Penalty for excess tax collection not exigible where amounts were refunded to customers or deposited with the Government.

Penalty for illegal collection of tax was not exigible where the assessee did not retain the excess amount: amounts were refunded to identifiable customers and, where customers could not be traced, deposited with the Government. On those facts, the Tribunal's deletion of penalty was upheld because the excess collection did not remain in the assessee's hands. The Revenue's relied-on precedent was distinguishable, as it concerned a different factual situation involving no bona fide basis for the excess collection.

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Issues: Whether penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 was exigible when excess tax collected had been refunded to customers where found and deposited with the Government where customers were not found.

Analysis: The assessee had collected excess tax during the relevant assessment years, but the record showed that the excess amounts were not retained. Wherever customers were identifiable, the excess tax was refunded to them, and where they could not be traced, the amounts were deposited with the Government. On these facts, the collection did not result in the assessee keeping the excess tax in its hands. The earlier decision relied on by the Revenue turned on different facts, where penalty was upheld on the basis that there was no bona fide basis for the excess collection.

Conclusion: Penalty under section 22(2) was not exigible on the facts of this case, and the deletion of penalty by the Tribunal was upheld.

Ratio Decidendi: Penalty for illegal collection of tax is not exigible where the excess tax collected is not retained by the assessee and is either refunded to customers or deposited with the Government.

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