Forfeiture of unlawfully collected sales tax extends to the full amount collected, not merely the excess over other liabilities.

Where a registered dealer collected amounts as sales tax on resales on which no sales tax was payable, section 46(2) of the Bombay Sales Tax Act, 1959 permitted forfeiture of the full amount so collected. The High Court held that the statutory prohibition against collecting tax in such circumstances was not reduced by the dealer's separate liability to purchase tax, and that the expression "tax" covered the relevant sales tax charges under the Act. The Tribunal's approach of limiting forfeiture to the excess over purchase tax liability was rejected as inconsistent with the later binding High Court ruling, and forfeiture of the entire collection was confirmed.

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Issues: Whether, on the facts of the case, section 46(2) of the Bombay Sales Tax Act, 1959 permitted forfeiture only of the excess amount collected by the dealer or justified forfeiture of the entire amount collected as tax on sales for which no sales tax was payable.

Analysis: The respondents were not liable to pay sales tax on the resales, but had collected amounts from customers by way of sales tax, thereby representing that tax was payable on those sales. Section 46(2) prohibits a registered dealer from collecting tax in circumstances where no such tax is payable, and the expression "tax" in section 2(32) includes sales tax, general sales tax, purchase tax and retail sales tax payable under the Act. The fact that the respondents were separately liable to purchase tax did not authorise them to collect sales tax on the resales, nor did it justify limiting forfeiture to only the excess over the purchase tax liability. The earlier Tribunal view was rejected as inconsistent with the later binding High Court decision.

Conclusion: The entire amount collected as tax on the resales was liable to forfeiture, and the Tribunal was wrong in restricting forfeiture to only the excess amount.

Final Conclusion: The reference was answered against the assessee and in favour of the department, confirming forfeiture of the full amount collected as tax on the impugned sales.

Ratio Decidendi: Where a dealer collects tax on a transaction on which no such tax is payable, section 46(2) authorises forfeiture of the amount so collected, and the dealer cannot claim adjustment against some other tax liability to limit forfeiture to only the excess.

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