Instalment payment of sales tax arrears removes default where all instalments are paid on time, barring penalty.

Government's power to permit payment of sales tax arrears by instalments under the Mysore Sales Tax Act, 1957, was treated as superseding the earlier demand for immediate payment, so the tax became due only on the instalment dates fixed by Government. Default under section 13 could arise only on failure to pay an instalment when it fell due; where the assessee paid all instalments within time, the earlier non-payment no longer remained a subsisting default. On that reasoning, the penalty condition in the original notice did not survive the later modification, and the penalty demand was not sustainable.

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Issues: Whether instalments granted by Government under the Mysore Sales Tax Act, 1957, extended the time for payment of tax so as to negate default and bar levy of penalty under section 13.

Analysis: Government had authority under section 3A, read with section 13, to permit payment of arrears by instalments, and such direction superseded the earlier notice requiring payment within twenty-one days. Once instalments were allowed, the tax became due only on the instalment dates fixed by Government. Default under section 13 could arise only if an instalment was not paid when due. Since the petitioner paid all instalments within the time allowed, the earlier non-payment ceased to constitute a subsisting default, and the penalty condition mentioned in the first order did not survive after the later modification.

Conclusion: The demand for penalty was not sustainable, as there was no default after the grant of instalments; the impugned penalty notices were liable to be set aside in favour of the assessee.

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