MEC CORPORATION Vs. V G MAHISHKAR

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India is aimed against an order purporting to fall under section 57 of the Bombay Sale tax Act, 1959 (BST Act or the Act).

(2.) Petitioner 1 is a firm registered under the Partnership Act whereof petitioner 2 is a partner. The firm is registered under the BST Act as also the Central sales Tax Act, 1956. For the Samvat years 2033 and 2034 corresponding to 24 October, 1976 to 11 November, 1977 and 12 November 1977 to 31 October 1978 respectively, the partnership was assessed under section 33 of the BST Act. This assessment was made by the Sales tax, Officer, respondent 2. The said officer did not pass any order of forfeiture/penalty under section 37 read with 46 of the BST Act. On a scrutiny the first respondent felt that during the Samvat years in question petitioners had collected Rs. 2,24,405.00 and Rs. 93,522.29 ps. as Sales-tax. This collection was contrary to law and was therefore liable to be forfeited. A show-cause notice calling upon the petitioners to reply as to why the aforementioned sum should not be forfeited and a penalty, levied elicited a reply, which may be summarised thus:---

(3.) Petitioner re-agitate the submissions advanced by them before the 1st respondent. It is contended by them that "surcharge in lieu of sale tax" which was the expression construed by the 1st respondent in passing the impugned orders, did not mean that they had recovered from their customers amount payable as sale tax unto the State Government. While purchasing the goods from their purchaser they had paid components of a price made up of amongst other items, excise duty and sale tax. To recoup the price they could not but recover amounts paid by them under the heads "Excise Duty and Sales tax". At the same time they had passed on a part of the trade discount received by them from their seller. Not willing to disclose their exact profit margin, they had calculated the surcharge on account of excise duty and sales tax on the net sales price charged by them to their customers. The practice was common and known to be prevalent far and wide in the trade. The affidavits and certificates tendered by them conclusively established that there had been no infraction of section 46. Therefore, no order for forfeiture or penalty could be imposed under section 47 against them. This apart, respondent 2 had not taken any action against them under sections 37 r/w. 45 of the B.S.T Act. Under section 57 of the Act, the Commissioner could revise an order passed by a subordinate officer. He could not suo motu exercise the powers conferred upon Sale-tax Officer under section 37 r/w. 46 of the Act. For these reasons also the orders impugned were illegal. The said orders deserved to be quashed and that respondents be directed to refrain from enforcing the same.