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TMI Blog1956 (12) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... were directed to pay over to the State a sum of Rs. 6,966-11-6 and another sum of Rs. 2,613-11-0, which had already been collected by them as sales tax on such transactions, during those periods, under section 11(2) of the Act. The petitioners disputed their liability to pay these collections but they were overruled by the Sales Tax Officer in the first instance and thereafter in appeal and revision before the respondents 2 and 3 respectively. Hence this petition for the issue of appropriate writ or order or direction quashing the order for payment under section 11(2). The main grounds relied on in the affidavit in support were three-fold: Firstly, that section 11(2), on proper construction applied only to sales tax properly collectable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that Court, Kunju Moideen Kunju v. State of Travancore-Cochin[1954] 5 S.T.C. 462. , the contention was seriously raised that the obligation to pay tax to the State was confined to tax which was justly and properly leviable and had been so collected, so that when a registered dealer collected tax from purchasers under a mistaken conception of the liability of the sales to sales tax, e.g., on inter State sales, as here or on sales effected outside the State, the amounts so collected being illegal levies, need not be paid over and reliance was placed on the Bench decision of the Madras High Court in Tata Iron Steel Co., Ltd. v. The State of Madras [1954] 5 S.T.C. 382. M.S. Menon, J., who delivered the judgment on behalf of the Bench observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Mysore Sales Tax Act and has requested me to reconsider the position, if possible, so far as this Court is concerned and I proceed to do so. 6.. Now it may be conceded that the basic features of the sales tax enactment are: (i) The levy of tax is on the dealer and the authority empowered by the Act to collect that tax is the State Government (section 3). (ii) The dealer by virtue of registry is empowered to collect the tax from the customer or purchaser [section 11(1)] but this does not absolve him from his own liability under section 3. (iii) What the State can levy under section 3 and similarly what the registered dealer could collect under section 11(1) is the lawfully leviable tax. But the question is whether section 11(2) compels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Rule 8 imposes the condition that the registered dealer should not exceed the rate fixed and he should, besides, pay in full the amount or amounts collected by him by way of tax or taxes. And the certificate issued under the relevant Form III refers again to the condition that he should pay the entire amount of tax collected by him. Here is a case of a conferment of power by the State on a dealer, subject to an obligation on the part of the dealer to pay over to the State all and every collection made by him during the course of the exercise of the power. In such a case what is wrong in holding that the donee of the power is bound to account to Government even for illegal collections. See Reading v. Attorney General[1951] A.C. 507. wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore was not pressed. But he said that the tax collected was in the nature of a deposit, as the position was not clear as to which State the dealer has to remit the tax and it cannot therefore be claimed to be a collection by way of tax "under the Act." And he referred in this connection to Exhibit B, letter dated 30th June, 1951, addressed to the assessing authority, Sales Tax Department, Quilon, to say: "Since we come to understand that no sales tax is to be paid on sales effected outside the State we have remitted sales tax for the month of May, 1951, only on sales effected within the State. We trust that our action is in order." But there can be no doubt that the only authority which empowered the petitioners to collect sales tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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