Wrong-point tax collection under sales tax law justified penalty and upheld the dealer's liability.

A registered dealer that collected tax at the point of sale, although the goods were taxable only at the point of purchase, was found to have contravened the statutory sales tax scheme. The dealer had shown an independent tax amount in the sale bills at the rate applicable to purchase tax on jaggery, and its claim to be only a commission agent was not proved; the finding that it acted as a dealer was treated as one of fact. As a registered dealer, it was presumed to know the law, and collecting tax at the wrong point constituted a clear violation of section 22(1) of the Tamil Nadu General Sales Tax Act, 1959. The penalty restored under section 22(2) was upheld.

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Issues: Whether a registered dealer who collected tax at the point of sale, though the goods were taxable only at the point of purchase, had contravened section 22(1) of the Tamil Nadu General Sales Tax Act, 1959 and was liable to penalty under section 22(2) of that Act.

Analysis: The dealer was found to have charged and shown an independent amount as tax in the sale bills at the rate applicable to purchase tax on jaggery, thereby collecting tax contrary to the statutory scheme. The status claimed as a commission agent was not proved, and the finding that he acted as a dealer was treated as a finding of fact. As a registered dealer, he was presumed to know the law, and the collection of tax at the wrong point amounted to a clear violation of section 22(1). On penalty, the authority was not found to have acted arbitrarily in restoring the penalty imposed under section 22(2).

Conclusion: The dealer had violated section 22(1) and was liable to penalty under section 22(2); the penalty order was upheld.

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