2005 INSC 0085
                                    SUPREME COURT OF INDIA

                                     T. Stanes and Company Limited

                                                      Vs.

                                            State of Tamil Nadu

                              S.L.P. (Civil) Nos.25843 to 25845 of 2004

                                   (S. N. Variava and H. K. Sema JJ.)

                                                 24.01.2005

                                                JUDGMENT

S. N. Variava, J.

1. Heard Mr. Gopal Subramanium, learned Senior Counsel, at great length.

2. These special leave petitions are against the judgment of the High Court of Madras dated
16th September, 2004 wherein the High Court has dismissed the writ petition filed by the
appellant refusing to follow another judgment of the High Court in the case of Metal Sales
Corporation v. Joint Commercial Tax Officer reported in1 and preferring to follow a
judgment of the same High Court in the case of Swastik Household and Industrial Products
v. State of Tamil Nadu reported in2.

3. The question involved is whether section 22 of the Madras Sales Tax Act bars the
appellant from collecting in any manner amounts paid by them to the seller by way of tax.
The relevant portion of section 22 reads as follows:

        "22. Collection of tax by dealer.-(1) No person who is not a registered dealer shall
        collect any amount by way of tax or purporting to be by way of tax under this Act;
        and no registered dealer shall make any such collection except in accordance with the
        provisions of this Act and the Rules made thereunder :

        Provided that nothing in this sub-section shall apply to the collection of an amount by
        a registered dealer, towards the amount of tax already suffered under this Act, in
        respect of goods, the sale or purchase price of which is controlled by any law in
        force."

4. The wording of the section is very clear. The term" collect" would include in its ambit
collection in any manner. Purported recoupment or recovery would be nothing else but
collection. Once the dealer is prevented from collecting, it is not open to say that he is not
collecting but is only recouping. We find ourselves unable to accept the reasoning given by

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the High Court in the Metal Sales Corporation's case. Mere case of a different nomenclature
or language cannot be allowed to defeat the clear provision of the section. If the reasoning of
the High Court in Metal Sales Corporation's case is accepted, section 22 would be rendered
nugatory. It would enable dealers to collect by just terming the collection as recoupment,
recovery, etc. The recoupment, recovery, collection is nothing else but the amount paid by
the assessee to its seller towards the tax liability of the seller. Further recovery, recoupment
or collection from their buyers is what is prevented by section 22. In our view, the High
Court is absolutely right in the reasoning given in the impugned judgment. The law laid
down in the Metal Sales Corporation's case is not good law and stands overruled.
Accordingly, the special leave petitions stand dismissed. There will be no order as to costs.

11982 Indlaw MAD 97
21995 Indlaw MAD 144

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