Collection of tax by dealers

(1) (a) A person who is not a registered dealer liable to pay tax shall not collect any amount by way of tax or purporting to be by way of tax under this Act; nor shall a registered dealer collect any amount by way of tax or purporting to be by way of tax at a rate or rates exceeding the rate or rates 2[at which he is liable to pay tax under the provisions of this Act.] 3[x x x] 1. Substituted by Act 18 of 1978 w.e.f. 1.9.1978. 2. Substituted by Act 4 of 1992 w.e.f. 1.4.1992. 3. Inserted by Act 8 of 1984 w.e.f. 1.4.1984 & omitted by Act 9 of 1986 w.e.f. 1.4.1986. (b) No person shall collect any amount by way of tax or purporting to be by way of tax in respect of sales of any goods 1[or any transaction] on which no tax is payable by him under the provisions of this Act. 1. Deemed always to have been Inserted by Act 5 of 2001 w.e.f. 1.10.1957. (2) Notwithstanding anything contained in sub-section (1), a dealer who has been permitted to pay any amount by way of composition 1[under sub- section (1) 2[x x x] 3[ 4[x x x] or sub-section (8)] of section 17] or a dealer who is exempted from sales tax by virtue of recognition granted under the provisions of this Act, shall not collect any amount by way of tax or purporting to be by way of tax on the sales or purchases of goods made during the period to which such composition or recognition applies. 1[(3) Notwithstanding anything contained in sub-sections (1) and (2), no dealer who is liable to pay additional tax under section 6-C shall collect any amount by way of such additional tax or purporting to be by way of such additional tax payable by him.] 1. Substituted by Act 15 of 1988 w.e.f. 1.4.1988. 2. Omitted by Act 5 of 2000 w.e.f. 1.4.2000. 3. Inserted by Act 1 of 1996 w.e.f. 5.3.1996. 4. Omitted by Act 7 of 1997 w.e.f. 1.4.1997. 1. Omitted by Act 5 of 2002 w.e.f. 1.4.2002 and again Inserted by Act 30 of 2003 w.e.f. 1.6.2003. Sales Tax [1957: KAR. ACT 25 18-A. Penalty for collection in contravention of section 18.- If any person contravenes any of the provisions of section 18, the assessing authority may, after giving such person reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding 1. Substituted by Act 5 of 2002 w.e.f. 1.4.2002. 1[not less than one half but not exceeding an amount equivalent to] such amount: 1. Omitted by Act 23 of 1983 w.e.f. 18.11.1983 and again Inserted by Act 26 of 2004 w.e.f. 1.8.2004. 1[Provided that no penalty shall be levied under this section after a period of eight years from the close of the year to which the contravention relates.] Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.] 1. Inserted by Act 4 of 1992 w.e.f. 1.4.1992. 1[18-AA. Payment and disbursement of amounts wrongly collected by dealer as tax.- (1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act. (2) If default is made in payment of the amount in accordance with sub- section (1),- (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer; (ii) the dealer liable to pay the amount shall pay interest at the rate of 1[one and a quarter percent] of such amount for each month of default; and (iii) the whole of the amount remaining unpaid along with the interest calculated under clause (ii) of this sub-section shall be recoverable in the manner specified in section 13. 1[Explanation.- For the purpose of this sub-section, non-payment during any period during which recovery of any amount due under this Section is stayed by an order of any authority or Court in any appeal or other proceedings disputing such amount, shall be deemed to be a ‘default’, unless such appeal or other proceeding is allowed by such Authority.] (3) Notwithstanding anything contained in this Act, or in any other law for the time being in force, any amount paid or payable by any dealer under sub- section (1) shall, to the extent it is not due as tax be forfeited to the State Government and be recovered from him and such payment or recovery shall discharge him of the liability to refund the amount to the person from whom it was collected. 1957: KAR. ACT 25] Sales Tax (4) Where any amount is paid or recovered by or from any dealer under sub- section (1) or (3), a refund of such amount or any part thereof can be claimed from Government by the person from whom, it was realised by way of tax provided an application in writing in the prescribed form is made to the Commissioner, within two years from the date of the order of forfeiture. On receipt of any such application, the Commissioner shall hold such inquiry as he deems fit and if the Commissioner is satisfied that the claim is valid and admissible and that the amount so claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the person concerned. (5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of section 18 at any time before the commencement of the Karnataka Sales Tax (Amendment) Act, 1992, the provisions of sub- sections (3) and (4) shall apply to such amount collected.] 1. Substituted by Act 11 of 2005 w.e.f. 1.4.2005 1. Inserted by Act by Act 11 of 2005 w.e.f. 1.10.1957

2[at which he is liable to pay tax under the provisions of this Act.]

3[x x x]

¹ Substituted by Act 18 of 1978 w.e.f. 1.9.1978.

² Substituted by Act 4 of 1992 w.e.f. 1.4.1992.

³ Inserted by Act 8 of 1984 w.e.f. 1.4.1984 & omitted by Act 9 of 1986 w.e.f. 1.4.1986.

1. (b) No person shall collect any amount by way of tax or purporting to be by way of tax in respect of sales of any goods 1[or any transaction] on which no tax is payable by him under the provisions of this Act. 1. Deemed always to have been Inserted by Act 5 of 2001 w.e.f. 1.10.1957.

1. (2) Notwithstanding anything contained in sub-section (1), a dealer who has been permitted to pay any amount by way of composition 1[under sub- section (1) 2[x x x] 3[ 4[x x x] or sub-section (8)] of section 17] or a dealer who is exempted from sales tax by virtue of recognition granted under the provisions of this Act, shall not collect any amount by way of tax or purporting to be by way of tax on the sales or purchases of goods made during the period to which such composition or recognition applies. 1[(3) Notwithstanding anything contained in sub-sections (1) and (2), no dealer who is liable to pay additional tax under section 6-C shall collect any amount by way of such additional tax or purporting to be by way of such additional tax payable by him.]

¹ Substituted by Act 15 of 1988 w.e.f. 1.4.1988.

² Omitted by Act 5 of 2000 w.e.f. 1.4.2000.

³ Inserted by Act 1 of 1996 w.e.f. 5.3.1996.

⁴ Omitted by Act 7 of 1997 w.e.f. 1.4.1997.

¹ Omitted by Act 5 of 2002 w.e.f. 1.4.2002 and again Inserted by Act 30 of 2003 w.e.f. 1.6.2003.

Sales Tax [1957: KAR. ACT 25

18-A. Penalty for collection in contravention of section 18.- If any person contravenes any of the provisions of section 18, the assessing authority may, after giving such person reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding

¹ Substituted by Act 5 of 2002 w.e.f. 1.4.2002.

1[not less than one half but not exceeding an amount equivalent to] such amount:

¹ Omitted by Act 23 of 1983 w.e.f. 18.11.1983 and again Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

1[Provided that no penalty shall be levied under this section after a period of eight years from the close of the year to which the contravention relates.] Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.]

¹ Inserted by Act 4 of 1992 w.e.f. 1.4.1992.

1[18-AA. Payment and disbursement of amounts wrongly collected by dealer as tax.- (1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act.

1. (2) If default is made in payment of the amount in accordance with sub- section (1),-
   • (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer;
   • (ii) the dealer liable to pay the amount shall pay interest at the rate of 1[one and a quarter percent] of such amount for each month of default; and
   • (iii) the whole of the amount remaining unpaid along with the interest calculated under clause (ii) of this sub-section shall be recoverable in the manner specified in section 13. 1[Explanation.- For the purpose of this sub-section, non-payment during any period during which recovery of any amount due under this Section is stayed by an order of any authority or Court in any appeal or other proceedings disputing such amount, shall be deemed to be a ‘default’, unless such appeal or other proceeding is allowed by such Authority.]
2. (3) Notwithstanding anything contained in this Act, or in any other law for the time being in force, any amount paid or payable by any dealer under sub- section (1) shall, to the extent it is not due as tax be forfeited to the State Government and be recovered from him and such payment or recovery shall discharge him of the liability to refund the amount to the person from whom it was collected. 1957: KAR. ACT 25] Sales Tax
3. (4) Where any amount is paid or recovered by or from any dealer under sub- section (1) or (3), a refund of such amount or any part thereof can be claimed from Government by the person from whom, it was realised by way of tax provided an application in writing in the prescribed form is made to the Commissioner, within two years from the date of the order of forfeiture. On receipt of any such application, the Commissioner shall hold such inquiry as he deems fit and if the Commissioner is satisfied that the claim is valid and admissible and that the amount so claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the person concerned.
4. (5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of section 18 at any time before the commencement of the Karnataka Sales Tax (Amendment) Act, 1992, the provisions of sub- sections (3) and (4) shall apply to such amount collected.]

¹ Substituted by Act 11 of 2005 w.e.f. 1.4.2005

¹ Inserted by Act by Act 11 of 2005 w.e.f. 1.10.1957