such tax or up to the month prior to the month of assessment under Section 11 in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such return as remains unpaid at the commencement of each such month :
Provided that where such dealer admits in writing that the amount of tax payable in respect of such period is an amount which is either more or less than what has been originally shown as payable in the return and where the Commissioner is satisfied on the point of such admission, the interest shall be payable upon so much of the amount of tax payable according to such admission as remains unpaid at the commencement of each such month.
(2) Where a registered or certified dealer fails to furnish a return referred to in Section 10 in respect of any period by the prescribed date or thereafter before the assessment under Section 11 in respect of such period, and on such assessment full amount of tax payable for such period is found not to have been paid by him by such prescribed date, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of the month next following the prescribed date up to the month preceding the month of full payment of tax for such period or up to the month prior to the month of assessment under Section 11 in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such assessment as remains unpaid at the commencement of each such month :
Provided that where an assessment under Section 11 is made for more than one return period and such assessment does not show separately the tax payable for the period in respect of which interest is payable under this Sub-section, the Commissioner shall estimate the tax payable for such period on the basis of such assessment after giving the dealer an opportunity of being heard.
(3) Where a dealer fails to make payment of any tax payable after assessment by the date specified in the notice issued under Sub-section (3) of Section 11 for payment thereof, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of the month next following the date specified in such notice up to the month preceding the month of full payment of such tax or up to the month preceding the month of commencement of proceedings under Sub-section (4) of Section 11, whichever is earlier, upon so much of the amount of tax payable by him according to such notice as remains unpaid at the commencement of each such month.
(4) Where as a result of an order under Section 20 or Section 21 the amount of tax payable is reduced, the interest payable under Sub-section (3) shall be determined or redetermined on the basis of such reduced amount and the excess interest paid, if any, shall be refunded.”
6. The relevant portion of Section 20 reads as follows :
“Section 20. Appeal, revision and review.–[(1) Any dealer may in the prescribed manner appeal to the prescribed authority against any assessment within sixty days or such further period as may be allowed by the said authority for cause shown to his satisfaction from the receipt of a notice of demand issued in respect thereof:
Provided that no appeal shall be entertained by the said authority unless he is satisfied that such amount of the [tax, penalty] or interest, as the case may be as the appellant may admit to be due from him has been paid :
[Provided further that where tax due from a registered dealer under Sub-section (3) of Section 11 stands deferred under Section 10F, an appeal shall, notwithstanding the tax admitted to be due from him remaining unpaid, be entertained.]
Explanation.–For the purposes of this Sub-section, ‘a notice of demand’ means any notice served according to the provisions of this Act for realisation of [interest, penalty or tax] imposed thereunder.
(2) Subject to such rules of procedure as may be prescribed, the appellate authority, in disposing of any appeal under Sub-section (1), may-
(a) confirm, reduce, enhance or annul the assessment; or
(b) [when such authority is satisfied, for reasons to be recorded in writing, that it is not practicable or desirable to act in accordance with Clause (a), set aside] the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed.
[(2a) While acting in accordance with clause (b) of Sub-section (2), the appellate authority may set aside any part or parts of an assessment and if he does so, the assessing authority will make fresh assessment in respect of such part or parts only, the remaining part or parts of the previous assessment remaining valid.]”
7. In our view, the question raised in these appeals is covered by a decision of this Court in the case of Income-tax Officer v. Seghu Buchiah Setty . In this case the Income-tax Officer had issued a demand notice for recovery of tax. The assessee had preferred appeals against the assessment orders. Pending appeals the assessee had not paid the tax. In the appeal the tax payable was substantially reduced. The Income-tax Officer merely informed the assessee the reduced tax liability and called upon him to pay the reduced amount. No fresh notice of demand was issued. The question was whether the assessee could be treated as a defaulter in the absence of a fresh notice of demand. This Court considered the provision of Section 31(3) of the Income-tax Act which also provided that in an appeal tax may be confirmed, reduced, enhanced or annulled or the appellate authority could set aside the assessment or direct a fresh assessment to be made after making such enquiry or on the basis set out in the appellate order. Thus, that provision was also identical to Section 20. On an analysis of the provisions it has been held, by the majority, that in cases where assessment is reduced, enhanced or anulled or where fresh assessment is directed to be made, then the earlier order ceases to exist and the liability can only arise from the date of fresh demand notice. It has been held that even though there is no provision for issuance of a second demand notice, the department will necessarily have to issue a fresh demand notice. It is held that the party could only be considered as defaulter if payment is not made from the date specified in the fresh demand notice. This authority is binding upon us.
8. On behalf of the respondents reliance was placed upon the decision in the case of Calcutta Jute Manufacturing Co. v. Commercial Tax Officer . In that case the assessee had filed an incomplete return and this Court held that the provisions of Section 10A(2) had not been complied with. It was also held that interest was payable even for the period for which a stay had been obtained from a competent court. In our view, this authority does not help the respondents’ case.
9. As the original assessments have been set aside and it has been directed that there should be recomputation, the original orders cease to exist. After recomputation fresh notices have been issued. The liability is to pay the amount before the date set out in the fresh notices. Thus, the appellants cannot be said to be defaulters unless they have not paid the dues within the time specified in those fresh notices. In such cases interest cannot be demanded for an earlier period.
10. We, therefore, set aside the impugned order and allow the appeals. There will be no order as to costs.