Forfeiture without hearing was unconstitutional where the statute gave no procedure to test disputed tax collections.

Section 12A(4) of the Bombay Sales Tax Act, 1946, was held unconstitutional because it authorised forfeiture of tax amounts allegedly collected by a dealer without any adjudicatory procedure or opportunity of hearing. The provision did not provide machinery to determine whether any amount had in fact been collected, to resolve disputed questions of fact or law, or to allow the affected person to meet the case against him. The Court treated the forfeiture as a penalty for alleged contravention of section 12A(1) and (2) and found the power unguided, uncanalised and uncontrolled. The absence of procedural safeguards made the restriction unreasonable and contrary to Article 19(1)(f).

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Issues: Whether section 12A(4) of the Bombay Sales Tax Act, 1946, was constitutionally valid in authorising forfeiture of amounts collected by a dealer by way of tax without providing any adjudicatory procedure or reasonable opportunity of hearing.

Analysis: The provision was challenged as infringing the right to hold property under Article 19(1)(f) of the Constitution. The Court held that the forfeiture operated as a penalty for alleged contravention of section 12A(1) and (2), yet the provision made no arrangement for determining whether any amount had in fact been collected, or, if so, the amount so collected. It contained no machinery for enquiry, no procedure for deciding disputed questions of fact or law, and no opportunity to the person affected to meet the case against him. The power conferred was therefore regarded as unguided, uncanalised and uncontrolled, and the procedural absence was held to make the restriction unreasonable.

Conclusion: Section 12A(4) was held void as violating Article 19(1)(f) of the Constitution of India, and the assessee succeeded.

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