1995 (2) TMI 364 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the Tribunal was justified in upholding the forfeiture of tax collected by the assessee during the unregistered period.
2. Whether the assessee, already registered as a dealer in Bombay, could be treated as an unregistered dealer for its turnover at Sangli.
3. Whether the forfeiture of the tax collected by the assessee was lawful.
4. Whether the levy of penalty under section 36(2)(a) was justified.
5. Whether the levy of additional tax under section 15A-I was justified.

Issue-Wise Detailed Analysis:

1. Justification of Forfeiture of Tax Collected During Unregistered Period:
The Tribunal upheld the forfeiture of tax collected by the assessee during the period it was not separately registered for its Sangli business. The High Court examined the provisions of sections 37 and 46 of the Bombay Sales Tax Act, 1959. Section 37(1) of the Act, which provides for forfeiture of tax, was interpreted to mean that the power of forfeiture is discretionary and the expression "shall be forfeited" should be construed as "shall be liable to be forfeited." The court emphasized that forfeiture should operate only to the extent of the total collections less what has been returned to the purchasers or paid to the government. In this case, the entire amount collected by the assessee was paid to the Sales Tax Department, leaving nothing to be forfeited. Therefore, the Tribunal was not justified in upholding the forfeiture.

2. Registration Status of the Assessee:
The assessee contended that it was already registered as a dealer in Bombay and should not be treated as an unregistered dealer for its Sangli business. The High Court agreed, stating that registration under section 22 of the Act is for the dealer, not for a specific place of business. Once registered, the dealer is considered a registered dealer for all purposes under the Act, irrespective of the location of its business within the State. The requirement for separate applications for different places of business is directory and non-compliance may attract penal action but does not render the dealer unregistered for any place of business in the State.

3. Lawfulness of Forfeiture:
The court held that the forfeiture of tax collected by the assessee was not lawful. The sums collected by the assessee were paid to the Sales Tax Officer as tax payable under the Act on those transactions, leaving nothing with the assessee that could be forfeited. The Tribunal's decision to uphold the forfeiture without considering this fact was incorrect.

4. Levy of Penalty Under Section 36(2)(a):
The Tribunal upheld the levy of penalty under section 36(2)(a) of the Act. However, the High Court did not address this issue in detail as the primary focus was on the forfeiture of tax collected. The penalty was imposed for the period April 1, 1975, to March 31, 1976, amounting to Rs. 2,000.

5. Levy of Additional Tax Under Section 15A-I:
The Tribunal decided in favor of the assessee regarding the levy of additional tax under section 15A-I, holding that no additional tax was leviable on the sales of cotton yarn. The High Court did not further address this issue as the Tribunal's decision was not challenged.

Conclusion:
The High Court concluded that the Tribunal was not justified in upholding the forfeiture of tax collected by the assessee. The assessee, being a registered dealer under the Act, could not be treated as an unregistered dealer for its Sangli business. The forfeiture of tax collected by the assessee was not lawful as the entire amount was paid to the Sales Tax Department. The question referred to the High Court was answered in the negative, in favor of the assessee and against the Revenue. No order as to costs was made.

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