Tax liability, assessment and payability are distinct under sales tax law; penalty applies only to tax properly payable and unpaid.

Under the Bombay Sales Tax Act, 1946, liability to tax, assessment of tax, and the stage when tax becomes payable are distinct. The High Court construed section 12(3A) in the statutory scheme of sections 5, 11 and 12(4) and held that penalty is attracted only when tax has become payable within that scheme, including tax shown in late returns and assessed tax not paid after notice of demand. The penalty could not be treated as automatically extending to the full amount ultimately found due in every case, and the penalty order had to be modified to reflect the amount properly covered by delayed payment.

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Issues: Whether penalty under section 12(3A) of the Bombay Sales Tax Act, 1946 is leviable only on tax that has become payable after assessment, and not merely on the amount ultimately found due.

Analysis: The statutory scheme distinguished between liability to pay tax, the quantification of tax by assessment, and the stage when tax becomes payable. Section 5 created the liability, section 11 provided for assessment, and section 12(4) showed that the assessed tax was to be paid only after a notice of demand. On that construction, the expression "tax payable" in section 12(3A) could not be confined to the assessed balance alone in every case. Penalty was attracted in respect of tax due according to the returns furnished late and also where assessed tax was not paid within the prescribed time after assessment.

Conclusion: The penalty under section 12(3A) was held leviable only to the extent of delayed tax according to the returns and the amount remaining unpaid after assessment, and the penalty order was required to be modified accordingly.

Final Conclusion: The application succeeded in part and the penalty was restricted by directing amendment of the order of the Additional Collector.

Ratio Decidendi: Under the Bombay Sales Tax Act, 1946, the liability to tax, its assessment, and its payability are distinct stages, and penalty for non-payment is attracted only when tax has become payable within the statutory scheme governing assessment and demand.

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