Unauthorised collection of sales tax attracts penalty without proof of mens rea, but enhancement needs a clear computation error.

Penalty under the Tamil Nadu General Sales Tax Act was attracted where a registered dealer collected tax on second sales of timber and bamboo, since those goods were taxable only at the first sale and section 22 prohibited collection otherwise than in accordance with the Act. The provision operated on the unauthorised collection itself and did not require proof of wilfulness or neglect, so cancellation of the penalty was unsustainable. However, restoration of the original higher penalty was refused because no demonstrable computational error justified enhancement, and the reduced amount sustained by the authorities was maintained.

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Issues: (i) Whether penalty was leviable under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 for collecting sales tax on second sales of timber and bamboo not taxable at that stage; (ii) whether the penalty could be restored to the original higher amount claimed by the Revenue.

Issue (i): Whether penalty was leviable under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 for collecting sales tax on second sales of timber and bamboo not taxable at that stage.

Analysis: Bamboo and timber were taxable only at the first sale under entry 84 of the First Schedule, and section 22(1) prohibited a registered dealer from collecting tax otherwise than in accordance with the Act. Section 22(2) authorised penalty where tax was collected in contravention of section 22(1). The provision did not require proof of wilfulness or neglect, and the unauthorised collection itself attracted the statutory consequence. Since the assessee admittedly collected tax on second sales, there was no legal basis for deleting the penalty.

Conclusion: Penalty was leviable and its cancellation by the Tribunal was unsustainable.

Issue (ii): Whether the penalty could be restored to the original higher amount claimed by the Revenue.

Analysis: The authorities below had already examined the figures and reduced the penalty to the amount sustained on what was found to be the correct computation. No clear arithmetic error justifying restoration of the original figure was shown, and the revisional court declined to rework the computation.

Conclusion: The Revenue was not entitled to restoration of the original higher penalty; the reduced penalty was maintained.

Final Conclusion: The revisions were disposed of with the penalty held payable, but only to the reduced amount sustained below, so the Revenue succeeded on liability while failing on enhancement.

Ratio Decidendi: Where a sales tax statute imposes a penalty for collecting tax in contravention of the charging and collection provisions, the penalty follows from the unauthorised collection itself and does not depend on proof of mens rea, while enhancement of the penalty requires a demonstrable error in computation.

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