Retrospective penalty liability under a repealed sales tax law was held invalid where no such penalty existed earlier.

A statutory penalty creating a fresh liability could not be imposed retrospectively on tax assessed under a repealed enactment. Section 24(3) of the Madras General Sales Tax Act, 1959 applied only to failure to pay tax within the notice period under that Act, while the assessment here had been made under the 1939 Act, which contained no such penalty for delayed payment. The saving clause in section 61 preserved liabilities and proceedings already incurred or pending, but did not create a new penalty where none existed under the old law. The penalty demand was therefore invalid and was quashed.

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Issues: Whether penalty under section 24(3) of the Madras General Sales Tax Act, 1959 could be levied for delay in payment of tax that had been assessed under the repealed Madras General Sales Tax Act, 1939.

Analysis: Section 24(3) created a new liability to penalty for failure to pay tax within the time specified in the notice of assessment. The assessment in question had been made under the old Act, and under that Act no penalty for delayed payment of assessed tax was provided. The saving clause in section 61 protected liabilities, penalties, and proceedings already incurred or pending under the repealed Act, but it did not create a fresh liability where none had existed before. The amendment made by Act X of 1963 did not alter this position, because the deemed transfer of assessments to the new Act under section 61 could not be extended to impose a penalty that was unknown to the old law.

Conclusion: The penalty under section 24(3) could not be levied retrospectively on tax assessed under the repealed Act, and the levy was invalid.

Final Conclusion: The writ petition succeeded and the demand for penalty was quashed.

Ratio Decidendi: A statutory penalty creating a new liability cannot be imposed retrospectively on an assessment made under a repealed enactment unless the saving clause clearly authorises such imposition.

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