Tax collected in lieu of levy must be remitted to the State; penalty upheld for non-disclosure and retention.

Amounts collected by an assessee in lieu of tax on the sale of rubber trees had to be remitted to the State, even if the underlying tax liability was disputed. Non-disclosure of the collected amount in the return rendered the return incorrect, and the proper statutory course was to pay over the sum and seek refund if the levy was later struck down. On that basis, penalty proceedings for tax sought to be evaded were validly initiated, and the plea that refund complications justified retention of the amount was rejected. The penalty was upheld, and no further reduction in quantum was warranted.

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Issues: Whether the assessee, having collected amounts in lieu of tax on the sale of rubber trees but not remitted them to the State, was liable to penalty and whether the quantum of penalty required interference.

Analysis: The collection made by the assessee was found to be in lieu of tax, and once such collection was made it had to be paid over to the State. The return was incorrect because the tax so collected was not disclosed in the records. The circumstance that the liability to tax was then under dispute did not justify retaining the collected amount with the assessee, since the statutory course was to remit the tax and seek refund if the levy was later negated. The court also held that the penalty proceedings were properly initiated under the provision governing penalty for tax sought to be evaded, and the suggested refund difficulty did not assist the assessee.

Conclusion: The assessee was liable to penalty, and no further reduction in the quantum was warranted.

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