1. There is a common petitioner in these petitions. Identical questions of law arise for decision in all these petitions. The petitioner is a dealer in iron and steel. During the period between 1st October, 1957, and 31st December, 1958, he collected from his customers certain amounts purporting to be collections under section 18 of the Mysore Sales Tax Act, 1957 (to be referred to hereinafter as 'the Act'). During the relevant period, 'sales' of iron and steel were not eligible to sales tax. Only a single point tax was livable on transactions relating to iron and steel and that at the last purchase point. These are admitted facts. Despite the same, the petitioner unauthorisedly collected from his customers certain sums of money as sales tax. The petitioner was asked by the Revenue to remit those sums to the Treasury. At that stage, the petitioner moved this Court under Article 226 of the Constitution (in W.P. Nos. 27 and 33 of 1959 ( 13 S.T.C. 322)) to quash the demand notices issued to him. This Court held that where a dealer had collected from the customer an amount in anticipation of or against the contingency of his being made liable to pay sales tax in respect of a particular transaction, but that transaction was ultimately found not liable to tax it must be held that the dealer had collected a sum which he was not entitled to collect and the customer was not bound to pay and, therefore, the customer was entitled to recall the amount as having been paid against a non-existing liability; when section 18(3) of the Act purported to forfeit these sums to the Government what it actually did was to deprive either the customer or dealer or both of their property in respect of the moneys which was in direct contravention of Article 19(1)(f) of the Constitution and, therefore, section 18(3) was unconstitutional. See M. Kuppuswami Naicker v. Commercial Tax Officer, IVth Additional Circle, Bangalore, and Another ( 13 S.T.C. 322). This Court accordingly allowed those writ petitions and quashed the notice of demand. The judgment of this Court was delivered on 4th October, 1961.
2. After the above judgment was delivered, the State Legislature amended section 18 of the Act. Apart from other alterations, it added one more clause to section 18(3) and that clause reads thus :
'Where any amount forfeited to the State Government is either paid into a Government treasury or is recovered as an arrear of land revenue under clause (a), a refund of such amount or any part thereof can be claimed from the Government only by the person from whom the person, registered dealer or licensed dealer, as the case may be, has actually realised such amount by way of the tax provided that such claim is made within one year from the date of payment of the amount into a Government treasury or recovery thereof as arrear of land revenue.'
3. The amending Act also contains a validating provision. The same found in section 10 of the amending Act. That section says :-
'Anything done or any action taken or purported to be done or taken (including any notices or orders issued or assessment, payments or recoveries made and all proceedings held for the levy and collection of tax) under the principal Act before the commencement of this Act, shall, notwithstanding any judgment, decree or order of any court, be deemed to have been validity done, taken, issued, made or held and shall have effect for all purposes, as if it had been done, taken, issued, made or held by or under the provisions of the principal Act as amended by sections 5 and 9 of this Act and accordingly no suit or other legal proceeding shall be entertained or continued in any court or other authority on the ground that any such thing was done or action taken under or in pursuance of provisions which were not valid or not in force at that time.'
4. The amending Act (Mysore Act No. XXIX of 1961) came into force on 1st December, 1961.
5. After the amending Act was passed the Revenue again revived the demand notices issued to the petitioner. Aggrieved by these notices the petitioner has come with these writ petitions.
6. In these writ petitions, two contentions have been urged on behalf of the petitioner, i.e., (1) that section 18(3) is invalid as it contravenes Articles 19(1)(f) and 31(2) of the Constitution, and (2) that on the admitted facts of the case, there is no contravention of section 18(1) and (2) of the Act, and therefore the Revenue is not entitled to take action under section 18(3).
7. It was observed by the Supreme Court in State of Bihar v. Rai Bahadur Hurdut Roy Moti Lall Jute Mills and Others : 2SCR331 , that in cases where the vires of statutory provisions are challenged on constitutional grounds, it is essential that the material facts should first be clarified and ascertained with a view to determine whether the impugned statutory provisions are attracted; if they are, the constitutional challenge to their validity must be examined and decided; if, however, the facts admitted or proved do not attract the impugned provisions there is no occasion to decide the issue about the vires of the said provisions; any decision on the said question would in such a case be purely academic; Courts are and should be reluctant to decide constitutional points merely as matters of academic importance. Therefore, we have to first see whether there is any contravention of sub-section (1) of section 18 before pronouncing on the question as to the constitutional validity of sub-section (3) of section 18.
8. Section 18(1) says :-
'No person who is not a registered dealer shall collect any amount by way of tax under this Act; nor shall a registered dealer make any such collection except in accordance with such conditions and restrictions, if any, as may be prescribed :
Provided that the amount which may be collected by way of tax shall not exceed the rate or rates of tax specified in respect of the sale or purchase of goods under this Act.
* * * *'
9. Sub-section (2) of section 18 is not relevant for our purpose. The only question for our consideration now is whether the petitioner who is admittedly a registered dealer had collected 'any amount by way of tax' or whether he had made collection of 'any amount by way of tax' in disregard of the prescribed conditions and restrictions.
10. The rule which provides for the collection of tax by dealers is rule 12.
11. The said rule says :
'(1) A registered dealer other than a dealer who has been permitted to pay any amount by way of composition under section 17, may collect amounts by way of tax or taxes under the Act subject to the following conditions :
(i) He shall not collect any amount or amounts by way of tax or taxes under the Act at a rate or rates exceeding the rate or rates specified in section 5 or 6 or in First, Second, Third or Fourth Schedules.
(ii) He shall pay the amount collected by him by way of tax to the Government within 30 days after the close of the year in which such collection is made after deducting the amount of tax, if any, paid by him under the provisional assessment made in his case for that year.
12. Nothing contained in this clause shall apply to a casual trader in respect of the collections made by him who shall pay such tax immediately after an assessment is made during any part of the assessment year.
(2) The assessing authority may at any time call for and examine the accounts of a registered dealer for the purpose of satisfying himself that the dealer has paid in full the amount collected by him by way of tax, as required by clause (ii) of sub-rule (1).
(3) If the assessing authority is satisfied that any amount collected by the dealer by way of tax has not been paid by him to the Government in any year as required by clause (ii) of sub-rule (1), the assessing authority shall issue a notice to the dealer in Form 3 specifying therein the total sum so withheld by him and the dealer shall pay such sum within the time and in the manner specified therein.'
13. Section 18(3)(a) says :-
'If any person collects any amount by way of the tax in contravention of the provisions of sub-section (1) or (2) or if any registered dealer or licensed dealer collects any amount by way of the tax in excess of the amount payable by him, the amount so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for any offense under this Act, stand forfeited to the State Government, and such person or dealer, as the case may be, shall, within the prescribed period, pay such amount into a Government treasury and in default of such payment, the amount shall be recovered as an arrear of land revenue.'
14. Under sub-section (3) of section 18, only when any collection 'by way of the tax' in contravention of the provisions of sub-section (1) or (2) is made, that a dealer is liable to pay over that amount to the State and not otherwise. A collection which is not made 'by way of the tax' is outside the scope of section 18(3). Therefore we have to see whether the petitioner had collected any amount 'by way of the tax'. As mentioned earlier sale transactions were not eligible to tax. Therefore, the collections in question fall wholly outside the scope of the Act. The facts of this case fall within the rule laid down by the Supreme Court in State of Bihar v. Rai Bahadur Hurdut Roy Moti Lall Jute Mills and Others : 2SCR331 referred to earlier. Identical question of law arose for consideration in that case. The material facts were more or less similar. The Court held that before the penalty of forfeiture can be imposed upon the dealer under the proviso it must be shown that he has acted contrary to the conditions and restrictions prescribed by the rules; it would not be enough to show that the collection of the amounts in question by the dealer is otherwise illegal or improper; the contravention of the statutory provision contained in section 14A of the Bihar Sales Tax Act or of the Rules prescribing conditions and restrictions in this behalf alone can form the basis of the imposition of the penalty under the proviso. Dealing with the argument that the collection in question contravened the provisions of section 14A of the Bihar Sales Tax Act, which is somewhat similar to the provisions contained in section 18 of the Act, this is what Gajendragadkar, J., observed :
'......... as to the argument about the contravention of section 14A itself it is difficult to appreciate how any provision of section 14A can be said to have been contravened. Section 14A consists of two parts both of which are put in the negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed. If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of section 14A as such .................'
15. These observations apply mutatis mutandis to the facts of the present case.
16. In the result, these petitions are allowed and the impugned demands made under section 18(3) of the Act are quashed. In the circumstances of the case, we direct the parties to bear their own costs.
17. Petition allowed.