Strict construction of penal forfeiture provisions bars tax collection forfeiture where transactions fall wholly outside the taxing scheme.

A penal forfeiture provision under the Bihar Sales Tax Act was construed strictly, and tax collected on transactions placed outside the Act could not be treated as a breach of rule-based deduction conditions unless the statute clearly said so. Because section 33 retrospectively excluded the transactions from the taxing scheme, the amounts collected on those transactions were not liable to forfeiture under the proviso to section 14A. The construction favouring the dealer was preferred, and the broader forfeiture interpretation was rejected. The constitutional issues were left undecided because the statutory objection succeeded.

---

---

Issues: Whether the proviso to section 14A of the Bihar Sales Tax Act, 1947 could be invoked to forfeit amounts collected by a registered dealer as tax when the relevant transactions were outside the taxing provision by reason of section 33(1)(a)(i) and whether the collection was in contravention of the conditions and restrictions prescribed under the rules.

Analysis: The proviso to section 14A operates only where a dealer collects tax in contravention of section 14A or the conditions and restrictions prescribed under the rules. The relevant question, therefore, was whether the amounts collected on transactions covered by section 33 could be treated as collections made in breach of the proviso to rule 19. Section 33, given retrospective effect, placed such transactions outside the scope of the Act. The deductions contemplated by rule 19 and the return form were tied to exemptions and deductions under the Act, and not to transactions excluded altogether from the taxing scheme. A claim that the Act itself did not apply to those transactions could not be treated as an allowable deduction under the rule. In the setting of a penal forfeiture provision, the construction favourable to the dealer was preferred, and the broader construction urged for forfeiture was rejected. As the preliminary statutory objection succeeded, the constitutional questions did not require decision.

Conclusion: The proviso to section 14A could not be invoked against the dealer on the facts, and the order of forfeiture was unjustified and illegal.

Ratio Decidendi: A penal forfeiture provision must be strictly construed, and a collection of tax on transactions wholly outside the taxing provision cannot be treated as a contravention of rules governing allowable deductions so as to attract forfeiture unless the statute clearly so provides.

---