Excess sales tax collection attracts forfeiture under Bombay Sales Tax law without proof of mens rea.

A registered dealer who collects an amount by way of sales tax in excess of what is legally payable contravenes section 46(2) of the Bombay Sales Tax Act, 1959, even if the amount was not actually due. The statutory scheme in sections 37 and 38(6) authorises forfeiture of such excess collections and supports refund to the purchaser from whom they were taken. Mens rea is not required for forfeiture under section 37 because the provision operates as a restitutionary measure to prevent retention of wrongfully collected tax, not as a punitive sanction. The forfeiture orders were therefore upheld.

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Issues: (i) Whether the amount collected by a registered dealer as general sales tax, though not actually payable, was liable to forfeiture under sections 37 and 46 of the Bombay Sales Tax Act, 1959. (ii) Whether mens rea is necessary for attracting forfeiture under section 37 of the Bombay Sales Tax Act, 1959.

Issue (i): Whether the amount collected by a registered dealer as general sales tax, though not actually payable, was liable to forfeiture under sections 37 and 46 of the Bombay Sales Tax Act, 1959.

Analysis: Section 46(2) prohibits a registered dealer from collecting any amount by way of tax in excess of the amount payable under the Act. The expression used is "any amount by way of tax", which is wide enough to cover an amount collected on the footing that it represented tax payable, even if that amount was not in fact payable. Section 37 provides for forfeiture of sums so collected in contravention of section 46, and section 38(6) reinforces the scheme by providing for refund to the person from whom the amount was collected. A later determination of the correct legal position does not alter the law but declares it.

Conclusion: The collection of general sales tax in excess of what was payable was a contravention of section 46(2), and forfeiture under section 37 was justified.

Issue (ii): Whether mens rea is necessary for attracting forfeiture under section 37 of the Bombay Sales Tax Act, 1959.

Analysis: The forfeiture provision is part of a scheme intended to prevent a dealer from retaining amounts wrongfully collected from purchasers and to ensure their refund to the persons from whom they were realised. It is not a punitive liability in the same sense as a penalty imposing an additional burden such as a fine. In that context, the absence of deliberate wrongdoing or dishonest intent does not prevent application of forfeiture. The principle requiring mens rea for quasi-criminal penalties of a different character was held inapplicable to this statutory scheme.

Conclusion: Mens rea is not necessary for forfeiture under section 37.

Final Conclusion: The reference was answered against the assessee, and the orders of forfeiture were upheld as lawful.

Ratio Decidendi: A registered dealer who collects from purchasers an amount by way of tax in excess of what is legally payable contravenes section 46(2) of the Bombay Sales Tax Act, 1959, and the resulting forfeiture under section 37 is attracted without proof of mens rea.

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