Retrospective forfeiture under sales tax law was held unconstitutional and the forfeiture order was quashed.

Retrospective application of the proviso to section 14A of the Bihar Sales Tax Act, which authorised forfeiture of tax collected in contravention of the provision, was held unconstitutional because it imposed an additional penal consequence on past conduct when no such forfeiture existed at the time of collection. The forfeiture was treated as punishment for contravention and therefore offended Article 20(1). In any event, the same retrospective deprivation of money was also inconsistent with Article 31(2) as a taking of property without the required legal protection. The forfeiture order directing deposit into the Government Treasury was without authority of law and was quashed in favour of the assessee.

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Issues: Whether the retrospective insertion of the proviso to section 14A of the Bihar Sales Tax Act, making forfeiture of tax collected in contravention of the provision applicable to past conduct, was unconstitutional and whether the forfeiture order passed thereunder could be quashed.

Analysis: The collection of tax on inter-State sales had occurred before the retrospective amendment, when the law then in force did not authorise forfeiture of the amount collected. The amendment of 1955 expressly made the forfeiture provision retrospective and thereby imposed an additional penal consequence for past conduct. Such a consequence was treated as a penalty within the meaning of Article 20(1) of the Constitution, because forfeiture under the proviso operated as punishment for contravention of the statutory restriction. The same retrospective deprivation of money, if viewed as something other than a penalty, would in any event amount to deprivation of property without the protection contemplated by Article 31(2). The order directing forfeiture and deposit in the Government Treasury was therefore without authority of law.

Conclusion: The retrospective application of the forfeiture proviso was unconstitutional, and the forfeiture order was invalid and liable to be quashed in favour of the assessee.

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