Narayana Pai, J.:— The Petitioner in these two Writ Petitions is a dealer in iron and steel which are among the goods described as declared goods in the Fourth Schedule to the Mysore Sales Tax Act of 1957, on the last purchase of which a single point tax is leviable on the dealer in the State under Section 5(4). Prior to the coming into force of the Act on 1-10-1957 the point of levy was the first sale which was changed to the last purchase under the aforesaid provisions.

The Petitioner was purchasing the goods both from the Bhadravati Iron and Steel Works situated within the State and from others outside the State. Even after the coming into force of the Act, the Iron and Steel Works, Bhadravati which is a Government concern continued to collect from the petitioner along with the price, tax calculated as if the levy continued to be at the point of sale. When the petitioner protested stating that no such levy could be made after the Act came into force on 1-10-1957, the Bhadravati Iron and Steel Works appears to have told him that in the opinion of the Sales Tax Assessing Authority at Bhadravati, the Iron and Steel Works were entitled to levy and collect the said amounts by way of tax from the petitioner. Feeling therefore in doubt as to whether his sales also might be subjected to tax the petitioner collected from his purchasers certain sums of money in addition to the cost of goods, apparently as and for taxes likely to be collected from him. The amounts so collected by him were Rs. 6,451-07 during the quarter 1-10-1957 to 31-12-1957 to which W.P No. 33 of 1959 relates, and Rs. 6,432-52 during the quarter 1-1-1958 to 31-3-1968 which W.P No. 27 of 1959 relates. The Assessing Authority having jurisdiction over the petitioner called upon the petitioner to pay these amounts to the Government relying upon the provisions of Section 18(3) of the Act.

From the relevant assessment orders produced, there can be no doubt that the Assessing Authority considered these two sums of Rs. 6,451-07 and 6,432-52 to be sums collected in contravention of the provisions of the statute and therefore liable to be paid over to the Government under Section 18(3) of the Act.

The contention of the Petitioner in these. Writ Petitions is that the demand made by the Assessing Authority in respect of the amounts mentioned above is devoid of the authority of law and that the provisions of sub-section (3) of Section 18 of the Act are themselves unconstitutional.

Section 18 of the Act makes provision authorising certain dealers to collect amounts from the purchasers by way of tax and for paying over the same to the Government. The third sub-section deals with what are described as collections by the dealers of amounts by way of tax in excess of the amounts payable by them and requires such dealers to pay over the amounts so collected to the Government. That Sub-Section reads as follows:—

“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 tax in excess of the amount Payable by him, the amounts so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for any offence 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.”

The effect of this Section clearly is to forfeit the amounts to the Government and the liability to pay them over to the Government is a direct consequence of such a statutory forfeiture provided for by the said Section.

Apart from the question whether the dealer did or did not have authority to collect these amounts from his purchasers as and for or by way of sales tax, the circumstances in which the dealer came to make these collections as set out in his affidavit are not sought to be disputed. It was not the intention of the dealer to collect these amounts from his purchasers in addition to sale price and to appropriate the same to himself. His purpose in making these collections was to provide himself with a certain fund which in the event of his being held liable for sales tax should be available to him to discharge that liability, but, which in the event of its being clearly held that he was not liable to pay sales tax in respect of the transactions, the money should be refunded to or be claimable by his purchasers. It is on this basis that Mr. Venkatesha Iyer has argued that these amounts could not possibly come within the meaning of amounts collected by way of tax mentioned in the Section.

Cases have come before this Court where when liability to tax was a matter of doubt, the dealers had collected from parties dealing with them certain sums of money setting them apart under the heading ‘Contingent Deposits’, that is to say deposits to be dealt with according to the contingency of the transactions being subjected to such tax or not.

In those cases the department accepted the correctness of the contention put forward by the assessee that the Government was not entitled to collect the amounts under any of the provisions of the Sales Tax Act, in view of the decision of the Supreme Court reported in The State of Mysore v. Mysore Spinning and Manufacturing Co., Ltd.(1).

It is argued that the same principle should apply to the collections made by the assessee in these cases also. The distinction between the two as suggested by the learned Government Pleader appearing on behalf of the Department is that in the case of ‘Contingent Deposits’ there was a clear understanding between the parties that the money collected should be held in deposit by the assessee to be dealt with in a particular manner, depending upon whether or not the transactions were going to be subjected to sales tax, but that in the present case no such understanding between the assessee and the dealers has been alleged or proved. In the affidavit the petitioner no doubt states that he is always ready and willing to refund the moneys if and when his customers ask for payment or refund of the same. But, that is not saying that the moneys were collected upon an understanding of the type referred to in the case dealing with the ‘Contingent Deposits’ mentioned above.

In their decision, in the case referred to above, viz., The State of Mysore v. Mysore Spinning and Manufacturing Company, their Lordships of the Supreme Court contented themselves by stating that the deposits concerned in those cases could not, in the circumstances of those cases, be described as collections by way of taxes and refrained from expressing any opinion on the question whether the amounts collected in excess of sales tax payable under the statute would or would not be liable to be paid over to the Government. There is, however, another ruling of the Supreme Court in Bombay Dyeing and Harm factoring Co., Ltd. v. The State of Bombay, the principles stated in which are, in our opinion, directly applicable other facts and circumstances of these cases.

In that case, their Lordships considered the constitutionality of certain of the provisions of the Bombay Labour Welfare Fund Act of 1953. That Act constituted a fund called the Labour Welfare Fund and vested the same in a Board of Trustees for being applied for the welfare of workmen in the manner set out in that Act. That fund was to consist of certain specified items of money, one of which was ‘unpaid—accumulations, that is to say wages payable by an employer to his employees which remained with him unpaid to or unclaimed by the employees. The argument was that the provision of the statute providing for the transfer to the Board of Trustees of the unpaid accumulations in the possession of the employers at the time the statute came into force and for payment thereafter of such sums by the employers to the trustees were unconstitutional as amounting to deprivation of property in contravention of Article 19(1)(f) of the Constitution. Their Lordships accepted this argument. In doing so, their Lordships pointed out that the wages, though the property therein might not have passed to the employees, were payable to the employees and that even if the employees' right of recovery might have got barred by the law of limitation the intrinsic liability of the employer was not extinguished thereby. They further pointed out that the provisions of the Act providing for transfer or payment of such unpaid wages to the board of trustees did not discharge the contractual liability of the employer to make payment of those wages. Hence their Lordships held that the provisions of the Act in so far as they related to unpaid accumulations were void as amounting to deprivation of property in contravention of Article 19(1)(1) of the Constitution.

The position in the present cases is similar. When in ordinary cases a dealer collects from his customers an amount equal to the sales tax payable in respect of that transaction what he actually or in effect does is to transfer his liability to pay the tax-over to the customer and the customer as a part of the bargain undertakes himself to discharge the liability to pay the taxes which in normal circumstances would rest upon the dealer. Whichever way you look at it the amount so collected is liable to be paid to the Government as and for sales tax payable under the Statute. The position of the dealer in those circumstances would be more or less like that of an agent of the Government for collection of taxes. But no such position can be postulated in cases where the amount collected by the dealer from his customers does not or cannot represent tax payable to the Government in respect of the transactions in question. Although the dealer might have collected this amount in anticipation of or against the contingency of his being made liable to pay sales tax in respect of particular transactions the actual legal position is otherwise. It is not disputed that the transactions in connection with which the dealer in these cases has made the collections were not liable to sales tax at all. Hence the money collected by the dealer in addition to the price does not and cannot represent money liable to be paid over to the Government by way of sales tax or on account of sales tax. When there is no such liability resting on the dealer himself any attempt to transfer that liability to the purchaser to get the purchaser to undertake a liability for tax cannot be postulated at all. The customer having admittedly paid the price for the goods was no longer under any liability to the dealer or to pay any additional amounts. The payments made by the customer, therefore, are not in discharge of any liability resting upon him either owing to the dealer himself or owning to the Government by the dealer on account of tax and undertaken by him. For the same reason the dealer when he collected these moneys cannot be said to have collected the same on account of sums due to him in respect of the transactions from the customers. He has, therefore, collected a sum of money from the customers to which be is not entitled and which the customers were not bound to pay him. He is, therefore, accountable to the customers and the customers are entitled to recall the amounts as having been paid against a non-existing liability.

Thus the property in the money belongs ultimately to the customer; whether or not some special property in it may vest in the dealer it is beyond doubt that no rights in respect of it can vest in the Government by reason only of the fact that the occasion for the collection was some doubt regarding the liability of the transactions to sales tax. When, therefore, Section 18(3) purports to forfeit these sums to the Government, what it actually does is to deprive either the customer or the dealer or both of their property in respect of the monies which is in direct contravention of Article 19(1)(f) of the Constitution.

The result, therefore, is that sub-section (3) of Section 18 of the Mysore Sales Tax Act (Mysore Act No. 25 of 1957) is declared unconstitutional as opposed to Article 19(1)(f) of the Constitution and therefore void. The assessment orders of the assessing authority to the extent to which they hold that the two sums of money viz., Rs. 6,451-07 in respect of the Quarter 1-10-1957 to 31-12-57 and Rs. 6,432-52 in respect of the Quarter 1-1-1958 to 31-3-1958 are payable to Government under Section 18(3) of the Act and the notices of demand to the extent to which they require the petitioner to pay these sums to the Government will stand quashed.

We make no order as to costs.

Other matters dealt with in the impugned assessment orders which we are told are subject matters of separate appeals are not decided and are left open.