Strict construction of penal tax rules barred punishment for non-payment where the demand related to a pre-rule period.

A penal rule requiring payment after demand was held to apply only within the prospective scope of the assessment and return-filing machinery created by rule 14-A of the Central Sales Tax (Andhra Pradesh) Rules, 1957. Rule 14-A(7) could not be read in isolation; it operated with the return and final assessment provisions, all of which were confined to periods after the rule came into force. Because the tax demand related to a period ending before commencement of rule 14-A, non-payment did not satisfy the ingredients of the offence under rule 16 read with rule 14-A(7). The acquittal was therefore upheld on the basis that no punishable default was made out.

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Issues: Whether non-payment of tax relating to a period prior to the commencement of rule 14-A of the Central Sales Tax (Andhra Pradesh) Rules, 1957, after service of a demand notice, constituted a contravention punishable under rule 16 read with rule 14-A(7).

Analysis: Article 20(1) of the Constitution of India forbids conviction for an act made punishable only by a later law, but the real question here was one of construction of rule 14-A and rule 16. Rule 14-A(7) could not be read in isolation: it operated only with the machinery of rule 14-A, including the return-filing obligations under sub-rules (1) and (2) and the final assessment contemplated by sub-rules (5) and (6). Those provisions were prospective and were confined to periods after the rule came into force. Penal provisions must be strictly construed, and no liability can be created unless all statutory ingredients of the offence are clearly satisfied. Since the tax in question related to a period ending before rule 14-A came into force, the alleged non-payment did not fall within the scope of rule 14-A(7) for purposes of rule 16.

Conclusion: The alleged default was not punishable under rule 16 read with rule 14-A(7), and the acquittal was rightly upheld.

Final Conclusion: The prosecution failed because the statutory offence was not made out on the facts, and the appeal could not succeed.

Ratio Decidendi: A penal rule imposing liability for non-payment after demand must be strictly construed, and it cannot apply where the tax demanded relates to a period outside the prospective scope of the rule that creates the obligation.

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