Penalty provisions extend to unauthorised surcharge collection when the surcharge statute incorporates the principal sales tax Act.

Where a surcharge statute applies the provisions of the principal sales tax Act to surcharge without express exclusion, the penalty machinery of the principal Act also applies. The Madras High Court held that section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 governed unauthorised collection of surcharge under section 3(2) of the Tamil Nadu Sales Tax (Surcharge) Act, 1971. The Court read the charging and enforcement provisions together to give effective operation to the surcharge levy and rejected the contrary earlier view.

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Issues: Whether penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 could be levied in respect of unauthorised collection of surcharge under section 3(2) of the Tamil Nadu Sales Tax (Surcharge) Act, 1971.

Analysis: Section 3(2) of the Surcharge Act was construed as making applicable to surcharge all provisions of the principal sales tax enactment that apply in relation to sales tax, unless expressly excluded by the Surcharge Act. The Court held that section 22 of the principal Act is one such applicable provision and that the charging and machinery provisions of the two enactments must be read together to give effective operation to the surcharge levy. The contrary view taken in an earlier Division Bench decision was not accepted, and the Court preferred the reasoning that a surcharge provision which incorporates the principal Act by reference carries with it the penalty machinery needed to enforce the levy.

Conclusion: Penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 was validly attracted to surcharge collected under section 3(2) of the Tamil Nadu Sales Tax (Surcharge) Act, 1971.

Final Conclusion: The revision succeeded and the penalty levy was upheld on the footing that the surcharge enactment incorporated the penalty provision of the principal sales tax law.

Ratio Decidendi: Where a surcharge statute makes the provisions of the principal sales tax Act applicable to surcharge without exclusion, the penalty provisions of the principal Act apply to unauthorised collection of surcharge as well.

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