Forfeiture under sales tax law requires wrongful collection and retention; remitted amounts did not justify section 18-AA action.

Forfeiture under section 18-AA of the Karnataka Sales Tax Act was confined to tax collected in contravention of section 18 and retained contrary to the statutory scheme. A works contractor under composition had collected an amount described as tax but had remitted it within the prescribed period, so the statutory precondition for forfeiture was not met. Reading sections 18, 18-A and 18-AA together, the Court held that mere collection was insufficient where the amount was not retained as the dealer's own and the statute did not authorise forfeiture on those facts. The forfeiture order was therefore unsustainable and was set aside.

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Issues: Whether forfeiture under section 18-AA of the Karnataka Sales Tax Act, 1957 was sustainable where a works contractor opted for composition under section 17(6), collected tax separately, and remitted the amount; and whether the impugned forfeiture order could be sustained on that basis.

Analysis: Section 18 prohibits collection of tax in specified situations, and section 18-AA applies where amount is collected in contravention of section 18 and is not dealt with as required by the statute. The facts showed that the dealer had opted for composition for the relevant assessment year and had collected an amount described as tax, but had already made over the amount within the period contemplated by the statutory scheme. The Court read sections 18, 18-A and 18-AA together and applied the principle that forfeiture is justified only where the dealer has collected and retained the amount as his own in breach of the prohibition. Since the amount had been remitted and the statutory precondition for forfeiture was not satisfied, the forfeiture order was held unsustainable. The finding recorded by the authority that remittance was not sufficient to avoid forfeiture was rejected as inconsistent with the statutory scheme.

Conclusion: Section 18-AA was inapplicable on the facts, and the forfeiture order was set aside for want of jurisdiction.

Ratio Decidendi: Forfeiture under section 18-AA can be sustained only when tax is collected in contravention of section 18 and retained in a manner that attracts the statutory consequence; mere collection, without the statutory basis for forfeiture being satisfied, is insufficient.

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