BALASUBRAHMANYAN, J.

These are cases in which penalties have been levied under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959. The levies of penalty are questioned on two grounds : (i) that they are unconstitutional, and (ii) that they are not valid even under the Act. The constitutional issue is raised in the writ petitions. The issue as to the propriety of the penalties is raised in the tax revision cases. We shall first deal with the tax revision cases and then proceed to deal with the writ petitions.

Section 22(2) of the Act enacts that if any one collects sales tax or purports to collect sales tax in contravention of section 22(1) he shall be liable for penalty up to one and a half times the amount so collected. Section 22(1) will be contravened under three different sets of circumstances : (i) where sales tax is collected by a person who is not a registered dealer at all; (ii) where even a registered dealer collects tax on transactions which are not taxable at all under the Act; and (iii) where a registered dealer collects tax even on transactions at a rate higher than that at which they are taxable under the Act. That these are the contraventions of section 22(1) can be spelled out from rule 24(16)(ii) of the Tamil Nadu General Sales Tax Rules, 1959.

In the cases before us, penalties were levied under section 22(2) of the Act on registered dealers on the ground that sales tax was collected by them on transactions not liable to tax under the Act. The registered dealers in question are dealers in iron and steel goods, machinery, accessories and tools, cycles, and cycle spare parts, electrical goods, and the like. These are single point taxable goods. Under section 3(2) or section 4 of the Act read with the appropriate entries in the First or Second Schedule to the Act, the first seller of these goods is liable to pay single point tax on these items. Second and subsequent sellers of the same goods in the State are not liable to pay sales tax on the second or subsequent sales. Under section 22(2) read with rule 24(16)(ii), the first seller in these goods, if he is a registered dealer, can collect sales tax from those to whom he sells these goods. Second sellers and subsequent sellers cannot make similar collections of sales tax.The registered dealers before us, on whom penalties have been levied, are second sellers of these goods. They have purchased the goods from the first sellers in the State. They have paid to the first sellers the price of these goods plus single point sales tax collected from them by the first sellers. These second sellers have subsequently resold the same goods to their own customers. While doing so, they have reimbursed to themselves the sales tax which the first sellers have collected from them, by adding that tax to the price charged by them to their customers. This reimbursement is called by various names, such as, "recoupment of tax", "plusage", and the like. Penalties under section 22(2) were levied on these second sellers on the score that the so-called recoupment, plusage or reimbursement of the tax by them was in contravention of section 22(1) read with rule 24(16)(ii), thereby rendering these second sellers liable for penalties under section 22(2). The Sales Tax Appellate Tribunal accepted this position in principle, but reduced the quantum of penalties in individual cases.

The main question in these tax revision cases is, whether in the events that happened, the penalties are validly levied on these second sellers under section 22(2) of the Act.

The contention put forward by the second sellers before us is, that they did not collect any sales tax as such from their purchasers. It is urged that they and their purchasers knew fully well that the transactions in which they were involved were only second sales, and as such, not liable to tax at that point. Their case is that, with this mutual awareness of the statutory position, the second sellers avoided collecting any sal