Separate penalty and forfeiture consequences under sales tax law require proper notice, and false return penalty needs false particulars.

Penalty for excess tax collection under section 16(1)(j) of the Rajasthan Sales Tax Act, 1954 is separate from forfeiture of the excess amount, so a penalty cannot be sustained beyond the statutory maximum of Rs. 2,000 without the procedural basis required for forfeiture. Where no separate forfeiture notice was issued and there was no finding that excess tax was actually collected, reduction of the penalty to the statutory limit was justified. Penalty under section 16(1)(e) is not attracted where the turnover is correctly reflected in the books and return, the assessment proceeds on the returned figure, and no false particulars or misrepresentation is shown.

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Issues: (i) Whether the maximum penalty under section 16(1)(j) of the Rajasthan Sales Tax Act, 1954 was limited to Rs. 2,000 and could be sustained at Rs. 8,000 in the absence of a separate forfeiture notice. (ii) Whether penalty under section 16(1)(e) of the Rajasthan Sales Tax Act, 1954 was attracted on the facts of the case.

Issue (i): Whether the maximum penalty under section 16(1)(j) of the Rajasthan Sales Tax Act, 1954 was limited to Rs. 2,000 and could be sustained at Rs. 8,000 in the absence of a separate forfeiture notice.

Analysis: Section 16(1)(j) contemplates two distinct consequences where a registered dealer collects tax in excess of the tax payable: forfeiture of the excess amount to the State and, in addition, a penalty not exceeding Rs. 2,000. The proceedings for forfeiture and penalty are separate and require appropriate notice. On the facts, no notice for forfeiture was issued and there was no finding that the excess amount was in fact collected so as to justify treating the composite figure of Rs. 8,000 as including forfeiture. The only matter in issue was the penalty component under section 16(1)(j).

Conclusion: The Tribunal was right in holding that the penalty under section 16(1)(j) could not exceed Rs. 2,000 and in reducing it from Rs. 8,000 to Rs. 2,000.

Issue (ii): Whether penalty under section 16(1)(e) of the Rajasthan Sales Tax Act, 1954 was attracted on the facts of the case.

Analysis: The turnover in question was reflected in the books and in the return, and the assessment itself proceeded on the basis of the returned figure. The return required disclosure of tax payable, not of tax collected. In these circumstances, the particulars furnished could not be treated as false or incorrect, and no mens rea or misrepresentation was established for invoking section 16(1)(e).

Conclusion: The penalty under section 16(1)(e) was not exigible and its cancellation was justified.

Final Conclusion: The revision failed, the assessee succeeded on both penal issues, and the order reducing the penalty and quashing the other penalty was left undisturbed.

Ratio Decidendi: Penalty for incorrect return and penalty for excess tax collection are distinct consequences under the Rajasthan Sales Tax Act, 1954, and a penalty for excess collection cannot be sustained beyond the statutory maximum or without the procedural basis required for forfeiture; further, where the return correctly discloses the turnover and there is no false particulars in the return, section 16(1)(e) is not attracted.

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