Bona fide tax collection without prescribed form does not attract penalty where later refund follows compliance.

Penalty for collection of tax under the M.P. General Sales Tax Act was not justified where a registered dealer collected tax at the applicable rate because the purchaser had not produced form XII-J at the time of sale. The collection was made in accordance with the statutory scheme and was not illegal or unauthorised merely because the amount was later refunded after the form was furnished. The HC held that penal action under section 45-B(2) applies only to collection contrary to law, and the record disclosed no deliberate violation or dishonest intent. The question was answered in favour of the assessee and against the Revenue.

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Issues: Whether the penalty imposed under section 45-B(2) of the M.P. General Sales Tax Act, 1958 was justified when the dealer had collected tax because the purchasing entity had not furnished form XII-J and later refunded the amount.

Analysis: The statutory scheme prohibited collection of tax only when such collection was in contravention of section 45-B(1). On the admitted facts, the dealer was a registered dealer and collected tax at the applicable rate because the purchaser had not produced form XII-J at the time of sale. The collection was therefore made in accordance with the Act and was not illegal or unauthorised merely because the amount was later refunded after the form was furnished. Section 45-B(2) could operate only where there was illegal collection, and the record disclosed no deliberate violation or dishonest intent warranting penal action.

Conclusion: The penalty under section 45-B(2) was not sustainable and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Penalty for collection of tax can be imposed under section 45-B(2) only when the collection is contrary to law, and a collection made bona fide in the absence of the prescribed exemption form does not become illegal merely because it is later refunded.

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