9911796707
TMI Blog1994 (11) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... arge portion of the amount have not been refunded along with the basic value, it was held that the dealers have collected the sales tax and surcharge on the rebate for which exemption was allowed. According to the assessing officer, it amounts to contravention of the provisions of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the TNGST Act") and penalty is warranted under section 22(2) of the Act. In respect of such discount also the dealers have adopted the same procedure as followed in the matter of rebate on the basic value. The sales tax and surcharge portion on the cash discount have not been refunded. No evidence was produced to prove that the sales tax and the cash discount was refunded. The exemption claimed on the cash discount was granted. In view of the above facts, it was proposed by the assessing officer to recover the portion of the sales tax and surcharge on the turnover of the rebate and cash discount by way of penalty under section 22(2) of the Act. 2. On appeal, the Appellate Assistant Commissioner confirmed the penalty levied under section 22(2) of the Act, amounting to Rs. 36,969. On further appeal, the Tribunal held that according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash discount is a matter between the stockists and the assessee. The department cannot levy penalty under section 22(2) of the Act for non-payment of the sales tax and surcharge collected on the amounts given by way of rebate and cash discount in accordance with law. 4.. On the other hand, learned Government Advocate (Taxes) submitted as under: The assessee collected sales tax and surcharge on the amounts given by way of rebate and cash discount to its stockists. The excessive amount collected by the assessee by way of sales tax and surcharge is refundable to its stockists. There is no record to show that the assessee has refunded such sales tax and surcharge collected by the assessee. If the assessee has not refunded the sales tax and surcharge collected by it on the amount given by way of rebate and cash discount, the assessee would be liable for illegal collection of sales tax and surcharge. In such a case the department is justified in levying penalty under section 22(2) of the Act, if the amounts collected by way of sales tax and surcharge were not refunded. 5.. We have heard the rival submissions. 6.. The fact remains that the assessee at the end of the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Penalty under section 22(2) the Act is directed to be levied if the assessee failed to refund the sales tax and the surcharge collected by it on the amounts given by way of rebate and cash discount to its stockists. If the tax is collected by any person or by a registered dealer in contravention of sub-section (1) of section 22 of the Act, then alone the penalty is exigible under section 22(2) of the Act. 9.. The Supreme Court in R.S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited [1977] 40 STC 497, while considering the provisions of sections 37(1)(a), 46(2) and 64(1) of the Bombay Sales Tax Act, as applicable to the State of Gujarat held as under: "If a dealer merely gathered a sum by way of tax and kept it in suspense account because of dispute about its taxability or was ready to return it if eventually it was found to be not taxable, it was not collected within the meaning of section 37(1). The spirit of the provision lends force to the construction that 'collected' means 'collected and kept as his' by the trader. Under the section the Commissioner is vested with a discretion to forfeit the whole or any lesser sum or none at all. The meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on only related to the transaction which was strictly taxable under the Act, and therefore, any collection of tax in respect of such transaction could not be regarded as a collection in contravention of either rule 24(16)(ii) of the Rules or of section 22(1) of the Act. Therefore, it followed that penalty could not be levied for making such collections." 12.. Another decision brought to the notice of this Court by learned counsel appearing for the assessee was Commissioner of Income-tax, Tamil Nadu-III v. Thirumalaiswamy Naidu and Sons [1984] 147 ITR 657 (Mad.). According to the facts arising in that decision, the High Court in the proceedings taken challenging the validity of levy of sales tax held "that jaggery was exempt from Central sales tax. Consequently the amount paid by the assessee to the Sales Tax Department as Central sales tax on inter-State sales of jaggery came to be refunded to the assessee resulting in the assessee being obliged to refund the amount to its customers. As the refund was received by the assessee in the course of the account year relevant for the assessment year 1974-75, the ITO held that the refund received by the assessee would represent taxable tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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