TMI Blog1956 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... (Act XVII of 1950) the Governor of Bihar fixed the rate of 3 pies in the rupee as tax on the sale and purchase of jute and jute products. During the period 1st of April, 1950, to 31st of March, 1951, the petitioner sold and despatched jute and jute products amounting to Rs. 92,24,386-1-6 to dealers outside the State of Bihar. A sum of Rs. 2,11,222-9-6 was realised by the petitioner as sales tax from such dealers. Section 14A of the Bihar Sales Tax Act was introduced by Bihar Act VI of 1949, which came into force from 1st October, 1948. Section 14A then read as follows: "14A. Unregistered dealers not to collect tax.-No dealer who is not a registered dealer shall realise any amount by way of tax on sale of goods from purchasers, nor shall any registered dealer make any collection of such tax except in accordance with such restrictions and conditions as may be prescribed". A proviso was added to section 14A by the Bihar Finance Act, 1952 (Bihar Act IV of 1952). The proviso was in the following terms: "Provided that if any dealer collects any amount by way of tax, in contravention of the provision of this section or the conditions and restrictions prescribed thereunder, the amount so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to have always been so inserted." On behalf of the petitioner Mr. P.R. Das made the submission that the Superintendent of Sales Tax had no authority to forfeit the amount as no offence had been committed by the petitioner. The learned counsel said that the petitioner had not collected any amount of sales tax in contravention of the provision of section 14A or the conditions and restrictions prescribed thereunder. Reference was made in this connection to rule 19 made by the State Government in exercise of the powers conferred on it by section 31 of the Bihar Sales Tax Act. Rule 19 reads as follows: "19. Restrictions on realisation of tax by registered dealers from purchasers: No registered dealer shall realise any amount by way of tax on sale of goods from any purchaser unless such registered dealer issues a cash memo, or bill which shall be serially numbered and shall show separately the price of goods sold and the amount realised by way of tax. Provided that no such registered dealer shall realise any amount by way of tax at a rate higher than the rate at which he is liable to pay tax under the Act or realise any amount by way of tax in respect of such part of his turnover as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence." It was submitted by the learned counsel that during the period from the 1st of April, 1950, to 31st of March, 1951, the proviso to (1) [1953] S.C.R. 1069; 4 S.T.C. 133. (2) [1951] S.C.R. 322. section 14A was not in existence. The proviso was added by the Bihar Finance Act (IV of 1952) and came into force on the 1st of April, 1952. The proviso introduced by Bihar Act IV of 1952 was prospective in operation and did not affect the case of the petitioner. The position was, however, changed by the amendment made by Bihar Act IV of 1955. This amendment made the proviso to section 14A expressly retrospective. It was not disputed by the petitioner that this case falls within the amended proviso to section 14A as it now stands. But the argument of learned counsel of the petitioner is that the amendment made by Bihar Act IV of 1955 in section 14A is unconstitutional and is directly hit by Article 20(1) of the Constitution. I have summarised the argument presented by Mr. Das on this point. I think the argument is well-founded and must prevail. I agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is obvious that money has been paid under a mistake of law by the customers and the legal position is that there is a liability on the petitioner to refund the money to the customers. In Sri Sri Shibha Prasad Singh v. Maharaja Srish Chandra Nandi and Another(1), it was held by the Judicial Commit- tee that section 72 of the Indian Contract Act applied to a case where money was paid under a mistaken belief that it was legally due to be paid. In the present case the petitioner is, therefore, under the obligation to pay the tax illegally collected to the various customers and the petitioner holds the amount of money illegally collected subject to this liability. A similar view was taken by the Madras High Court in Tata Iron and Steel Co., Ltd. v. The State of Madras(2), and I respectfully agree with that view. It was held in that case that if a registered dealer collects tax from the purchasers under a mistaken conception, the registered dealer is not under an obligation to pay the amount so collected to the State Government, but he is liable to refund the amount to purchasers. The argument of the Advocate-General on this point is, therefore, unsound and must be rejected. The poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision is Kedar Nath Bajoria v. The State of West Bengal(1). There is also another point I wish to make. If the proviso to sec- tion 14A is not penalty within the meaning of Article 20(1) of the Constitution, the provisions of Article 31(2) of the Constitution are attracted and the enactment of the proviso to section 14A will infringe the provisions of Article 31(2) of the Constitution. If the proviso to section 14A imposes a penalty, then the legislation would be saved by Article 31(5) (b)(i) of the Constitution; otherwise the legislation would be hit by Article 31(2) of the Constitution. It was held by the Supreme Court in Dwarkadas Shrinivas v. Sholapur Spinning and Weaving Co. Ltd.(2) that the saving clause (5) of Article 31 comprehensively included within its ambit all the powers of the State in exercise of which it could deprive a person of property without payment of compensation, and that all forms of deprivation of property by the State without payment of compensation have been included within the ambit of the exception clause, while other forms of deprivation which are outside the ambit of the exception clause are inevitably within the mischief of clause (2) of the Art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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