Forfeiture of unlawfully collected sales tax: exempt small-scale unit could not retain tax embedded in sale price as an incentive.

An exempted small-scale industrial unit that collected sales tax from purchasers, though not liable to pay it, could not retain the amount as an incentive. The governing exemption scheme and forfeiture provision applied to a dealer who collected tax without liability, and the form of collection, whether shown separately or embedded in the composite sale price, was immaterial. The notifications allowed retention only within the scheme's stated arrangement, which the unit had not chosen. An earlier contrary view was treated as incorrect for ignoring the controlling statutory provisions and notifications, and the collected amount was held liable to forfeiture.

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Issues: Whether an exempted small-scale industrial unit that collected sales tax from the purchaser, though not liable to pay such tax, could retain the amount as an incentive, or whether the amount was liable to forfeiture under the Act.

Analysis: The exemption scheme did not confer a right to collect and retain tax as a matter of course. The governing provision applied where a dealer not liable to pay tax nevertheless collected it, and such collection was subject to forfeiture. The distinction between collecting tax separately and including it in the composite sale price was held to be immaterial. The relevant notifications permitted an option to collect tax and retain it only in the manner contemplated by the scheme, but the unit had chosen exemption and had not opted for the loan-repayment arrangement. The earlier view permitting retention as an incentive was held to be incorrect because it had been rendered without reference to the controlling statutory provisions and notifications.

Conclusion: The collected amount was liable to forfeiture and the assessee was not entitled to retain it as an incentive.

Final Conclusion: The revisions failed, the tribunal's order was sustained, and the contrary earlier view was overruled.

Ratio Decidendi: A dealer who is not liable to pay tax but nevertheless collects it cannot retain the amount merely because the collection formed part of the sale price or because exemption was enjoyed; such collection is forfeitable where the governing exemption scheme and forfeiture provision so require.

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