Appellate pre-deposit is computed on the net outstanding tax and penalty after assessment, not the gross assessed amount.

Under the unamended proviso to section 38(3) of the Madhya Pradesh General Sales Tax Act, the appellate pre-deposit was to be computed on the balance tax and penalty remaining due after assessment, not on the gross amount originally assessed. The proviso was read with the main sub-section, which required payment of the tax or penalty in dispute as a condition for admission of the appeal and allowed the appellate authority to permit a smaller deposit, subject to the statutory minimum. The 15 April 1968 amendment expressly referring to the balance due was treated as clarificatory, confirming that the operative amount was the net outstanding demand.

---

---

Issues: Whether, under the proviso to section 38(3) of the Madhya Pradesh General Sales Tax Act, 1958, as it stood prior to 15 April 1968, the part payment required by the appellate authority was to be computed with reference to the gross tax and penalty originally assessed or only the net amount remaining due after assessment.

Analysis: The proviso was construed in the context of the main sub-section, which made payment of the tax or penalty in respect of which the appeal was preferred a condition for admission of the appeal, while conferring a discretion on the appellate authority to permit payment of a smaller amount not below one-third of the amount in dispute. The amendment of 15 April 1968, introducing express words referring to the balance due, was treated as clarificatory and not as introducing a new legal position. On that construction, the amount to be deposited for admission of the appeal was relatable to the balance of tax and penalty remaining due after assessment, and not to the gross assessed amount irrespective of advance payment already made.

Conclusion: The required part payment was relatable to the net demand of tax and penalty remaining due after assessment, and the answer was against the assessee.

Final Conclusion: The reference was answered in the Revenue's favour by affirming that the appellate pre-deposit under the unamended proviso was to be computed on the balance outstanding after assessment.

Ratio Decidendi: Where an appellate pre-deposit proviso requires payment of the tax or penalty in dispute, the amount directed by the appellate authority is to be calculated with reference to the net outstanding demand after assessment, and a later amendment expressly stating that position is clarificatory.

---