Mandatory notice before tax default penalty under sales tax rules; penalty cannot arise without Form 6 compliance.

Penalty under section 13 of the Mysore Sales Tax Act could arise only on default in payment within the time lawfully prescribed. Rule 18, read with its second proviso, required the dealer to pay the admitted tax with the return or, if not, to receive a Form 6 notice specifying the time for payment. In the absence of service of that prescribed notice, the dealer could not be treated as a defaulter merely because the tax was unpaid with the return. Penalty therefore could not accrue before expiry of the time stated in the notice, and the penalty demand was quashed.

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Issues: Whether penalty under section 13 of the Mysore Sales Tax Act, 1957 could be levied before the time specified in the demand notice issued under rule 18 of the Mysore Sales Tax Rules, and whether the dealer became a defaulter on the date of filing the return or only on failure to comply with the notice in Form 6.

Analysis: Section 13 makes penalty dependent on default in payment within the prescribed time. The second proviso to rule 18 requires a dealer, along with the return, to furnish payment of the tax due or, failing that, the assessing authority must serve a notice in Form 6 demanding payment within the time specified therein. The rule was read as a whole and treated as giving the assessee an opportunity to discharge the admitted tax either with the return or pursuant to the statutory notice. In the absence of service of a Form 6 notice, default could not be said to have occurred merely because the tax was not paid with the return. Penalty could not therefore accrue before expiry of the time given in the notice.

Conclusion: The penalty demand was unlawful and was quashed; the issue was decided in favour of the assessee.

Ratio Decidendi: Where a taxing rule makes service of a prescribed notice mandatory for payment of admitted tax, a dealer does not incur default for penalty purposes until failure to comply with that notice.

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