Sales tax surcharge recovery is unlawful only for the excess over vendor-borne tax, with forfeiture limited accordingly.

Section 46(2) of the Bombay Sales Tax Act, 1959 bars a registered dealer from collecting tax in excess of the amount properly attributable to its tax burden. The decisive factor is how the bill presents the surcharge: if it is shown as sales tax payable by the dealer to the Government, the collection is prohibited; if it is shown as a recoupment of tax passed on by vendors, recovery is not inherently unlawful. However, where the dealer recovers more from purchasers than the amount actually borne from vendors, the excess is a prohibited collection. Forfeiture is confined to that excess amount, not the full surcharge.

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Issues: Whether amounts recovered by a registered dealer as surcharge on account of sales tax were collected in contravention of section 46(2) of the Bombay Sales Tax Act, 1959, and whether the entire amount or only the excess over the tax recovered by the dealer from its vendors was liable to forfeiture.

Analysis: Section 46(2) prohibits a registered dealer from collecting any amount by way of tax in excess of the amount payable by him under the Act. The decisive factor is the representation made to the purchaser in the bill. Where the bill showed the surcharge as an amount of sales tax payable by the dealer to the Government, the collection was in substance a prohibited collection by way of tax. Where the bill showed that the surcharge was on account of sales tax paid by the dealer to its vendors, the collection was not per se prohibited, because a reseller may recoup itself for tax burden already passed on by its vendor. However, even in such cases, the dealer had recovered from its customers an amount calculated on its selling price and not confined to the amount actually recovered from it by its vendors. That excess could not be treated as reimbursement and was therefore collected in contravention of section 46(2). The amount liable to forfeiture was thus confined to the excess amount collected, not the whole amount shown in the bill.

Conclusion: The collection described as surcharge on account of sales tax was unlawful only to the extent it exceeded the amount actually recovered by the dealer's vendors, and only that excess amount was liable to forfeiture under section 37(1) of the Bombay Sales Tax Act, 1959.

Ratio Decidendi: Under section 46(2) of the Bombay Sales Tax Act, 1959, a dealer commits a prohibited collection only to the extent that the amount recovered from the purchaser exceeds the amount properly attributable to tax burden passed on by the vendor; forfeiture extends only to the excess so collected.

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