Transaction-specific tax collection outside forfeiture where amount matched lawful purchase tax liability under sales tax law.

Forfeiture under section 46(2) of the Bombay Sales Tax Act, 1959 applies only when a registered dealer collects tax in excess of the tax payable on the relevant transaction. The Bombay HC noted that the dealer's collection related to specific transactions and corresponded to purchase tax already payable under section 14 because the goods were not used in manufacturing taxable goods for sale. Applying its earlier construction of section 46(2), the Court held that an aggregate-year basis could not be used to treat such transaction-specific collections as unlawful excess collections. On those facts, the amount was not within the mischief of section 46(2), and forfeiture was not justified.

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Issues: Whether the forfeiture of the amount collected by the registered dealer as purchase tax was justified under section 46(2) 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 tax payable under the Act. The amount collected by the dealer was confined to particular transactions and represented the purchase tax that had become payable under section 14 because the goods were not used in the manufacture of taxable goods for sale. The Court applied the earlier construction of section 46(2) that the provision cannot be read as permitting an aggregate-year basis to justify forfeiture where the collection relates to distinct transactions. On the facts found, the collection corresponded to the purchase tax liability and was not an unlawful excess collection within the mischief of section 46(2).

Conclusion: The forfeiture was not justified and the question referred was answered in the affirmative, in favour of the assessee and against the department.

Ratio Decidendi: Forfeiture under section 46(2) is attracted only where a registered dealer collects tax in excess of the tax payable under the Act on the relevant transaction, and not where the amount collected merely matches a legitimate statutory tax liability.

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