Penalty for breach of demand notice fails when the underlying notice is cancelled and no valid default survives.

A penalty for non-compliance with a demand notice could not stand once the notice itself had been cancelled as not being in the proper form. Default arises only in relation to a valid and operative notice of demand, and where the alleged breach is founded on a notice that has ceased to exist, the legal basis for penalty disappears. The penalty order was therefore quashed in favour of the petitioner.

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Issues: Whether a penalty for non-compliance with a demand notice could be sustained after the demand notice had been cancelled as not being in the proper form.

Analysis: The levy of penalty was founded entirely on default in complying with the original notice of demand. Once that notice was cancelled by the authority itself, the legal basis for treating the petitioner as being in default ceased to exist. A default can arise only in relation to a valid notice of demand, and an order of penalty cannot survive where the notice whose breach is alleged is itself no longer operative.

Conclusion: The penalty order was not sustainable and was quashed in favour of the petitioner.

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