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TMI Blog1964 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial concern could purchase coal without obtaining priority from the Coal Controller. The modus operandi which was therefore followed was that after the textile mills and industrial concerns, to which for the sake of convenience we shall briefly refer as the purchasers, obtained priority from the Coal Controller, they used to employ the petitioners to contact the collieries on their behalf for ascertaining whether the requisite supply of coal desired by them was available with the collieries and to procure the same. The petitioners accordingly used to contact the collieries on behalf of the purchasers and to make the necessary arrangements for obtaining the requisite quantity of coal required by the purchasers from the collieries. The collieries used to send coal directly to the purchasers but the bills used to be made out in the name of the petitioners who, in their turn, used to make out their own bills in the name of the purchasers after adding their commission as well as sales tax. The petitioners used to add sales tax to the amounts of the bills as the legal position was rather uncertain and it was not possible to say with any definiteness or certainty that sales tax wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue authorities have remitted that penalty. The only dispute which therefore survives in the petition is with regard to the forfeiture of the two sums of Rs. 6,422.25 and Rs. 5,105.19 and it is this forfeiture which has been challenged by the petitioners in the present petition. Mr. Kaji, learned Advocate appearing on behalf of the petitioners, urged three contentions against the validity of the forfeiture and they were as follows: (i) On a true construction of the various provisions of section 21 and particularly the words "by way of tax" occurring in sub-sections (1), (2) and (4), it was clear that the section was intended to deal only with collection of tax by a dealer which was lawfully leviable under the Act and since in the present case there were no sales effected by the petitioners and no sales tax was therefore lawfully leviable under the Act, sub-section (4) could not operate so as to entitle the State to forfeit any amount collected by the petitioners from the purchasers by way of tax in respect of transactions which were not sales and on which tax was accordingly not payable by the petitioners. (ii) Section 21(4) did not fall directly within the subject of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s those contentions must be decided against the petitioners. The only contention which, therefore, survives for consideration is the third contention and that raises a question of construction of section 21(4). In order to appreciate the arguments that have been urged before us on this question of construction, it is necessary to refer to some of the provisions of section 21. Section 21 as it stood at the material time consisted of six sub-sections, but sub-sections (2A), (3) and (5) are not material and we need not, therefore, make any reference to them. Sub-sections (1), (2) and (4) of section 21 ran as follows: "21. Prohibition against collection of tax in certain cases.- (1) No person shall collect any amount by way of sales tax or general sales tax in respect of sales of any goods which are declared, from time to time, under section 7 as sales on which such tax is not payable. (2) No person selling any goods shall collect from the purchaser any amount by way of the tax unless such person is a registered dealer and is liable to pay the tax in respect of such sale: Provided that this sub-section shall not apply in cases where a person is required to collect such amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of tax from the purchaser and the reason obviously was that since, being an unregistered dealer, he would not be liable to pay any tax on the sale, he should not be entitled to recover any amount by way of tax from the purchaser. The other part prohibited a registered dealer from collecting any amount by way of tax from the purchaser in cases where he was not liable to pay any tax in respect of such sale. The prohibition in both its parts thus reflected the legislative policy that no one selling any goods should be allowed to recover from the purchaser any amount by way of tax when no tax was in fact payable by him in respect of the sale. If notwithstanding this prohibition an unregistered dealer collected any amount by way of tax from the purchaser or a registered dealer collected any amount by way of tax from the purchaser in respect of a sale on which he was not liable to pay tax and contravened the provisions of sub-section (2) of section 21, he rendered himself liable to punishment under clause (d) of sub-section (1) of section 36 and the amount collected also became liable to be forfeited under sub-section (4) of section 21. Now the transactions in respect of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered dealer liable to pay tax on a sale collected an amount by way of tax in excess of the amount of tax actually payable by him on the sale. Both the sub-sections applied in relation to sale; if the sale was one on which no tax was payable, sub-section (2) applied to prohibit a registered dealer from collecting any amount by way of tax in respect of such sale, but if the sale was one in which tax was payable, sub-section (4) was attracted and it precluded a registered dealer from collecting an amount by way of tax in excess of the amount of tax actually payable by him on the sale. This was the construction contended for on behalf of the petitioners and if this construction is well-founded, it is obvious that the petitioners would be able to steer clear of sub-section (4) of section 21 since the transactions in respect of which the amounts in question were collected by the petitioners by way of tax were admittedly not sales and subsection (4) of section 21 would not, therefore, on this construction be attracted. But unfortunately for the petitioners there are several difficulties in the way of acceptance of this argument. In the first place this argument involves the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered dealer contemplated by sub-section (4) of section 21 must, therefore, mean not the amount of tax chargeable on each sale effected by him but the amount of tax payable by him for each year on his turnover of sales during such year. It would not, therefore, be correct to say that subsection (4) of section 21 was intended to be applicable to excess collection by way of tax made by a registered dealer in respect of each distinct and separate transaction. What sub-section (4) of section 21 was intended to strike at was collection by a registered dealer of an amount by way of tax in excess of the amount of tax payable by him for the year in question on his turnover of sales. The object was that a registered dealer should not be entitled to collect by way of tax any amount in excess of the amount of tax actually payable by him for any particular year, a year being the unit of time laid down by the Act for the purpose of assessment of the amount of tax due from a registered dealer. If, therefore, a registered dealer collected any amount by way of tax whether in respect of transactions which were sales or in respect of transactions which were not sales and qua sales, whether in re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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