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2005 (1) TMI 397 - SC - VAT and Sales TaxWhether section 22 of the Madras Sales Tax Act bars the appellant from collecting in any manner amounts paid by them to the seller by way of tax? Held that - SLP dismissed. The wording of the section is very clear. The term collect would include in its ambit collection in any manner. Purported recoupment or recovery would be nothing else but collection. Once the dealer is prevented from collecting, it is not open to say that he is not collecting but is only recouping. We find ourselves unable to accept the reasoning given by the High Court in the Metal Sales Corporation s case 1982 (12) TMI 174 - MADRAS HIGH COURT . Mere case of a different nomenclature or language cannot be allowed to defeat the clear provision of the section.
Issues: Interpretation of section 22 of the Madras Sales Tax Act regarding the collection of tax amounts by dealers.
Analysis: The Supreme Court heard special leave petitions against a judgment of the High Court of Madras. The High Court had dismissed a writ petition filed by the appellant, choosing to follow a different judgment over another. The question at hand was whether section 22 of the Madras Sales Tax Act prohibits the appellant from collecting amounts paid to the seller as tax. The relevant section states that no person, except a registered dealer, shall collect any amount as tax. The Court emphasized that the term "collect" encompasses any form of collection, including recoupment or recovery. Rejecting the High Court's reasoning in a previous case, the Supreme Court clarified that allowing different nomenclatures to bypass the section would render it ineffective. The Court affirmed that recouping, recovering, or collecting from buyers what was paid to the seller as tax is prohibited by section 22. Consequently, the judgment in the previous case was overruled, and the special leave petitions were dismissed with no costs awarded.
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