1984 (4) TMI 257 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 46(2) of the Bombay Sales Tax Act, 1959 regarding forfeiture of tax collected by a registered dealer in excess of the amount of tax payable.

Analysis:
The case involved a re-seller of plastic bangles who was assessed for the purchase tax on goods purchased on form 14. The Sales Tax Officer found a contravention in the declaration recitals and levied purchase tax on the purchases, along with directing forfeiture of the tax collected unauthorisedly by the dealer. The Tribunal set aside the forfeiture order based on the interpretation of section 46(2) of the Act, relying on a previous decision by the Special Bench of the Tribunal.

The Court examined the interpretation of section 46(2) in light of previous judgments. Referring to the decision in Ramkrishan Kulwantrai v. Commissioner of Sales Tax, the Court emphasized that merely deducting the tax payable from the total tax collected by a dealer and forfeiting the balance would go against the legislative intent of prohibiting tax collection on non-taxable transactions. Similarly, in Commissioner of Sales Tax v. Automobile Products of India Limited, a similar stance was taken, reinforcing the interpretation provided in the earlier case.

Ultimately, the Court disagreed with the interpretation by the Special Bench of the Tribunal and held that the intention of the legislature was to prevent the collection of tax on transactions not subject to tax. Therefore, the question referred to the Court was answered in the negative, favoring the department. The respondent-assessee was directed to pay the costs associated with the case.