JUDGMENT

TULZAPURKAR, J. :— Having regard to the decision of the Constitution Bench of this Court in R. S. Joshi v.. Ajit Mills Ltd., Ahmedabad. (1978) 1 SCR 338, this appeal will have to be allowed.

2. Before the High Court the provisions of S.9-B(3) and S. 14-A of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) were challenged on the ground of lack of legislative competence by the assessee by way of a writ petition. The contention was while Entry 54 of List II of the Seventh Schedule enables Legislation imposing levy of tax on sale or purchase of goods, a provision that if a person (trader) realised any amount by way of tax when not exigible or realised any amount by way of tax in excess of the tax at the prescribed rate he should make over to the State by way of penalty such collections and a further provision that a refund of such amount shall be made by the State to the person or persons from whom such collections were made provided a claim of such refund was made within the prescribed period of limitation did not fall within ancillary or incidental legislative powers of the State Legislature and hence would be beyond the Entry. Following its own earlier decision in Rameshwar Prasad v. Sales, Tax Officer, 32 STC 332, the High Court allowed the writ petition. It may be stated that in Rameshwar Prasads case (supra) the High Court had followed two decisions of this Court one in Abdul Quader & Co. v. Sales Tax Officer, 15 STC 403 and the other in Ashoka Marketing Co. v. State of Bihar, 26 STC 254. Both these decisions were reconsidered. by the Constitution Bench in R. S. Joshis can (AIR 1977 SC 2279) (supra) and the provisions of the Maharashtra Sales Tax Act as applied to Gujarat State (similar to the provisions contained in S. 9-B(3) and S. 14A of the Orissa Act) have been upheld. The view in Ashoka Marketing Companys case has been expressly dissented from.

3. The crux of the question raised in all these decisions was whether a provision directing the trader to cough up collections wrongly made by him from the purchasers otherwise than in accordance with the provisions of the Act and to make over the same to the Government as also the further provisions obliging the State to refund the amounts so collected to the person or persons from whom these had been collected would fall within the incidental and ancillary powers of the State Legislature while enacting a taxing statute under Entry 54, List II of the Seventh Schedule, and the final decision of the Constitution Bench has answered the question in the affirmative upholding the validity of such provisions. While doing so the Constitution Bench disagreed with the view taken in Ashoka Marketing Co.s case (supra). As regards Abdul Quarters case this Court felt that the crucial ratio of the decision was to be found in the following significant observation made in that judgment : "it (the law) does not provide for a penalty for collecting the amount wrongly by way of tax from purchasers which may have been justified as a penalty for the purpose of carrying out the objects of the taxing legislation" and the Constitution Bench observed that this significant observation demarcated the constitutional watershed between merely laying hands upon collections by way of tax by traders although they were not exigible from traders and the policing by penalizing, including forfeiting illegal exactions, the working of a taxing statute and inhibiting injury to the public and since the Maharashtra Act as applicable to the State of Gujarat contained a prohibition against collecting such amounts from purchasers, a penalty and forfeiture the impugned provisions were valid inasmuch as these properly fell within ancillary and incidental powers - ancillary and incidental to the power to levy a tax under Entry 54, List II.

4. At page 360 (of 1978(1) SCR 338), of the Report Krishna Iyer, J. has gone to the length of observing thus : "in strict legality once the money is forfeited to the State, the