1963 (12) TMI 21 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Construction of Section 12A(4) of the Bombay Sales Tax Act, 1946.
2. Validity of Section 12A(4) under Article 19(1)(f) of the Constitution of India.
3. Compliance with orders of refund by Sales Tax Authorities.
4. Legality of the notice of forfeiture issued under Section 12A(4).

Issue-wise Detailed Analysis:

1. Construction of Section 12A(4) of the Bombay Sales Tax Act, 1946:
The petitioners argued that Section 12A(4) should be interpreted to apply only to collections of tax lawfully leviable under the Act. They emphasized that the words "by way of tax" indicated that the section was not intended to cover amounts collected on sales not taxable under the Act. The court, however, held that Section 12A(4) applies to all cases where a dealer collects any amount by way of tax, whether or not the sales are taxable under the Act. The court reasoned that the legislative intent was to prevent dealers from unjustly enriching themselves by collecting amounts as tax when no tax was due.

2. Validity of Section 12A(4) under Article 19(1)(f) of the Constitution of India:
The petitioners contended that Section 12A(4) was violative of their fundamental right to hold property under Article 19(1)(f) because it provided for the forfeiture of amounts collected by way of tax without extinguishing their liability to refund such amounts to purchasers. The court rejected this argument, holding that the forfeiture provision was a reasonable restriction in the interest of the general public. The court noted that the provision aimed to prevent the exploitation of consumers by dealers who might collect tax amounts not payable to the State.

3. Compliance with Orders of Refund by Sales Tax Authorities:
The petitioners sought a writ of mandamus to compel the Sales Tax Authorities to comply with the orders of refund made by the Additional Collector of Sales Tax and the Tribunal. The court acknowledged that the authorities were under a statutory obligation to carry out these orders. However, the court denied relief because the petitioners had not specifically claimed this relief in their petition. The court also noted that the petitioners could amend their petition to include this relief, but the application for amendment was made too late and was therefore rejected.

4. Legality of the Notice of Forfeiture Issued under Section 12A(4):
The petitioners challenged the notice of forfeiture issued by the Sales Tax Officer, arguing that it was not warranted by Section 12A(4) and that the section itself was ultra vires. The court found that the notice was within the scope of Section 12A(4) and that the section was not ultra vires. The court held that the provision for forfeiture was necessary to prevent the abuse of the Act by dealers and that it did not violate the petitioners' fundamental rights.

Conclusion:
The court dismissed the petition, holding that Section 12A(4) was valid and applicable to the amounts collected by the petitioners by way of tax. The court also found that the Sales Tax Authorities were under a statutory obligation to comply with the orders of refund but denied relief due to procedural issues. The notice of forfeiture issued under Section 12A(4) was upheld as valid. The rule was discharged with costs fixed at Rs. 500.