Strict construction of sales tax penalty provisions limits penalty to proven statutory contravention, not excess assessed collections.

Penalty under section 45-B of the M.P. General Sales Tax Act is attracted only where tax is collected in contravention of the Act and Rules, including collection in excess of what is permitted. Where the dealer collected sales tax at the rate prescribed in Schedule II, a later mismatch between the total collection and the tax ultimately assessed did not by itself establish a statutory breach. Penal provisions in fiscal law must be strictly construed and cannot rest on equitable considerations. The penalty was therefore held not leviable and was set aside in favour of the assessee.

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Issues: Whether penalty under section 45-B of the M.P. General Sales Tax Act, 1958 could be sustained where the registered dealer had collected tax in accordance with the rate prescribed under Schedule II, but the aggregate collection ultimately exceeded the tax finally assessed.

Analysis: Section 45-B authorises penalty only when a person collects any amount by way of tax in contravention of section 45-B(1), that is, otherwise than in accordance with the Act and the Rules or in excess of the permitted collection. The material on record showed an admission by the revenue authorities that the petitioner had collected sales tax as per the rate mentioned in Schedule II. Once the individual collections were in accordance with the statutory rate, the mere fact that the total collection exceeded the tax ultimately found payable on final assessment did not establish a contravention attracting penalty. Penal provisions in a taxing statute must be strictly construed, and cannot be invoked on equitable considerations or on the basis of an after-the-event mismatch between collections and assessed liability.

Conclusion: The penalty under section 45-B was not leviable and was set aside in favour of the assessee.

Ratio Decidendi: Penalty for collection of tax can be imposed only on proof of a statutory contravention in the manner of collection, and not merely because the aggregate amount collected exceeds the tax finally assessed.

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