Advance tax liability under sales tax law can attract penalty even before final assessment when the statute makes tax due without demand.

Under the amended section 13(2) of the Tamil Nadu General Sales Tax Act, 1959, dealers were permitted to pay tax in advance during the year on actual turnover, and the tax became due without any notice of demand on receipt of the return or on the last due date, whichever was later. In that statutory setting, the earlier position that penalty could not be levied before final assessment was reconsidered because the basis of tax liability had changed. The Madras High Court held that penalty under section 24(3) was sustainable despite the absence of a completed final assessment, and the challenge to the penalty failed.

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Issues: Whether penalty under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained in view of the amended section 13(2) providing for advance payment of tax on the basis of actual turnover and making such tax due without notice of demand.

Analysis: The amendment introduced by Tamil Nadu Act 78 of 1986 with effect from 1 January 1987 enabled a dealer to pay tax in advance during the year on the basis of actual turnover for each month or other prescribed period, and further declared that such tax would become due without any notice of demand on receipt of the return or on the last due date, whichever was later. In light of this statutory scheme, the earlier view that penalty could not be levied before final assessment and demand had to be revisited, since the provision governing provisional and advance payment altered the basis on which tax liability arose.

Conclusion: The penalty under section 24(3) was held to be sustainable and the assessee's challenge failed.

Final Conclusion: The writ appeal succeeded and the order quashing the penalty was set aside, with the dismissal of the writ petition following as a consequence.

Ratio Decidendi: Where the statute expressly permits advance payment of tax and provides that such tax becomes due without notice of demand, penalty for delayed payment can be sustained notwithstanding the absence of a completed final assessment.

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