Appellate pre-deposit for interest cannot be imposed where the statute limits payment to tax or penalty only.

Under section 20(5) of the Punjab General Sales Tax Act, 1948, an appeal could be entertained only on proof of payment of tax or penalty, subject to limited waiver or reduction where the dealer was unable to pay. Interest under section 11-D created a substantive liability, but it could not be read into the appellate pre-deposit requirement because the provision was confined to tax and penalty. The court therefore held that prior deposit of interest could not be insisted upon as a condition precedent for admission of the appeal, and the appeal on that demand was to be entertained without such payment.

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Issues: Whether interest demanded under section 11-D of the Punjab General Sales Tax Act, 1948 could be insisted upon as a condition precedent for entertaining the assessee's appeal under section 20(5) of the Act.

Analysis: Section 20(5) permits entertainment of an appeal only on proof of payment of tax or penalty, with a limited discretion to waive or reduce such payment where the dealer is unable to pay. The provision does not refer to interest. Section 11-D merely creates a substantive liability to pay interest, but that liability cannot be imported into the appellate pre-deposit requirement when the appellate provision itself is confined to tax and penalty. The statutory language was therefore not wide enough to justify insisting on prior deposit of interest before the appeal could be entertained.

Conclusion: The pre-deposit of interest could not be imposed as a condition for entertaining the appeal, and the assessee's appeal on that demand was directed to be admitted without prior payment.

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