Fresh demand notice required before recovery, penal interest, or penalty can lawfully begin on enhanced tax demands.

Enhanced sales tax could not be recovered until a fresh notice of demand was served after appellate or revisional enhancement, because the enhanced amount carries a separate 30-day payment period and the assessee is not in default before expiry. Penal interest was also unavailable where the statutory six-month period from the enhancement order had not expired and the excess remained unpaid. A penalty notice for non-payment within time was likewise unsustainable because, without service of the fresh demand notice, the time for payment had not begun to run. The article states that recovery, interest, and penalty action all failed for want of the required statutory preconditions.

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Issues: (i) Whether recovery proceedings for enhanced sales tax could be initiated without service of a fresh notice of demand after enhancement in appeal or revision; (ii) whether proceedings for levy of penal interest were premature when the statutory period had not expired; (iii) whether a notice to impose penalty for non-payment within time was sustainable when no fresh notice of demand had been served.

Issue (i): Whether recovery proceedings for enhanced sales tax could be initiated without service of a fresh notice of demand after enhancement in appeal or revision.

Analysis: Where an assessment is enhanced in appeal or revision, clause (a) of section 8(9) requires service of a fresh notice of demand for the enhanced amount. The enhanced demand carries its own period of 30 days for payment, and until that notice is served and the period expires, the assessee cannot be treated as in default. Recovery action taken without such notice is without jurisdiction.

Conclusion: Recovery proceedings for the enhanced tax were illegal and could not be sustained.

Issue (ii): Whether proceedings for levy of penal interest were premature when the statutory period had not expired.

Analysis: Penal interest under section 8(1-A) could arise only after six months from the date of the enhancement order and only if the excess amount remained unpaid. The impugned notice was issued before expiry of that six-month period, so the statutory condition precedent had not been fulfilled.

Conclusion: The proceedings for penal interest were premature.

Issue (iii): Whether a notice to impose penalty for non-payment within time was sustainable when no fresh notice of demand had been served.

Analysis: Penalty under section 15-A(1)(c) depended on failure to pay tax within the time allowed by law. Since the fresh demand notice required by section 8(9) had not been served, the statutory period for payment had not even commenced, and no failure to pay within time could be attributed to the assessee.

Conclusion: The penalty notice was premature and unsustainable.

Final Conclusion: The writ petition succeeded because the recovery action, the claim for penal interest, and the penalty proceedings were all initiated before the statutory preconditions for enforcement had arisen.

Ratio Decidendi: When enhanced tax becomes payable only upon service of a fresh demand notice, recovery, penal interest, and penalty proceedings cannot lawfully commence until the notice is served and the prescribed statutory period expires.

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