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TMI Blog2001 (6) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... tter in appeal. The Tribunal, by exhibit P4 order, set aside the appellate order and restored exhibit P1 assessment order of the original authority. Consequentially, exhibit P5 demand was issued. While issuing the demand, penal interest under section 23(3) of the Act was also demanded. Section 23(3) of the Act is as follows: "(3) If the tax or any other amount assessed or due under this Act is not paid by any dealer or other person within the time prescribed therefor in this Act or in any rule made thereunder and in other cases within the time specified therefor in the notice of demand the dealer or other person shall pay, by way of interest, in the manner prescribed, in addition to the amount due, a sum equal to,- (a) one per cent of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sales Tax Officer, First Circle, Mattancherry [2001] 122 STC 410; (2001) 3 SCC 735 held that penal interest can be demanded under section 23(3) only when there was unpaid tax due or payable on the basis of a return as per self-assessment or by assessment order or appellate/revisional order. The Supreme Court in Income-tax Officer v. Seghu Buchiah Setty [1964] 52 ITR 538; AIR 1964 SC 1473 held that if an order of assessment is restored or replaced by the appellate order, then notice of demand and all other steps based upon the original order must be deemed to have become ineffective. While considering an identical matter, this Court held in K. Nachimuthu v. Sales Tax Officer [1994] 95 STC 539; (1994) 2 KLT 171 as follows: "8. The consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P1 from the date of exhibit P1 original assessment till exhibit P2 appellate order, that is, February 12, 1985. The above appellate order was in force till exhibit P4 order was passed on April 3, 1993. Till exhibit P4 was passed only demand payable was exhibit P3 demand consequent of exhibit P2 appellate order. There was no other valid demand over and above exhibit P3 after exhibit P2. Therefore, for that period, no penal interest is payable if amount demanded in exhibit P3 is paid as demanded. From the date of exhibit P4, the actual tax payable by the assessee was the amount mentioned in exhibit P3 till exhibit P4 and if that amount is not paid, penal interest is payable on that amount till exhibit P4. But, for the period after exhibit P4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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