Govinda Bhat, J.
1. These writ petitions raise common questions concerning the interpretation of section 18-A of the Mysore Sales Tax Act, 1957, hereinafter called the Act. The writ petitions are directed against the orders of the Commissioner Tax Officer, Bangalore (respondent No. 2) levying penalties under section 18-A of the Act. The main contention of the petitioners before the Commercial Tax Officer was that they have not contravened the provisions of sub-section (1) or (2) of section 18 and, therefore, no penalty could be levied on them. A number of other contentions were urged before the Commercial Tax Officer including the constitutional validity of section 18-A.
2. The orders impugned refer to the main contention urged by the petitioners, viz., that the provisions of sub-section (1) of section 18 have not been contravened as they have collected tax only at the specified rates. The said objection of the petitioners, however, has not been satisfactorily considered by the Commercial Tax Officer. He has not come to the conclusion that the petitioners have collected tax at rates in excess of the rates specified under Act. The contention has not been overruled by the Commercial Tax Officer. The reason for coming to the conclusion that the petitioners have contravened sub-section (1) of section 18 of the Act and therefore are liable to penalty under section 18-A was that the total amount of the tax collected by the petitioners during the respective accounting periods was in excess of the total amount of tax assessed on the total turnover determined. On the basis of the said findings, penalties equal to the actual excess amounts collected were imposed by the impugned orders.
3. In response to the show cause notices issued proposing to levy penalty, the petitioners had submitted that they have not contravened the provisions of sub-section (1) of section 18 of the Act and further asserted that they had collected tax only at the rates specified under the Act. They offered their explanations submitting that their annual turnovers amount to several lakhs of rupees and that in such cases there is possibility of variation in the tax collected under section 18(1) and the tax assessable on the 'total turnover'.
4. The total turnover for one one assessment year in the case of the petitioners in W.P. No. 1856 of 1966 amounted to Rs. 17,22,349.66 P. For the succeeding year their turnover was Rs. 23,56,849.32 P. The amount collected by the said petitioners under section 18(1) exceeded the actual amount of the taxes assessed to the extent of Rs. 372.71 P. and and Rs. 227.13 P. respectively. The turnover of the petitioners in W.P. No. 793 of 1967 for the accounting year ending on 30th June, 1965, amounted to Rs. 7,14,264.19 P. The said petitioners collected tax from their customers under section 18(1) only at the rates specified under the Act; but the actual amount collected exceeded the actual amount assessed on the total turnover by Rs. 292.89 P. The Commercial Tax Officer came to the conclusion that the petitioners have contravened the provisions of sub-section (1) of section 18 solely on the ground that the amounts collected by way of tax by the petitioners from their customers exceeded the actual tax assessed on their total turnovers to the extent stated above.
5. Under section 18(1) of the Act, a registered dealer in entitled to collect from his customers any amount by way of tax not exceeding the rate or rates of tax specified in respect of every transaction of sale or purchase of the goods. It is not the case of the Commercial Tax Officer that the petitioners had contravened any of the conditions and restrictions prescribed under the Act in making the collections. It is also not his case that the petitioners have collected by way of tax amounts exceeding the rate or rates specified in respect of any transaction of sale of goods under the Act.
6. As stated earlier, the reason for levy of penalty was the aggregate of the amounts collected by the dealers under section 18(1) were in excess to the extent stated earlier, when the assessments on each year's total turnover were made. A registered dealer collects amounts by way of tax under section 18(1) at the rates specified on individual transactions; the assessing authority makes the assessment of tax on the total turnover of the dealer. The aggregate of the amounts collected under section 18(1) and the tax assessed on the dealer on his total turnover of the year cannot be and need not be identical. Let us suppose of an article priced 60 paise where the rate of tax is 2 per cent. If the dealer sells one article in one transaction of sale for 60 paise, he is entitled to collect two paise by way of sales tax; if he sells fifty articles in fifty separate transactions, he collects 100 paise or Re. 1 under section 18(1). But if the same dealer sells fifty of the said articles in one transaction of sale of Rs. 30, then he is entitled to collect under the law 60 paise only. Thus, a dealer without contravention of the provisions of sub-section (1) of section 18 may collect small amounts in excess of the total tax actually assessed on the total turnover. It may also be possible that the actual amounts collected under section 18(1) may fall short of the amount actually assessed on the total turnover.
7. On a reading of sections 18 and 18-A, it is clear to our mind that the penalty provision of section 18-A is attracted only where a registered dealer makes collection of amounts by way of tax, or purporting to be by way of tax, either not in accordance with the conditions and restrictions prescribed or at the rate or rates in excess of that specified in respect of the sale or purchase of the goods; section 18-A is not attracted where section 18 is not contravened. Where on the individual transaction of sale or purchase, the dealer under section 18(1) collects amounts in excess of the rate or rates specified under the Act or, where he purports to collect amounts by way of tax, where there is no tax charged on the transaction under the Act, section 18(1) is contravened, which attracts the penalty provision of section 18-A, where sub-section (1) of section 18 is not contravened, even though the aggregate amounts collected on all the transactions of the dealer during the accounting period exceed the tax chargeable on the total turnover of the dealer, there is no power to invoke the penalty provision.
8. In view of the clear error of law apparent on the face of the impugned orders, the said orders are liable to be quashed. They are accordingly quashed. We further direct the Commercial Tax Officer (respondent No. 2) to consider the explanation offered by the petitioners after affording them a reasonable opportunity to be heard and then pass appropriate orders in the light of the interpretation of sections 18 and 18-A.
9. We express no opinion on the rest of the grounds raised in the writ petitions. Writ petitions allowed. No costs.
10. Petitions allowed.