Registered dealer must remit tax collections even if the levy was unlawful, where amounts were collected under the Act.

Section 11(2) of the Travancore-Cochin Sales Tax Act was construed to require a registered dealer to remit all amounts collected by way of tax, even where the underlying levy was not legally leviable. The Court held that the obligation extended to collections made under colour of the taxing authority granted by registration, and was not confined to amounts ultimately found lawful. It further held that the sums in question were collected as sales tax under the statutory scheme, not as mere deposits, and therefore fell within the expression collected by way of tax under the Act. The writ petition failed and the impugned order was sustained.

---

---

Issues: (i) Whether section 11(2) of the Travancore-Cochin Sales Tax Act fastened liability on a registered dealer to pay over amounts collected by way of tax even where the collections were not legally leviable. (ii) Whether the amounts collected could be said to have been collected by way of tax under the Act, so as to attract section 11(2).

Issue (i): Whether section 11(2) of the Travancore-Cochin Sales Tax Act fastened liability on a registered dealer to pay over amounts collected by way of tax even where the collections were not legally leviable.

Analysis: The statutory scheme treated the dealer as liable to tax, while registration enabled him to collect tax from purchasers. The language of section 11(2) required him to pay over all amounts collected by way of tax, and the provision was read as covering collections made under colour of the taxing authority, whether or not the underlying levy was ultimately lawful. The deduction mechanism in the section did not limit the outer scope of the obligation. The Court declined to adopt the narrower construction that restricted the duty only to lawfully leviable collections.

Conclusion: The dealer was liable to pay over the collections to the State even though the collections were not properly leviable.

Issue (ii): Whether the amounts collected could be said to have been collected by way of tax under the Act, so as to attract section 11(2).

Analysis: The dealer's authority to collect arose only from registration under the Act, and the collections were made at rates contemplated by the statutory scheme. The contention that the sums were merely deposits was not supported on the facts, and the record showed that they were collected as sales tax. The Court therefore held that the collections fell within the expression collected by way of tax under the Act.

Conclusion: The amounts were collections by way of tax under the Act and were covered by section 11(2).

Final Conclusion: The writ petition failed because the statutory obligation to remit tax collections extended to the sums collected in the present case, and the impugned order was sustained.

Ratio Decidendi: A registered dealer must remit to the State all amounts collected by way of tax under the taxing statute, even if the underlying levy was unlawful, so long as the collections were made under the authority conferred by registration and within the statutory scheme.

---