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TMI Blog2003 (2) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the returns for the said period, in the case of the petitioner itself, this court in Bharat Textile and Proofing Industries v. State of Karnataka [1988] 71 STC 10; [1988] 32 KLJ 90, declared that tarpaulins being, cotton fabrics are exempt from levy of tax in view of entry 8-A of the Fifth Schedule to the Act. Accordingly, as per the assessment order dated February 6, 1989 pertaining to the year 1985-86, though the assessing authority allowed exemption on the sale of tarpaulins, but the petitioner was subjected to penalty proceedings under section 18-A of the Act vide notice dated March 30, 1989 on the ground that the appellant had collected the said amount in excess of its tax liability. The proceedings culminated in imposition of penalty of Rs. 1,50,737 since the assessing authority, as of fact, accepted the plea of the petitioner that out of the total collection of Rs. 1,99,796 it had already refunded a sum of Rs. 49,059 to the customers. Subsequently, in appeal, the Tribunal under its order dated August 3, 1994 (Bharat Textile and Proofing Industries v. State of Karnataka [1995] 39 KLJ 138, (annexure B) set aside the said penalty on the ground that at the time the tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceeding one and a half times such amount: Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section. 18-AA. Payment and disbursement of amounts wrongly collected by dealer as tax. (1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act. (2) If default is made in payment of the amount in accordance with sub-section (1) (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer; (ii) the dealer liable to pay the amount shall pay interest at the rate of two and one half per cent of such amount for each month of default; and (iii) the whole of the amount r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes on the sale or purchase of goods. It is now well-settled that an entry in a legislative List must be read in its widest amplitude and the Legislature must be held to have power not only to legislate with respect to the subjectmatter of the entry but also to make ancillary or incidental provision in aid of the main topic of legislation. Can section 29-A be justified as exercise of an ancillary or incidental power of legislation under entry 54? Now, this question is no longer res integra. It stands concluded by the decision of this court in R. S. Joshi v. Ajit Mills Ltd. [1977] 40 STC 497 (SC); [1978] 1 SCR 338. It is no doubt true that the decision of this court in Ashoka Marketing Ltd. v. State of Bihar [1970] 26 STC 254 (SC); [1970] 3 SCR 455, does seem to indicate that a provision such as section 29-A would not be justifiable as an exercise of incidental or ancillary power. There also, the impugned legislative provision, namely, section 20-A of the Bihar Sales Tax Act was very similar to section 29-A and this court held that it fell outside the legislative competence of the State Legislature. This court in Ashoka Marketing Ltd.'s case [1970] 26 STC 254 (SC); [1970] 3 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order, annexure A, has further contended that since the Tribunal has knocked down the penalty, the provisions of section 18-AA of the Act contemplating forfeiture of excess collections cannot be held as applicable. The submission is obviously misconceived. As noticed above, the Tribunal has set aside the penalty on the ground that at the time of collecting the tax on sale of tarpaulins, petitioner had no mens rea, since the legal position with regard to the taxability of tarpaulin was hazy, and it was only after the collections were made, the law was finally settled by this court declaring the sale of tarpaulins as exempt. But so far as the applicability of the provisions of section 18-AA is concerned, in the very opening sentence of sub-section (1) thereof, the Legislature has made it absolutely clear that whether any amount collected as, or purported to be, a tax in contravention of section 18 is made knowingly or not, all amounts so collected are to be deposited with the assessing authority, and the amounts found to have been collected in excess of the liability will stand forfeited to the State Government for being refunded to the customer concerned. Therefore, the doctrine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of section 18 at any time even before commencement of the said Amending Act 4 of 1992, still the provisions of sub-sections (3) and (4) shall apply to such collection. It is now firmly established that Indian Legislature having competence over a topic can legislate, both prospectively as also retrospectively except in case of penal laws. [See: Government of Andhra Pradesh v. Hindustan Machine Tools Ltd. [1975] 2 SCC 274; AIR 1975 SC 2037 and D.G. Gouse and Co. (Agents) Pvt. Ltd. v. State of Kerala [1980] 2 SCC 410; AIR 1980 SC 271]. I have already held that the impugned provisions are not penal in nature. Therefore this attack launched on behalf of the petitioner also falls to the ground. On having reached up to this stage the State Government needs to be reminded that the purpose of forfeiting the amounts under section 18-AA(3) is not to allow even the State to unjustly enrich itself. Keeping in view the benevolent object behind the impugned provisions, sincere efforts should be shown to have been made into carrying out the ultimate goal envisaged therein, namely that amount shall be refunded to the person concerned, provided: (i) an application in writing in the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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