Analysis
Collection of tax is not a statutory right but a contractual obligation. The person collecting taxes, acts as an agent of the Government. As such, no recipient is obliged to reimburse the supplier taxes due on the supply. At the same time, every taxable person (in case of forward charge) remains liable to deposit the applicable tax to the Government.
This provision casts an obligation on each – unregistered person and registered person with regard to collection of tax on supply:
— unregistered person is not to collect tax or any sum ‘by way of’ tax; and
— registered person is to collect tax only in the manner prescribed
It is important to differentiate between the restriction placed by this provision and the contractual route necessary to recoup tax by the supplier. Only tax that is collected as ‘CGST’ or ‘IGST’ or ‘SGST-UTGST’ is to be paid to the Government. Any other loss recoupment of input tax credit ‘foregone or forfeited’ does not fall within this restriction.