1984 (11) TMI 303 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether section 46(2) first part would cover the case of a registered dealer.
2. Whether the forfeiture orders for the period up to 15th July, 1962, are bad in law.

Issue-wise Detailed Analysis:

1. Whether section 46(2) first part would cover the case of a registered dealer:

The court decided not to address this issue as it became redundant due to the resolution of the second issue. Therefore, no detailed analysis was provided for this question.

2. Whether the forfeiture orders for the period up to 15th July, 1962, are bad in law:

The court first addressed the second question, considering it crucial. The respondent-firm, a registered dealer, had collected excess tax amounts of Rs. 1,115.67 and Rs. 993.66 for the periods 1st April, 1961, to 31st March, 1962, and 1st April, 1962, to 31st March, 1963, respectively. The Sales Tax Officer ordered the forfeiture of these amounts. The Tribunal held that forfeitures relating to periods before 15th July, 1962, were invalid, as the amendment to section 46(2) was only effective from that date.

Arguments and Legal Provisions:

- Mr. Jetly's Argument: The amendment to section 46(2) by Maharashtra Act 21 of 1962 was retrospective, implying that the prohibition against collecting excess tax by registered dealers was always in place. Thus, forfeiture orders for periods before 15th July, 1962, were valid.

- Mr. Patel's Argument: Citing article 20 of the Constitution, Mr. Patel argued that retrospective application of section 46(2) should not permit forfeiture for periods before the amendment. He also cited section 27 of the amending Act, asserting that it protected against penalties for actions that were not offenses before the amendment.

Court's Analysis:

- Section 46 and Section 37: Section 46(2) prohibits registered dealers from collecting tax amounts exceeding what is payable. Section 37(1) mandates forfeiture of such excess collections. The retrospective amendment to section 46(2) by section 18 of the amending Act meant these provisions applied to periods before 15th July, 1962.

- Article 20 of the Constitution: The court referred to the Supreme Court's decision in Shiv Dutt Rai Fateh Chand v. Union of India, which clarified that penalties under sales tax laws are civil liabilities, not criminal penalties. Therefore, article 20, which protects against retrospective criminal penalties, did not apply to these forfeitures.

- Section 27 of the Amending Act: The court interpreted section 27, which protects against penalties for actions not offenses before the amendment, as referring to criminal penalties, not civil liabilities like forfeitures. Accepting Mr. Patel's broader interpretation would nullify the retrospective effect intended by section 18.

Conclusion:

The court concluded that the forfeiture orders for periods before 15th July, 1962, were valid, rejecting Mr. Patel's arguments. Consequently, question No. (2) was answered in the negative and against the dealer. Given this resolution, question No. (1) was deemed redundant and not addressed.

Costs and Acknowledgment:

The court directed no order as to the costs of the reference, considering the respondent's absence. The court acknowledged Mr. Patel's assistance as amicus curiae.

Final Judgment:

The forfeiture orders for the periods before 15th July, 1962, were upheld as valid, and the Tribunal's decision was overturned.