Strict fiscal liability for excess tax collection: mens rea not required, and a delayed refund offer may not defeat penalty.

Section 18-A of the Karnataka Sales Tax Act was treated as imposing absolute liability for collecting tax in excess of the permissible rate, so mens rea was not required to attract penalty. The statutory scheme was read as protecting consumers and preventing unjust enrichment, displacing the ordinary presumption of intention in this fiscal context. A belated offer to refund excess collections did not automatically defeat penalty; it was only a relevant factor in the authority's discretion. Because the refund proposal was delayed and lacked a convincing mechanism, it could be treated as lacking bona fides, and penalty could still be imposed.

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Issues: (i) Whether mens rea was a necessary ingredient for penalty under section 18-A of the Karnataka Sales Tax Act, 1957 for collection of tax in excess of the permissible rate. (ii) Whether the dealer's belated offer to refund the excess collections to customers barred or materially weakened the penalty.

Issue (i): Whether mens rea was a necessary ingredient for penalty under section 18-A of the Karnataka Sales Tax Act, 1957 for collection of tax in excess of the permissible rate.

Analysis: The prohibition in section 18 against collecting tax beyond the recoverable rate was held to be absolute in character. Read with section 18-A, the statute created a contravention punishable by penalty without using words importing intention, knowledge, or deliberation. In fiscal enactments of this kind, the ordinary presumption of mens rea stands displaced by the statutory language and the subject-matter, particularly where the provision is designed to protect consumers and prevent unjust enrichment by dealers.

Conclusion: Mens rea was not an essential ingredient for attracting penalty under section 18-A.

Issue (ii): Whether the dealer's belated offer to refund the excess collections to customers barred or materially weakened the penalty.

Analysis: The ability to refund excess collections was relevant to the exercise of discretion under section 18-A, but it was not conclusive. The offer was made only after penalty proceedings had progressed, no convincing mechanism for refund was shown, and the subsequent conduct of the dealer showed that the excess amount was used for its own benefit. The authority was therefore entitled to treat the offer as lacking bona fides and to impose penalty notwithstanding it.

Conclusion: The belated refund offer did not entitle the dealer to escape penalty.

Final Conclusion: Section 18-A was construed as creating a strict fiscal liability without mens rea, while leaving the quantum and imposition of penalty to the assessing authority's judicial discretion on the facts of each case.

Ratio Decidendi: In a fiscal statute prohibiting excess tax collection, mens rea is not indispensable where the statutory language and object indicate absolute liability, though the authority must still exercise discretion judicially on relevant circumstances, including bona fides and post-contravention conduct.

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