Pre-assessment deposit directions cover principal tax only; penalty cannot ordinarily be demanded before assessment is completed.

The clarification confines a pre-assessment deposit direction to the principal tax demanded in the notices, not the penalty amount. It explains that tax credit and reduction in liability relate to tax, while penalty ordinarily arises only after assessment and determination of statutory liability. Accordingly, where an earlier order requires compliance with assessment proceedings by filing return-cum-challan and paying the demanded amount, that direction is read as covering tax alone unless penalty is expressly included. The practical effect is that assessment may proceed on deposit of the principal tax, with penalty to be considered only in accordance with law after assessment.

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Issues: Whether the earlier direction requiring the petitioner to file return-cum-challan and deposit the demanded amount before assessment required payment of the principal tax alone or also the penalty mentioned in the demand notices.

Analysis: The clarification application arose from ambiguity in the earlier judgment directing the petitioner to submit to assessment proceedings by filing return-cum-challan and paying the tax demanded. The Court read the earlier judgment as referring only to the principal tax, because the entitlement to tax credit and reduction in tax liability arises in relation to tax and not penalty. It further noted that penalty ordinarily cannot be demanded before assessment and its imposition can arise only after assessment is completed and statutory liability is determined.

Conclusion: The petitioner was required to deposit only the principal tax demanded in the notices and not the penalty amount before the assessment could proceed.

Final Conclusion: The clarification resolved the ambiguity in the earlier order by limiting the pre-assessment deposit obligation to tax alone, while leaving questions of penalty to be dealt with in accordance with law after assessment.

Ratio Decidendi: Where an earlier order requires compliance with assessment proceedings by paying the demanded tax, the direction is confined to the principal tax liability unless the order expressly includes penalty; penalty cannot ordinarily be insisted upon before assessment.

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