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TMI Blog1977 (3) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ttles would be covered by entry 22 of Schedule E to the said Act, the said entry being the residuary entry. The Commissioner of Sales Tax, by his determination order dated 20th August, 1963, in a proceeding under section 52 of the said Act taken out by some other dealer, also held that glass bottles were covered by entry 22 of Schedule E to the said Act. Under the impression that this was the correct position in law, the assessees, who were selling glass bottles at a rate below Re. 1 per bottle, collected sales tax at 3 per cent and general sales tax at 2 per cent on the sales of bottles during the relevant periods, as provided in entry 22 of Schedule E to the said Act. Thereafter, on 4th January, 1966, the Commissioner of Sales Tax, in some other determination proceedings made at the instance of some other dealer, held that glass bottles sold at a rate below Re. 1 per bottle would be covered by entry 14 of Schedule C to the said Act, and hence no general sales tax was liable to be collected in respect of such sales. The Sales Tax Officer assessing the assessees held that the general sales tax collected by the assessees, in excess of the tax which the assessees were liable to pay, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act." There is a proviso to this sub-section, which is not material for the purpose of these references. The relevant portion of sub-section (6) of section 38, which has been inserted retrospectively, reads thus: "(6) Notwithstanding anything contained in this Act or in any other law for the time being in force, where any sum collected by a person by way of tax in contravention of section 46, is forfeited to the State Government under section 37 and is recovered from him, such payment or recovery shall discharge him of the liability to refund the sum to the person from whom it was so collected. A refund of such sum or any part thereof can be claimed from Government by the person from whom it was realised by way of tax, provided that an application for such claim is made by him in writing in the prescribed form to the Commissioner, within one year from the date of the order of forfeiture." Sub-section (32) of section 2 of the said Act defines the term "tax" thus "'tax' means a sales tax, general sales tax, purchase tax, or retail sales tax, payable under this Act." Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay under the said Act, such excess amount would become part of the purchase price and the assessees were entitled to retain it. It was further urged by him that the expression "any amount by way of tax" used in sub-section (2) of section 46 could refer only to an amount which the assessees could lawfully collect as tax. It was submitted by him that in view of the definition of the term "tax" contained in the said Act, which is set out earlier, any amount in excess of the tax due collected by the assessees could not be said to be "tax" at all, and hence such collection would not amount to contravention of sub-section (2) of section 46 of the said Act. In our view, this contention is totally unsound. In the first place, to accept the construction put forward by Mr. Sheth would be to render the provisions of sub-section (1) of section 37 of the said Act relating to forfeiture nugatory to a large extent, and to that extent to nullify the effect of the provisions of section 46(2) of the said Act. In our opinion, on the other hand, the expression "any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act" used in sub-section (2) of section 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Act. Sub-section (2) contains a dual restriction. Firstly, it prohibits a person who is not a registered dealer and not liable to pay tax in respect of any sale or purchase from collecting on the sale of goods any sum by way of tax from another person and, secondly, it prohibits a registered dealer from collecting any amount by way of tax in excess of the amount of tax payable by him under the said Act............The principle behind this section is thus clear. It is that a person who is not liable to pay tax to the Government in respect of the transaction in question should not be permitted to collect such amount from his purchasers, and in respect of those who collect any amount by way of tax in contravention of these provisions, section 37 prescribes forfeiture of the amount of tax so collected as also a levy of penalty. By the amendment made with retrospective effect in section 38, the amount so forfeited does not enure for the benefit of the Government but the purchaser is given a right to apply that it should be refunded to him. The object underlying these sections is simple. It is based on the principle that a purchaser would agree to pay the amount by way of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions not liable to tax under that Act, it will likewise be incompetent to make a law directing payment to the State of an amount realised by a dealer in excess of the tax payable under that Act. In our view, this decision has no relevance to the question before us. In the first place, it is a decision on the question of legislative competence, with which we are not directly concerned. In the second place, it deals with the provisions of a different Sales Tax Act with a different scheme. In particular, it is significant that the said Kerala Act which came up for consideration before the Supreme Court had no provision for refunding the excess amount collected by the dealer which under that Act was to be paid over to the State. Finally, in that case, the provision was merely for the payment of the said excess amount to the Government and there was no provision for forfeiture by way of penalty as in section 46(2) of the Bombay Sales Tax Act. Mr. Sheth next relied on the decision of the Mysore High Court in V.B. Patil v. Commercial Tax Officer[1970] 25 S.T.C. 449. That case arose under the provisions of the Mysore Sales Tax Act, 1957, and, in particular, section 18(1) and (2) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of the questions raised before us and no useful purpose would be served by our referring to those decisions. It is next pointed out by Mr. Sheth that, in the present case, as the assessees were under a bona fide impression, at the time when the relevant sales were effected, that these sales were covered by entry 22 of Schedule E to the said Act, they collected general sales tax believing that they would be liable to pay the same to the Government. It was urged by him that In these circumstances there was no deliberate wrong doing or mens rea on the part of the assessees in collecting these amounts and hence no penalty, including the penalty of forfeiture under section 37(2) of the said Act, could be levied against them. In our view, this contention also is liable to be rejected. An examination of the provisions of section 37(2) read with section 38(6) of the said Act, which we have referred to above, and the other relevant provisions of the said Act shows that the scheme of the said Act is that a registered dealer is entitled to recover or recoup from the purchasers, if the purchasers agree to it, only such tax or taxes as the registered dealer is liable to pay under t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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