Delayed payment penalty under sales tax law applies at the rate in force when default arose, not a later enhanced rate.

For tax due before 11 May 1973 but paid after that date, penalty for delayed payment under section 36(3) of the Bombay Sales Tax Act, 1959 was held to be governed by the rate applicable when the default arose, not the later enhanced rate. The court applied the Supreme Court ruling in Maya Rani Punj on computation of delay penalty for the relevant period and rejected application of the increased rate. The reference was answered against the assessee and in favour of the Revenue.

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Issues: Whether, for tax due prior to 11 May 1973 but paid after that date, penalty for delayed payment under section 36(3) of the Bombay Sales Tax Act, 1959 was leviable at the old rate or at the enhanced rate in force after 11 May 1973.

Analysis: The question was answered in the light of the Supreme Court decision in Maya Rani Punj, which governed the manner in which penalty for delay was to be computed for the relevant period.

Conclusion: The reference was answered in the negative, and the enhanced rate was not applicable; the answer was against the assessee and in favour of the Revenue.

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