Sales tax forfeiture cannot reach collections on non-sale transactions under a provision confined to taxable sales.

Section 46(2) of the Bombay Sales Tax Act was construed as a prohibition confined to tax collected in connection with taxable sales or sales of tax-free goods. The court held that the provision could not be split to treat its latter part as a separate prohibition covering collections on transactions that were not sales. A broader reading would create anomalous results and exceed the State Legislature's taxing competence under List II. The provision was therefore read down, and forfeiture under section 37(1)(a) was held unavailable for amounts collected on non-sale transactions.

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Issues: Whether section 46(2) of the Bombay Sales Tax Act, 1959 extended to amounts collected by a registered dealer as tax on transactions which were not sales, so as to justify forfeiture under section 37(1)(a).

Analysis: Section 46, read as a whole, created a prohibition against collection of tax in respect of taxable sales and sales of tax-free goods. The words in section 46(2) could not be split so as to treat the latter part as an independent prohibition detached from the notion of sale. A construction that allowed forfeiture of amounts collected on non-sale transactions would produce anomalous results, would be inconsistent with the scheme of the Act, and would carry the provision beyond the State Legislature's power under entries 54 and 64 of List II. The provision was required to be read down so that the forfeiture machinery operated only in relation to collections connected with sales or purchases within the legislative field of the Act.

Conclusion: Section 46(2) does not extend to collections made on transactions which are not sales, and such amounts are not liable to forfeiture under section 37(1)(a).

Ratio Decidendi: A forfeiture provision in a sales tax statute can operate only on amounts collected by way of tax in relation to sales or purchases within the State's taxing competence, and it cannot be construed to reach collections on transactions that are not sales.

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