Oil company not in violation of tax law, penalty set aside. Court allows petitions, emphasizes tax verification.

The court found that the petitioner, an oil company, did not contravene Section 65A of the Assam General Sales Tax Act as the goods were taxable and not exempted from tax. The order of forfeiture and penalty imposed by the assessing authority was set aside as the petitioner had not collected tax on goods where no tax was payable. The court distinguished a Supreme Court decision cited by the Government Advocate, stating it was not applicable to the case. The petitions were allowed, emphasizing the verification and collection of any excess tax retained by the petitioner by the Department.

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Issues Involved:
1. Legality of tax collection by the petitioner.
2. Application of Section 65A of the Assam General Sales Tax Act, 1993.
3. Relevance of the Supreme Court's decision in T. Stanes and Co. Ltd. v. State of Tamil Nadu.
4. Forfeiture and penalty imposed by the assessing authority.

Detailed Analysis:

1. Legality of tax collection by the petitioner:
The petitioner, an oil company, purchased oil products from Oil India Limited and Gas Authority of India Limited during 1998-2002 and paid sales tax as per Schedule-II of the Assam General Sales Tax Act, 1993. The petitioner collected taxes from its dealers, including some excess tax, which was remitted to the Government. The assessing authority directed forfeiture of the taxes collected and proposed a penalty under Section 65A. The petitioner argued that since the products were taxable and the tax was paid to the sellers, the collection of tax from dealers was not illegal. The court found that the petitioner had not contravened Section 65A(1) as the goods were taxable and not exempted from tax.

2. Application of Section 65A of the Assam General Sales Tax Act, 1993:
Section 65A prohibits the collection of tax on goods where no tax is payable. Sub-section (1) states that no person shall collect tax on sales of goods on which no tax is payable. Sub-section (3) mentions the forfeiture of any tax collected in contravention of sub-section (1). The court observed that the petitioner, being a registered dealer, paid tax on taxable goods and collected the same from its purchasers. Hence, there was no contravention of Section 65A(1) as the goods were not exempted from tax.

3. Relevance of the Supreme Court's decision in T. Stanes and Co. Ltd. v. State of Tamil Nadu:
The Government Advocate cited the Supreme Court's decision in T. Stanes and Co. Ltd. v. State of Tamil Nadu to justify the forfeiture and penalty. However, the court noted that Section 22 of the T.N. General Sales Tax Act, 1959, which restricts unregistered dealers from collecting tax, is not pari materia with Section 65A of the AGST Act. The court distinguished the provisions, stating that Section 65A(1) prohibits tax collection on exempted goods, whereas the cited case dealt with unregistered dealers collecting tax. Thus, the Supreme Court's decision was not applicable to this case.

4. Forfeiture and penalty imposed by the assessing authority:
The court examined the provisions of Section 65A and found that the petitioner did not contravene sub-section (1) as the goods were taxable. The order of forfeiture and penalty was deemed bad in law and was set aside. However, the court observed that if any excess tax collected by the petitioner was retained and not remitted, the assessing authority should verify and ensure its collection by the Department.

Conclusion:
The petitions were allowed, and the order of forfeiture and penalty under Section 65A was set aside. The court emphasized that any excess tax collected and retained by the petitioner should be verified and collected by the Department.

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