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Issues: (i) whether the writ petition under Article 226 was maintainable in view of the available statutory remedies and disputed questions of fact; (ii) whether the Commissioner acted within the revisional power under section 57 of the Bombay Sales Tax Act, 1959; (iii) whether the collections described as surcharge in lieu of sales tax were wholly illegal or were illegal only to the extent of any excess over the amount actually reimbursable.
Issue (i): whether the writ petition under Article 226 was maintainable in view of the available statutory remedies and disputed questions of fact.
Analysis: The existence of an appellate remedy, the condition of pre-deposit, and the availability of reference proceedings weighed against entertaining the petition. The controversy also turned on disputed facts relating to the true nature of the collections, which could not be satisfactorily resolved in writ proceedings.
Conclusion: The writ petition was not an appropriate forum for final factual adjudication on the controversy.
Issue (ii): whether the Commissioner acted within the revisional power under section 57 of the Bombay Sales Tax Act, 1959.
Analysis: The revisional power extends to examining the correctness, legality, and propriety of orders passed by subordinate officers. The omission of the assessing officer to deal with the alleged contravention did not place the matter beyond revision, because the Commissioner was entitled to correct an impropriety or illegality in the subordinate order.
Conclusion: The impugned order was not ultra vires section 57 of the Bombay Sales Tax Act, 1959.
Issue (iii): whether the collections described as surcharge in lieu of sales tax were wholly illegal or were illegal only to the extent of any excess over the amount actually reimbursable.
Analysis: A reseller may recover from customers the amount actually borne by it as part of the purchase price without contravening the statutory prohibition, provided the customer is not led to believe that the amount collected is tax payable to the Government. However, where the amount collected exceeds the tax actually borne on purchases, the excess is treated as collection by way of tax in breach of the Act and is liable to forfeiture. The factual position had to be re-ascertained to determine the extent of any excess.
Conclusion: The collections were not wholly illegal, but any excess over the amount actually reimbursable was liable to forfeiture and the matter required fresh factual determination.
Final Conclusion: The impugned forfeiture and penalty order could not stand in its present form and was set aside for reconsideration on the correct legal basis after re-examination of the facts, with the law confined to forfeiture of only the excess, if any, collected in contravention of the Act.
Ratio Decidendi: A reseller does not violate the sales tax prohibition when it merely recoups from customers the amount actually borne on purchases, but any amount collected in excess of that reimbursement constitutes an unlawful collection by way of tax and is liable to forfeiture; revisional power may be used to correct such illegality in a subordinate order.
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