Penalty under sales tax law not leviable merely because an exempt assessee collected tax from customers.

Penalty under section 45-B of the Madhya Pradesh General Sales Tax Act was held not leviable merely because an assessee exempt from tax collected tax from customers. The issue was treated as governed by an earlier Division Bench ruling, and that principle was applied to sustain the Tribunal's view setting aside the penalty. The operative legal point is that collection of tax by an exempt assessee, by itself, does not attract penalty under section 45-B without more. The reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether penalty under section 45-B of the Madhya Pradesh General Sales Tax Act, 1958 could be sustained against an assessee exempted from payment of tax but who had collected tax from customers.

Analysis: The question was treated as covered by an earlier Division Bench decision holding that an assessee is not liable to penalty under section 45-B merely because it recovered tax from customers, even though it was exempt from payment of tax. The reference was answered on that basis.

Conclusion: The Tribunal was justified in setting aside the penalty. The answer is in favour of the assessee and against the Revenue.

Ratio Decidendi: Penalty under section 45-B is not leviable merely because an exempt assessee collected tax from customers.

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