Retrospective interest on penalty barred absent valid demand notice; statutory procedure and strict construction controlled the levy.

Interest on a penalty under the 2011 Regulations could not be levied retrospectively without prior service of a valid demand notice in Form I. The statutory scheme was sequential and mandatory: Regulation 3 requires service of the demand notice after the penalty period, Regulation 3(2) makes the compliance period run from that service, and Regulation 5 makes interest dependent on non-payment within the time specified in the notice. As no Form I notice had been served before interest was imposed, no statutory default arose. The levy was therefore held to be without jurisdiction, and restitution could not be used to bypass the prescribed procedure. Strict construction applied because the levy was penal in nature.

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Issues: Whether interest on penalty under the 2011 Regulations could be levied retrospectively from an earlier date and without service of a valid demand notice in Form I under Regulation 3.

Analysis: The statutory scheme under the Competition Act, 2002 and the 2011 Regulations was held to be sequential and mandatory. Regulation 3 requires issuance and service of a demand notice in Form I after expiry of the penalty period, and Regulation 3(2) ties the compliance period to the date of service of that notice. Regulation 5 makes liability to pay interest dependent on non-payment of the amount specified in the demand notice within the time specified therein. On the admitted facts, no demand notice in Form I had been served before interest was imposed. The Court held that, in the absence of the statutory triggering event, no default could arise for the purpose of interest, and the Commission could not impose interest retrospectively or by invoking restitution to bypass the prescribed procedure. The penal nature of the levy also called for strict adherence to the statute and strict construction.

Conclusion: Interest on the penalty could not be levied without prior service of a valid demand notice, and the retrospective demand of interest was without jurisdiction. The issue was decided against the appellant and in favour of the respondent.

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