Inclusive of tax wording in bills was not conclusive proof of tax collection, so forfeiture failed.

The Gujarat HC held that forfeiture under section 37(1) read with section 46(2) of the Bombay Sales Tax Act was not justified where the assessee's bills stated only that the sale price was "inclusive of tax." The Tribunal had treated that wording as conclusive proof that tax was collected, but the Court found that inference too rigid because the bills did not separately split price and tax, the same form was used even where no tax was payable, and no other material showed recovery of tax rather than part of the sale consideration. The reference was answered in favour of the assessee and against the department.

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Issues: Whether the forfeiture of Rs. 27,104 under section 37(1) read with section 46(2) of the Bombay Sales Tax Act, 1959, was justified on the footing that the assessee had collected tax merely because its bills stated that the sale price was inclusive of tax.

Analysis: The assessee was not liable to pay sales tax on the resales in question, and the dispute turned on whether the amount recovered from customers was really tax or only part of the sale price. The Tribunal treated the words "inclusive of tax" in the bills as conclusive proof that tax had been collected. The Court held that this inference was too rigid, because the bills did not split up the price and tax, the assessee used the same form of bill even for transactions where no tax was payable, and there was no other material showing that the disputed amount had been recovered as tax rather than as sale consideration. The phrase "inclusive of tax" could, in the factual setting, mean that the assessee was merely indicating that the purchaser would not be called upon to bear tax separately.

Conclusion: The forfeiture was not justified, and the Tribunal was wrong in upholding it. The answer to the reference was therefore in favour of the assessee and against the department.

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