Delegated levy fails after omission of charging provision, and demand cannot stand without valid finalisation of assessment.

A delegated levy under the compounded levy scheme could not survive once the charging provision was omitted on 11-05-2001 without any saving clause, because the subordinate rules drew their authority from that parent provision; accordingly, the demand, together with interest and penalty, was not sustainable. Recovery also failed because the assessments had not been validly finalised in line with the earlier remand direction requiring provisional assessments to be finalised after due opportunity, so no lawful basis for demand existed on an unfinalised assessment. The assessee succeeded and the impugned demand order was set aside.

---

---

Issues: (i) Whether the demand and consequential interest and penalty under the compounded levy scheme could be sustained after omission of the charging provision and the corresponding subordinate rules. (ii) Whether the demand could stand when the assessments had not been validly finalised in accordance with the earlier remand direction.

Issue (i): Whether the demand and consequential interest and penalty under the compounded levy scheme could be sustained after omission of the charging provision and the corresponding subordinate rules.

Analysis: The charging provision stood omitted with effect from 11-05-2001 without any saving clause. The subordinate levy provisions traced their authority to that charging section, and once the parent provision was removed, the rule-making source itself disappeared. The reasoning further held that the pending proceedings could not be continued on the basis of the omitted provision and that the interest and penalty components, being unsupported by a valid delegation under the Act, could not be sustained.

Conclusion: The demand, including the consequential levy of interest and penalty, was not sustainable.

Issue (ii): Whether the demand could stand when the assessments had not been validly finalised in accordance with the earlier remand direction.

Analysis: The earlier remand had proceeded on the footing that the assessments were provisional and required finalisation after giving due opportunity. The order under challenge could not disregard that direction by treating the assessments as already final, particularly when the finalisation itself was found to be procedurally unsound. In the absence of a valid finalisation, the basis for recovery was not established.

Conclusion: The demand could not be upheld on the basis of an unfinalised assessment.

Final Conclusion: The assessee succeeded and the impugned demand order was set aside, while the connected appeal became infructuous in consequence.

Ratio Decidendi: When the charging provision forming the source of a delegated levy is omitted without a saving clause, the subordinate levy provisions and proceedings founded on it cannot survive, and recovery cannot be sustained without a valid final determination of liability.

---