SETHURAMAN, J.

This is a revision petition filed by the State against the order of the Sales Tax Appellate Tribunal, Madurai, dated 16 August, 1976.

The assessee is carrying on business in Madurai in jaggery. During the year 1973-74, the assessee purchased jaggery from agriculturists under bought notes and cane jaggery under pattials and statements of accounts. The assessing officer noticed that the assessee has collected surchage in respect of sales of cane jaggery, though it was not entitled to do so. He accordingly held that the assessee had contravened the provisions of section 22(2) of the Tamil Nadu General Sales Tax Act read with sub-section (1) of section 3 of the Tamil Nadu Sales Tax (Surcharge) Act, 1971. The collections came to Rs. 4, 808.96. The assessing officer levied Rs. 6, 213, 44 as penalty. The assessee appealed to the Appellate Assistant Commissioner, who confirmed the levy of penalty. The assessee thereafter appealed to the Tribunal. The Tribunal held that the collection of surcharge on the sales of cane jaggery fell outside the purview of section 22(2) of the Tamil Nadu General Sales Tax Act, and that the levy of penalty was illegal. The State has challenged this order of the Tribunal.

By the Tamil Nadu Sales Tax (Surcharge) Act (Act No. 24 of 1971), provision was made for the levy of surcharge on sales tax. Section 3 of the said Act provides that every dealer who is liable to pay tax under the Tamil Nadu General Sales Tax Act, 1959, on the sale or purchase of goods within the limits of the area in which this Act is in force shall, on and from the date of the commencement of this Act, pay a surcharge on such tax at certain specified rates. Sub-section (2) of section 3 of the said Act provides :

"Save as otherwise provided in this Act, the provisions of the said Act shall apply in relation to the surcharge payable under sub-section (1) as they apply in relation to tax payable under the said Act."

The" said Act" *

mentioned in the provision is the Tamil Nadu General Sales Tax Act, 1959.

In the First Schedule to the Tamil Nadu General Sales Tax Act, a list of goods in respect of which single point tax is leviable under sub-section (2) of section 3 of the Act is to be found. Item 68, as it was then in force, referred to jaggery and gur as goods which were taxable at the point of first purchase in the State. Thus, there was no levy of sales tax on the sales of jaggery. The assessee was thus not liable to any tax under the Tamil Nadu General Sales Tax Act on the sale of jaggery, but still has collected surcharge. Section 7 of the Tamil Nadu Act 24 of 1977 authorises the collection of surcharges only from persons who are eligible for tax under the Tamil Nadu General Sales tax Act. As in the present case, the sales were not liable to be taxed, there is no question of collection of surcharge by the assessee.

The authorities have invoked section 22 of the Tamil Nadu General Sales Tax Act for levy of penalty. Section 22 runs to the extent relevant as follows :

"(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." *

This section prohibits the collection of tax by any person who is not a registered dealer. Sub-section (2) of section 22 of the Tamil Nadu General Sales Tax Act provides :

"(2) If any person or registered dealer collects any amount by way of tax or purporting to be way of tax in contravention of the provisions of sub-section (1), whether or not any tax is due from such person or dealer under this Act in respect of the transaction in which he collects such amount, the assessing authority, may, after giving such person or dealer a reasonable opportunity of being heard, by order in writing impose upon him by way of penalty a sum not exceeding one and a half times such amount." *

The cons