JUDGMENT U. L. BHAT, J. - The subject-matter of the appeal is the extent of liability of the appellant to pay penal interest in regard to sales tax payable for the years 1978-79 and 1979-80. The third respondent imposed penalty in regard to each year. The appellant challenged the same in revision petitions filed before the second respondent who held that the order of the third respondent is not sustainable and penal interest is leviable only on default to pay tax on demand made on the basis of revised returns and not from the date of filing revised returns. Accordingly the cases were remanded to the third respondent for fresh disposal. The orders of the second respondent in so far as they are against the appellant were challenged by the appellant before the Board of Revenue (first respondent) by way of revision petitions. The Board of Revenue took suo motu action and issued notices to the appellant to show cause why the orders of the second respondent should not be set aside and the orders of the third respondent should not be restored. The appellant appeared, and contested. Ultimately the first respondent passed orders restoring the orders of the third respondent imposing penalty on the basis that appellant should have paid the tax on the date on which he filed the revised returns. This order is now challenged. 2. The appellant has formulated two questions of law for consideration. It is necessary to consider only the second question, namely : "Whether the liability to penal interest under section 23(3) arises only on failure to comply with the demand for the tax ?" This question arises in view of the fact that the Board of Revenue has taken the stand that the liability arises on failure to produce before the assessing authority proof of payment of tax along with the revised returns. The matter is covered by the decision of a Division Bench of this Court in Joy Varghese v. State of Kerala [1986] 62 STC 227. The Division Bench held : "It is failure on the part of the dealer to make the payment in accordance with the demand in form No. 14 that attracts the liability to pay penal interest under sub-section (3) of section 23 of the Act. The Division Bench held : "It is failure on the part of the dealer to make the payment in accordance with the demand in form No. 14 that attracts the liability to pay penal interest under sub-section (3) of section 23 of the Act. When the form prescribed under sub-rule (3) of rule 18, which in express terms provides that penal interest shall be leviable only if the tax demanded in the notice of demand is not paid, it is impossible to take the view that the dealer becomes liable to pay penal interest for his failure to pay the amount and produce evidence in respect thereof along with the return which he is required to submit under sub-rule (1) of rule 18." The question of law is therefore answered in favour of the appellant. 3. In the result, we set aside orders No. E4-39375/81/TX dated November 17, 1982 and E4-39374/81/TX dated November 17, 1982. Orders dated June 26, 1981 in S.T.R.P. Nos. 33 and 32 of 1985 of the second respondent are restored. The appeal is thus allowed, but without costs. Appeal allowed.