S.S. Dewan, J.
1. Two Civil Writ Petitions Nos. 1177 of 1976, Fairdeal Agencies (Regd.), Ambala Cantonment v. The State of Haryana and Ors. and 1471 of 1977, Shiv Kumar Hari Parkash, Hissar v. The State of Haryana and Anr., are being disposed of together by this judgment.
2. The facts emerging from the petition, which need be stated, are these: The petitioners are carrying on business in the State of Haryana. They were registered as dealers under the Punjab General Sales Tax Act, 1948, the Central Sales Tax Act, 1956, and later on under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the Punjab Act, Central Act and Haryana Act respectively). In respect of the year of assessment 1969-70, the petitioner in Civil Writ No. 1177 was assessed to sales tax under the Punjab Act as well as under the Central Act by order of the Assessing Authority, Ambala, dated 29th October, 1974. Assessment order for the year 1968-69 in the case of the petitioner in Civil Writ No. 1471 was made under both the Acts on 29th December, 1969, by the Assessing Authority, Hissar. Thereafter, the Deputy Excise and Taxation Commissioner, Ambala, acting suo motu issued to the petitioner in Civil Writ No. 1177 a notice dated 19th January, 1976, and thereby required the petitioner to appear in the proceedings intended to be taken with a view to determine the question of its liability for penalty in terms of Section 49(3) of the Haryana Act on account of collection by it of the amount of tax in excess of the amount permissible under the Central Act. A similar notice dated 23rd February, 1977 was issued by the Assessing Authority, Hissar, to the petitioner in Civil Writ No. 1471 under Section 9(2) of the Central Act, read with Section 49 of the Haryana Act. It appears that the petitioners chose not to appear in the proceedings so intended and instead approached this Court for quashing the notices in exercise of its extraordinary powers. The legality of the notice has been challenged in each case by the Learned Counsel and it is contended that:
(i) Section 49 of the Haryana Act, under which it is proposed to levy penalty, is beyond the competence of the legislature;
(ii) The legislature was not competent to give retrospective effect to Section 49, so as to operate with effect from 14th November, 1967;
(iii) Section 49 cannot be pressed into service so as to impose penalty in view of the saving provision made in the proviso to Section 65 of the Haryana Act;
(iv) In the absence of a provision in the Central Act for imposing penalty for excess collection of the amount of tax thereunder, recourse to Section 49 of the Haryana Act cannot be taken to penalise the petitioners for such collections.
3. These contentions are being dealt with hereunder:
Section 49 of the Haryana Act, of which the competency of the legislature to enact was questioned, is in these words:
(1) No person shall collect any sum by way of tax in respect of sale or purchase of any goods on which no tax is payable under this Act.
(2) No person, who is not a registered dealer and liable to pay tax in respect of any sale or purchase, shall collect on the sale or purchase of any goods any sum by way of tax from any other person and no registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under this Act.
(3) If any person, not being a dealer liable to pay tax under this Act, collects any sum by way of tax, or being a registered dealer collects any amount by way of tax in excess of the tax payable by him or otherwise collects tax in contravention of the provisions of Sub-sections (1) and (2), he shall be liable to pay, in addition to any tax for which he may be liable, a penalty of an amount not exceeding five hundred rupees, or double the amount so collected whichever is greater.
4. This section was given retrospective effect from 14th November, 1967, by the legislature by virtue of Section 1(3) of the Act.
5. Section 10A of the Punjab Act, which was inserted in the Haryana Act by the Haryana Legislature to take effect from 14th November, 1967, to which reference will be made during the course of discussion of the question of competency, reads thus:
(1) No dealer, who is not liable to pay tax under this Act shall collect any amount by way of tax under this Act; nor shall a dealer liable to pay tax under this Act make any such collection, except in accordance with the provisions of this Act.
(2) If any dealer, who is not liable, to pay tax under this Act, collects any amount purporting to be by way of tax under this Act, such dealer shall pay over to the State Government, within such time and in such manner as may be prescribed, the amount so collected.
(3) If any dealer liable to pay tax under this Act, collects tax on any transaction not liable to tax under this Act or in excess of the tax leviable under this Act, such dealer shall pay over to the State Government, in addition to the tax payable, the amount so collected within such time and in such manner as may be prescribed.
(4) If the amount of tax collected by any dealer under Sub-section (2) or Sub-section (3) is not paid to the State Government within the time, and in the manner prescribed, it shall be recoverable as arrears of land revenue:
Provided that the payment of any claim to such amount made by the person who paid it to such dealer shall be the liability of the State Government.
6. The learned Advocate-General for the State of Haryana drew our attention to the recent judgment of the Supreme Court in the case of R.S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Ltd.  40 S.T.C. 497 (S.C.) and submitted that, in view of what had been held therein, the competency of the legislature to enact Section 49 was no longer open to challenge. Sections 46 and 37 of the Bombay Sales Tax Act (No. 51 of 1959), which fell for consideration from the point of view of their legislative competence, are in these terms:
46. (1) No person shall collect any sum by way of tax in respect of sales of any goods on which by virtue of Section 5 no tax is payable.
(2) No person, who is not a registered dealer and liable to pay tax in respect of any sale or purchase, shall collect on the sale of any goods any sum by way of tax from any other person and no registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act....
37. (1)(a) If any person, hot being a dealer liable to pay tax under this Act, collects any sum by way of tax, or being a registered dealer collects any amount by way of tax in excess of the tax payable by him, or otherwise collects tax in contravention of the provisions 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.
7. The Supreme Court on a review of previous judgments of the court upheld the competency of the State Legislature to enact these sections and observed thus:
Sections 37(1)(a) and 46(2) of the Bombay Sales Tax Act (51 of 1959 as applicable to the State of Gujarat) are not ultra vires the State Legislature inasmuch as those provisions fall within the range of ancillary or incidental powers of the State Legislature under entry 54 read with entry 64 of List II of the Seventh Schedule of the Constitution of India. They also do not contravene Article 14 or 19(1)(f) of the Constitution. It is therefore permissible for the State Legislature to enact that sums collected by the dealers by way of sales tax but are not exigible under the State law and prohibited by it should be forfeited to the public exchequer punitively.
The forfeiture clause in Section 37(1) is a punitive measure to protect public interest in the enforcement of the fiscal legislation and it falls squarely within the area of implied powers. All real punitive measures, including the dissuasive penalty of confiscating the excess collections, are valid, being within the range of ancillary powers of the legislature competent to exact a sales tax levy. The fact that there is arithmetical identity between the figures of the illegal collections made by the dealers and the amounts forfeited to the State cannot create a conceptual confusion that what is provided is not punishment but a transference of funds. The notion that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea is not correct. Therefore, the contention that Section 37(1) fastens a heavy liability regardless of fault has no force in depriving the forfeiture of the character of penalty. The fact that in Section 37(1) mens rea is excluded and the penal forfeiture can be enormous are germane to legislative policy, not for judicial compassion.
In a developing country, with the mass of the people illiterate and below the poverty line, and most of the commodities concerned constitute their daily requirements, there is sufficient nexus between the power to tax and the incidental power to protect purchasers from being subjected to an unlawful burden. Social justice clauses, integrally connected with the taxing provisions, cannot be viewed as a mere device or wanting in incidentally.
8. Provisions of Section 49 of the Haryana Act are analogous to those made in Sections 46(1), (2) and 37(1)(a) of the Bombay Sales Tax Act.
9. The view of the Supreme Court on the legislative competence in relation to the provisions of the Bombay Act reproduced above will, therefore, aptly apply to Section 49 of the Haryana Act so that it has to be held that the enactment of the section is well within the area of ancillary or incidental power of the legislation under entry 54 of List II (taxes on sale and purchase of goods) of the Seventh Schedule to the Constitution and is a competent piece of legislation.
10. The judgments of the Supreme Court in R. Abdul Quader & Co. v. Sales Tax Officer, Hyderabad  15 S.T.C. 403 (S.C.), and Ashoka Marketing Ltd. v. State of Bihar  26 S.T.C. 254 (S.C.), on which the Learned Counsel relied to support their contention are wholly irrelevant in view of the obvious difference between the provisions of law which came for consideration in these cases and the provisions of Section 49 of the Haryana Act. The Sales Tax Act in each case made a provision exactly as in Section 10-A(3) of the Punjab Act, reproduced above, to the effect that the amount of tax collected by a dealer in excess of the amount due under the Act shall be paid over to the Government. The Supreme Court struck down the two sections holding that the ambit of ancillary or incidental power attaching to entry 54 of List II of the Constitution could not extend to permitting the legislature to provide that, though the excess amount collected by way of tax is not exigible under the law made under the relevant taxing entry, it shall still be paid over to the Government as if it was a tax. The reason assigned by the Supreme Court for striking down the two sections cannot apparently apply to Section 49 of the Haryana Act, which empowers imposition of penalty in the event of unauthorised collection of tax by a dealer. The contention fails.
11. Contention No. 2.--The contention that the legislature did not possess the power to give Section 49 of the Haryana Act, which came into force on 5th May, 1973, retrospective effect from 14th November, 1967, does not bear scrutiny in view of the position of law firmly settled by the Supreme Court. It has been laid down by the Supreme Court that the power of the legislature to enact a law with reference to the topic entrusted to it is unqualified subject to a limitation imposed by the Constitution and that, in exercise of such a power, it. is competent for the legislature to enact a law which is either prospective or retrospective. This situation of law, when pointed out, the Learned Counsel were unable to advance any argument in support of the contention raised. Consequently, it is held that Section 49 of the Haryana Act is not ultra vires the powers of the legislature on the ground that it operates retrospectively.
12. Contention No. 3.--Section 65(1) of the Haryana Act and the proviso to it, on which the contention by the Learned Counsel is based, is in these terms:
65. (1) The Punjab General Sales Tax Act, 1948 (hereinafter referred to as the repealed Act), is hereby repealed:
Provided that such repeal shall not affect the previous operation of the repealed Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder, and subject thereto, anything done or any action taken, shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amounts due under the repealed Act, at the commencement of this Act, may be recovered as if they had accrued under this Act.
13. The contention precisely stated is that, in so far as the Punjab Act under which the assessment had been made did not provide for penalty for the excess collection of tax during the years of assessment, the petitioners had acquired their right under the proviso to Section 65 of the Act, not to be so penalised. The argument is totally misconceived and pressed upon an interpretation of the first part of the proviso, which provides for saving of the rights accrued and the liability incurred under the repealed Act. Manifestly enough, the proviso is intended to preserve such rights as the repealed Act had conferred. Indisputably, no immunity from imposition of penalty for excess collection of tax had been granted to an assessee by or under the repealed Act. Consequently, no such right as is being contended for accrued, or could possibly accrue, to the petitioners.
14. The Learned Counsel relied upon two judgments of the Supreme Court to support the contention: one is the case of State of Tamil Nadu v. Star Tobacco Co. A.I.R. 1973 S.C. 1387 and another is the case of Sales Tax Officer v. Hanuman Prasad  19 S.T.C. 87 (S.C.). In the State of Tamil Nadu's case A.I.R. 1973 S.C. 1387, the assessment to sales tax in the case of the respondent was made under the Madras General Sales Tax Act, 1939. But, after coming into force of the Madras General Sales Tax Act, 1959, which by Section 61 repealed the 1939 Act, the appeal against the assessment order was rejected by the appellate authority. In such a situation, the appellate authority was alone competent under the 1939 Act and the Rules framed thereunder to reopen the assessment. Instead, the assessing authority did so purporting to exercise his power vesting in him under the 1959 Act. The question arose whether he could reopen the assessment in view of the saving provision made in the proviso to Section 61 of the 1959 Act, which is similar to the proviso of Section 65 of the Haryana Act. The Supreme Court held that a valuable right accrued to the assessee under the proviso to have his case reopened by the appellate authority and, consequently, the assessing authority was not competent to reopen the assessment.
15. In the other case of Sales Tax Officer v. Hanuman Prasad  19 S.T.C. 87 (S.C.), the respondent was assessed to sales tax under the Central Provinces and Berar Sales Tax Act, 1947. The order in this behalf was made by the authority sometime after the enforcement of the Madhya Pradesh General Sales Tax Act, 1958, which by Section 52 repealed the 1947 Act. The proviso to Section 52 was practically in the same words as the proviso to Section 65 of the Haryana Act and it saved the rights accruing under the 1947 Act. Sometime after the lapse of three years, the assessing authority commenced action so as to reassess the respondent on the ground that a part of his turnover had escaped assessment under the 1947 Act. The period within which the reassessment proceedings could be initiated was three years from the date of the assessment year. Consequently, the respondent questioned the legality of the proceedings on the ground that they were time-barred. It was contended on behalf of the assessing authority that the period for the assessment was 5 years under Section 19 of the 1958 Act. The Supreme Court and earlier the High Court of Madhya Pradesh repelled the contention of the assessing authority and held, relying upon the proviso to Section 52 of the 1958 Act, that the saving provision to be found in the proviso preserved the right of the respondent in respect of the period within which the reassessment proceedings could be set afoot and, hence, the proceedings which had been initiated after the expiry of the said period were quashed.
16. It will appear that, in both these cases, the right had come to vest in the assessee under the repealed Act, which had been preserved by the repealing Act. No such position, as has been observed above, exists in these petitions. The contention is absolutely devoid of substance and is rejected.
17. Contention No. 4.--In support of the contention that Section 49 of the Haryana Act authorising the imposition of penalty for excess collection of tax cannot be invoked unless a provision in that behalf was found in the Central Act, the Learned Counsel placed reliance on the judgment of the Supreme Court in the case of Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra  35 S.T.C. 571 (S.C.). The counsel submitted that no such provision exists in the Central Act. In the Khemka & Co.'s case  35 S.T.C. 571 (S.C.), the question arose whether the power residing in the State authority by virtue of Section 16(4) of the State Act to penalise a dealer for delayed payment of the tax under the Act could be validly exercised by them against a dealer under the Central Act found guilty of such default. The State depended on Section 9 of the Central Act, which provides for levy and collection of tax and penalties, in defence of the action taken by the authority for the purpose of imposing penalty under the Act. After examining the scope of the section, the court did not agree with the State and held:
There is no provision in the Central Sales Tax Act, 1956, for imposition of penalty for delay or default in payment of tax and the provision in the State Sales Tax Act imposing penalty for non-payment of tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax payable under the Central Act. Consequently, it is not permissible for the authorities to invoke the provisions of Section 16(4) of the Bombay Sales Tax Act, 1953, for imposing penalty for failure by the dealer to pay sales tax payable under the Central Act within the prescribed time.
18. It follows that, if Section 9 of the Central Act stood as it was at the time the Supreme Court decided the aforesaid case, the contentions raised by the Learned Counsel would be unanswerable and have to be accepted. But the position has completely changed since then, in view of the legislative enactment, namely, the Central Sales Tax (Amendment) Act (No. 103 of 1976), which received the assent of the President on 7th September, 1976. By Section 6 of the amending Act, a new sub-section, namely, Sub-section (2A) was inserted in Section 9 of the Central Act. The said sub-section is as follows:
All the provisions relating to offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, reassessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.
19. Section 9 of the Amendment Act is a validating section and makes the provision of Sub-section (2A) of Section 9 inserted thereby to operate retrospectively with effect from 5th day of January, 1957.
20. In view of the altered position of law as indicated, evidently no assistance can be sought by the Learned Counsel from the judgment in the Khemka & Co.'s case  35 S.T.C. 571 (S.C.).
21. It will have thus to be held that there is no substance in the contention of the Learned Counsel. The impugned notices as also the action proposed to be taken in furtherance of them so as to levy penalty are perfectly legal and unquestionable.
22. In the result, both the writ petitions are meritless and are dismissed. There will be no order as to costs.