Bona fide tax-rate dispute defeated penalty for excess sales tax collection where no intentional violation was shown.

Penalty for excess collection of sales tax was held not leviable because the assessee had collected tax at 4 per cent in the course of a bona fide dispute over the applicable rate. The Department had itself consistently treated cloth bags as taxable at 4 per cent until the Tribunal later ruled the correct rate was 2 per cent, and the collection was made before that ruling after the assessee's lower-rate claim had been resisted. On these special facts, the Court treated the collection as having been made by abundant caution and found no intentional violation of the Act, so the penalty provision did not apply.

---

---

Issues: Whether penalty for excess collection of sales tax was leviable on the assessee on the facts of the case.

Analysis: The assessee had collected tax at 4 per cent while the Department itself had consistently proceeded on the footing that cloth bags were taxable at 4 per cent until the Tribunal later held the correct rate to be 2 per cent. The collection was made before that decision, after the Department had resisted the assessee's claim for the lower rate. In these circumstances, the collection at 4 per cent was treated as having been made by abundant caution and in the context of a bona fide controversy on the rate of tax. On those special facts, the Court found no intentional violation of the Act and held that the penalty provision was not attracted.

Conclusion: The penalty was not leviable and the revision failed.

---