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TMI Blog2009 (12) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... ver the assessee is found to have collected tax in contravention of the provisions of the Act and as held in State of Tamil Nadu v. Selvakumar Timber Traders [1984] 57 STC 69 (Mad) and P. Ramasamy v. State of Tamil Nadu [1984] 57 STC 72 (Mad), the Tribunal ought to have confirmed the levy of penalty and dismissed the appeal? and (iii) Whether the Tribunal ought to have seen the fact that the tax, which had been remitted to the Government will not sanctify due to the illegal collection and hence the Tribunal ought to have allowed the enhancement petition and restored the assessing officer's order?" the Department has filed this revision under section 38 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as, "the Act" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal dismissed the enhancement petition filed by the Department. As the relief has been granted in favour of the assessee, the Department is on further revision before this court against the order of the Tribunal. The learned Special Government Pleader submits that there is no need for any mens rea for imposition of penalty under section 22(2) of the Act. If the collection of tax by the dealer is unauthorized, it is automatic on the part of the assessing officer to levy penalty as per the provisions of the Act. We have heard the learned Special Government Pleader and perused the materials on record. Section 22(2) of the Act provides that if any person or registered dealer collects any amount by way of tax or purporting to be by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no intention on the part of the assessee to collect tax in contravention of section 22(1) of the Act and retain the same for the benefit of the assessee. A Division Bench of this court in the case of State of Tamil Nadu v. K. Mohammed Ibrahim Sahib reported in [1991] 83 STC 402, after taking note of the ratio of the decision in the case of State of Tamil Nadu v. Selvakumar Timber Traders reported in [1984] 57 STC 69 (Mad) which has been referred to in one of the questions of law for automatic imposition of penalty, held that it became apparent that the penalty might be levied by the authorities under section 22(2) of the Act after giving the affected person a reasonable opportunity of being heard by an order in writing where there had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 46, he shall be liable to pay, in addition to any tax for which he may be liable, a penalty as follows: (i) Where there has been a contravention referred to in clause (a), a penalty of an amount not exceeding two thousand rupees; . . . and in addition, . . . any sum collected by the person by way of tax in contravention of section 46 shall be forfeited to the State Government. . .' Interpreting this section, the Supreme Court dealt with the expression 'collected', and opined: 'What does "collected" mean here? Words cannot be construed effectively without reference to their context. The setting colours the sense of the word. The spirit of the provision lends force to the construction that "collected" means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduction of tax at the rate of 10 per cent. The tax so collected was duly remitted to the Government. No amount was retained by the assessee, which factum has not been disputed by the Revenue. In view of the law laid down by the apex court in Ajit Mills case [1977] 40 STC 497 and on the admitted facts, it cannot, therefore, be said that the assessee has collected any amount by way of tax or purporting to be by way of tax so as to be held liable or render itself liable for contravention of section 22(1) of the Act. The assessee collected the amount, brought the same on account and remitted it to the Government faithfully. Therefore, it is not possible to hold that the assessee had collected tax as interpreted by the Supreme Court in Ajit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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