Prohibited collection of sales tax on second sales of timber attracts penalty when the seller charges tax on turnover.

A second seller of timber was not permitted to collect sales tax from the purchaser where the statute prohibited collection of tax on such transactions. The record showed that tax was collected on the sale turnover at 5 per cent, rather than merely passing on tax already paid on purchases, so the collection was treated as a breach of the Act. That contravention attracted the statutory penalty provision, and the penalty was held to be justified.

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Issues: Whether penalty was leviable for collecting sales tax on second sales of timber in contravention of the prohibition against collection of tax under section 22 of the Act.

Analysis: The assessee, being a second seller of timber, was not liable to collect sales tax from the purchaser. The record showed that tax was collected on the sale turnover at 5 per cent and not merely passed on as tax already paid on purchases. Such collection was contrary to the statutory prohibition and attracted penalty under the provision empowering the assessing authority to impose penalty for collection made in breach of the Act.

Conclusion: The levy of penalty was justified and was rightly upheld.

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