Bona fide doubt on tax collection authority barred penalty where collected sales tax was remitted to the Government.

Penalty was held unjustified where a decorticator collected sales tax during the assessment years under a genuine statutory doubt as to whether the tax was collectible by the decorticator or by the oil mill owners, and the amounts were remitted to the Government. Although the assessee was not ordinarily authorised to collect sales tax as a dealer, the existence of bona fide uncertainty and actual remittance meant the penal provisions had no proper application. The revisional order restoring the penalties was therefore unsustainable, and the penalties for all assessment years were cancelled.

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Issues: Whether penalty could be levied on a decorticator who collected sales tax during the relevant assessment years and remitted it to the Government, when there was uncertainty as to the person entitled to collect the tax.

Analysis: The assessee was not a dealer and ordinarily had no authority to collect sales tax. However, the record showed that during the assessment years in question there was a genuine doubt as to whether the tax was to be collected by the decorticator or by the oil mill owners. The tax collected by the assessee had in fact been paid over to the Government. In those circumstances, and following the earlier decision recognising that penalty is not warranted where the collection occurred in a situation of uncertainty, the basis for imposing penalty under the penal provisions was absent. The revisional order restoring the penalties was therefore unsustainable.

Conclusion: Penalty was not exigible and the assessee succeeded.

Final Conclusion: The penalties levied for all the assessment years were cancelled and the appeals were allowed.

Ratio Decidendi: Where tax collection occurs under a bona fide statutory doubt as to the person entitled to collect it and the amount is remitted to the Government, penal provisions should not be invoked.

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