Excess sales tax collections on exempt sales cannot be demanded back when no tax was legally payable.

Section 9A of the Central Sales Tax Act was construed as permitting collection only of amounts legally payable as tax, so sums collected on exempt sales where no tax liability existed were outside its scope. Rule 4-A of the Central Sales Tax (Madras) Rules, 1957 was held to be no wider than section 9A, and clause (iv) was confined to lawfully collected amounts within clause (i). Section 13(3) could not enlarge the substantive reach of the parent provision. On that construction, the demand for remittance of excess collections was not sustainable.

---

---

Issues: Whether a registered dealer could be compelled to pay over amounts collected as central sales tax on exempt sales when no tax was legally payable under the Act, and whether section 9A of the Central Sales Tax Act and rule 4-A of the Central Sales Tax (Madras) Rules, 1957 covered such excess collections.

Analysis: Section 9A was construed in its context as authorising collection only of amounts by way of tax which were legally payable under the Act. The phrase "any amount by way of tax under the Act" was held not to extend to sums collected where no liability to tax existed. Rule 4-A was treated as having no wider scope than section 9A, and clause (iv) was confined to amounts lawfully collected within clause (i). The power under section 13(3) could not enlarge the substantive ambit of the parent provision. Applying the earlier identical construction placed on the corresponding provision in the Madras General Sales Tax Act, the demand for payment of excess collections was unsupported.

Conclusion: The demand for remittance of the excess collection was not sustainable, and the assessee succeeded.

---