Sales tax penalty depends on statutory notice requirements; delegated rules cannot expand penal liability without notice.

Penalty for delayed sales tax payment is attracted only when the statutory preconditions under the parent Act are satisfied, including the prescribed notice of demand where required. Rule 29(1A) was treated as a payment mechanism and could not enlarge the penal reach of section 36(3) by dispensing with notice under section 38(4). The same principle applied under the Central Sales Tax framework, where the State recovery machinery operated through section 9 but penalty still depended on compliance with the statutory notice requirement. In the absence of the requisite notice, the penal liability was not sustained.

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Issues: (i) Whether penalty under section 36(3) of the Bombay Sales Tax Act, 1959 was leviable for failure to make monthly payments under rule 29(1A) of the Bombay Sales Tax Rules, 1959 without service of notice under section 38(4); (ii) Whether the same penalty could be levied under the Central Sales Tax Act, 1956 in the absence of notice under section 38(4) of the Bombay Sales Tax Act, 1959 as applied through section 9 of the Central Sales Tax Act, 1956.

Issue (i): Whether penalty under section 36(3) of the Bombay Sales Tax Act, 1959 was leviable for failure to make monthly payments under rule 29(1A) of the Bombay Sales Tax Rules, 1959 without service of notice under section 38(4).

Analysis: Rule 29(1A) operated only as a mode of advance payment for dealers whose turnover exceeded the prescribed limit, but it did not itself create the stage for penalty. The statutory scheme made section 38(2) and section 38(4) part of a connected mechanism: tax payable according to the return had first to be paid, and if it was not fully paid, a notice was required specifying the date for payment. Penalty under section 36(3) became attracted only on non-compliance with such notice. Delegated rules could not enlarge the reach of the penal provision so as to dispense with the notice contemplated by the Act.

Conclusion: Penalty under section 36(3) was not leviable for non-payment of the monthly amounts under rule 29(1A) in the absence of notice under section 38(4), and the answer was in favour of the assessee.

Issue (ii): Whether the same penalty could be levied under the Central Sales Tax Act, 1956 in the absence of notice under section 38(4) of the Bombay Sales Tax Act, 1959 as applied through section 9 of the Central Sales Tax Act, 1956.

Analysis: The Central Sales Tax framework adopted the State machinery for assessment, collection, and enforcement, and the relevant return-cum-challan system required payment of tax along with the return. Even so, the penal consequence under section 36(3) as applied through section 9 arose only after non-compliance with the statutory notice contemplated by section 38(4). Since no such notice in form 26 had been issued, the foundation for penalty was absent.

Conclusion: Penalty could not be sustained under the Central Sales Tax Act in the absence of the required notice, and the answer was in favour of the assessee.

Final Conclusion: The references were answered by holding that penalty was not exigible on the facts before the Court, and the assessees succeeded on the substantive questions decided.

Ratio Decidendi: A penal provision for delayed payment of sales tax is attracted only when the statute's preconditions for default, including the requisite notice of demand where prescribed, are satisfied, and a delegated rule cannot enlarge that liability beyond the parent Act.

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