MOOLCHAND PURUSHOTTAM PATEL Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THE petitioner in Special Civil Application No.818 of 1971 carries on business under the name and style of Empico Traders. He has registered himself as a dealer under the Bombay Sales Tax Act, 1959 (hereinafter referred to as the "bombay Act" ). He had submitted his return for the assessment period from 1st April, 1968, to 31st March, 1969, and in the course of the assessment proceedings he claimed deduction of a total sum of Rs. 4,72,840 from his total taxable turnover as the amount pertained to the sales of urea, which is exempted from sales tax under section 5 read with Schedule A to the said Act. THE Sales Tax Officer accepted this contention, but called upon him under section 37 of the Act to explain as to why the amount of Rs. 21,023 collected by him from the purchasers of the said urea by way of tax should not be forfeited and why penalty also should not be imposed upon him for such contravention of section 46 of the Act. After hearing the petition the Sales Tax Officer forfeited the amount of Rs. 20,200 and also imposed a penalty of Rs. 2,000 by order dated 28th October, 1970. He challenges the validity of the said order in this special civil application under articles 226 and 227 of the Constitution on the ground that section 37 of the Bombay Sales tax Act, 1959, is ultra vires of the power of the legislature. He also claims refund of in all Rs. 19,108. 90, which he had paid by mistake for the amounts similarly collected by him during the earlier period from 1960 to 1968. Miscellaneous Petition No.135 of 1969 filed on the original side of this court also raises the same question. THE said petition has been referred to this Bench. THE petitioner in this miscellaneous petition is an Association of Cinematograph Exhibitors. THE said association also has registered itself as a registered dealer. In the normal course of its business, the petitioner has to purchase cinema carbons on the strength of import licences and distribute the same to its members charging 10 per cent of its gross price as the handling charges. THE petitioner entertained some doubt whether such carbons were liable to sales tax under entry 22 of the Schedule E or entry 51 of Schedule C of the Act. On his application to the sales Tax Commissioner, it was ultimately held on 6th July, 1967, that the said cinema carbons were liable to sales tax at the rate of 3 per cent under the Bombay Act and 2 per cent under the Central Sales Tax Act, under entry 22 of Schedule E of the said act. Before this order, however, the petitioner seems to have collected sales tax at the rate of 10 per cent. It also appears that some amount was collected by him not as tax but by way of deposit, presumably pending the final decision of the point by the Commissioner. THE Sales Tax Officer passed an order on 19th August, 1968, for the period of 1st April, 1964, to 31st December, 1964. A sum of Rs. 8,125. 29 has been forfeited under section 37 of the Act, out of which Rs. 5,902. 86 was admittedly collected by the petitioner from its constituents by way of tax, while the remaining amount of Rs. 2,222. 43 was collected by him by way of deposits. Under the order dated 18th November, 1968, for the period from 1st April, 1965, to 31st March, 1966, a sum of Rs. 1,656. 74 had also been forfeited under section 37. According to the petitioner, those orders of forfeiture are invalid inasmuch as section 37 of the Act is ultra vires. Both the petitions raise the same point and can be disposed of by this common judgment.

(2.) NOW, under section 3 of the Act, every dealer is liable to pay tax on his turnover of sales and purchases made on or after the appointed day. Sale has been defined under section 2 (28) of the Act and means "sale of goods made within the State". Taxable goods, according to section 2 (33), means "goods other than those on the sale or purchase of which no tax is payable under section 5". It is unnecessary to refer to the provisions dealing with the exemptions and those dealing with the deductions of certain sales from the total turnover of sales of every dealer. Section 22 provides for registration of a dealer. Section 46 of the Act prohibits all persons and registered or unregistered dealers from collecting taxes excepting in the manner provided under the Act or in excess of the amount payable by them to the State as tax. Section 37 provides for the consequences of contravening certain provisions including section 46 of the Act. By Maharashtra Act No.40 of 1969, the said section has been amended in some material particulars though section 46 remains as it was. We are, however, not concerned with the amended section 37 in these two cases, as admittedly, the transactions in dispute have taken place long before the Maharashtra Act No.40 of 1969 was brought into force. The sales tax authorities have proceeded to forfeit the amounts in both these cases under section 37 of the Act on the ground that the petitioners collected the amounts in contravention of section 46 of the Act. Sub-section (2) of section 46, which alone is relevant, consists of two parts. Second part provides that no registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act. It needs mentioned that the words "collect. . . . . . . . . . . . . . . in excess of the amount of tax payable by him under the provisions of this Act" shall have to be construed by reference to sections 3 to 9 of the Act and also cover collecting on the exempted goods.

(3.) THE assessee-appellant in Abdul Quader's case [[1964] 15 S. T. C. 403 (S. C.)] had sold betel leaves to several customers, acting as agent in the then State of Hyderabad and under the Hyderabad General Sales Tax Act No.14 of 1950, such betel leaves were taxable at the purchase point by virtue of a notification in that behalf. THE appellant collected sales tax from the purchasers during the period after 1st May, 1950, but did not pay the same to the Government and kept the same with himself in the suspense account of its principals, namely, the purchasers. In the course of the assessment proceedings for the period from 1st May, 1953, to 31st March, 1954, the appellant was called upon to pay the said amount so realised by him to the Government under section 11 (2) of the Hyderabad Act. He, however, contested the liability to pay on the ground that the purchaser and not the appellant-seller was liable to pay the tax under the Act. It seems to have been common ground that the appellant was not liable to pay the amount by way of tax. However, the amount was sought to be collected under section 11 (2) of the said Hyderabad Act. Sub-section (2) of section 11 of the said Hyderabad Act in as follows : " (2) Notwithstanding anything to the contrary contained in any order of an officer or tribunal or the judgment, decree or order of a court, every person who has collected or collects on or after 1st May, 1950, any amount by way of tax otherwise than in accordance with the provisions of this Act, shall pay over to the Government, within such time and in such manner as may be prescribed the amount so collected by him, and in default of such payment the said amount shall be recovered from him as if it were arrears of land revenue. "