Commissioner of Sales
Tax, U.P. vs. M/S. Hind Lamps Ltd.  INSC 1263 (31 July 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4060 OF 2006 Commissioner
of Sales Tax, U.P. ...Appellant versus M/s Hind Lamps Ltd. ...Respondent
Dr. ARIJIT PASAYAT,
in this appeal is to the judgment of a learned Single Judge of the Allahabad
High Court allowing the Trade Tax Revision filed by the respondent (hereinafter
referred to as the `assessee /dealer'). The question involved lies within a
very narrow compass, i.e. whether a dealer can make adjustment while depositing
tax on the basis of tax out, admitted to be payable, of certain amounts which
according to him had been deposited in excess for some other assessment
periods. The High Court held that it was permissible under the U.P. Trade Tax
Act, 1948 (in short the `Act') and U.P. Trade Tax Rules, 1948 (in short the
facts in a nutshell are as follows:
required to pay tax in respect of returns filed for the months of April, May
and August, 1977.
In respect of the
assessment years i.e. 1969-70 to 1971-72, appellant had filed appeals before
the Assistant Commissioner (Judicial) Sales Tax, which were allowed and the
matter was remanded for re-consideration of the Assessing Authority.
According to the
dealer, the following amounts were to be refunded:
2 1969-70 Rs.95,506/- 1970-71 Rs.1,35,666/- 1971-72 Rs.2,38,435/- The dealer
adjusted aforesaid amounts from the amounts payable as tax in respect of three
months i.e. April, May and August, 1977. But, in the final assessment
proceedings, the Assessing Officer refused to give credits of the amounts in
his order dated 27.2.1982 on the ground that there was no provision for such
adjustment and the dealer cannot itself adjust the amounts, if any, refundable
to him. Consequently, interest for late payment was levied. The order was
confirmed by the first Appellate Authority i.e. Deputy Commissioner (Appeals)
Sales Tax, Agra. In appeal, the Sales Tax Tribunal, Agra, Bench (3)
(hereinafter referred to as the `Tribunal') affirmed the view of the Assessing
Officer and first Appellate Authority.
The dealer carried
the matter further by filing a Trade Tax Revision and as noted above, learned
Single Judge held that it is open to the assessee to make the adjustment with
reference to Section 29 of the Act.
counsel for the Revenue submitted that the High Court clearly misconstrued the
provisions contained in Section 29 of the Act and, therefore, the view of the
Assessing Officer as affirmed by the first Appellate Authority and the Tribunal
should not have been interfered with.
counsel for the respondent on the other hand submitted that the assessee is
entitled to refund and there is no reason as to why he cannot make adjustment.
29 of the Act reads as follows:
assessing authority shall, in the manner prescribed, refund to a dealer any
amount of tax, fees of other dues paid in excess of the amount due from him
under this Act.
Provided that the
amount found to be refundable shall first be adjusted towards the tax or any
other amount outstanding against 4 the dealer under this Act or under the
Central Sales Tax Act, 1956 and only the balance, if any, shall be refunded:
(2) If the amount
found to be refundable in accordance with sub-section (1) is not refunded as
aforesaid within three months from the date of order of refund passed by the
Assessing authority or, as the case may be, from the date of receipt by him of
the order of refund, if such order is passed by any other competent authority
or court, the dealer shall be entitled to simple interest on such amount at the
rate of eighteen percent per annum from the date of such order or, as the case
may be, the date of receipt of such order of refund passed by the assessing
authority to the date of refund.
date of refund shall be deemed to be the date on which intimation regarding
preparation of the refund voucher is- sent to the dealer in manner prescribed.
Explanation -II The
expression "refund" includes any adjustment under the proviso to
High Court referred to the proviso to sub-section (1) of Section 29 to hold
that the amount found to be refundable shall be first adjusted against the tax
or any other amount outstanding against the dealer under the Act or the Central
Sales Tax Act, 1956 (in short the `Central Act').
approach of the High Court is clearly erroneous. A bare reading of the proviso
referred to shows that the amount must have been found to be refundable and due
to be refunded. No authority has found any amount to be refundable. Stand of
the dealer that since the matter was remanded by the appellate authority any
amount paid beyond the admitted tax has to be construed as refundable. This
plea is clearly untenable.
expression used is "found to be refundable". In other words, it must
be as a result of adjudication. The amount has to be found to be refundable. In
the instant case, there is no such adjudication. Even otherwise, the power of
adjustment lies with the authority under the Statute. While granting refund, he
has to first find out whether there is any amount which has to be adjusted
against tax or other amounts outstanding against the dealer under the Act or
the Central Act and the balance has to be refunded. This power of adjustment
lies only with the authority under the Statute. The dealer cannot make any
adjustment on his own, and not certainly under the proviso to sub-section (1)
of Section 29 of the Act as has been held by the High Court. The Explanation I
makes the position further clear that the date of refund shall be deemed to be
the date on which first intimation regarding preparation of the refund voucher
is sent to the dealer in the prescribed manner. Obviously, therefore, date of
refund is relatable to the intimation regarding the preparation of the refund
voucher. Explanation II shows that the expression "refund" includes
the adjustment which is permissible under the proviso to sub-section (1). It is
to be noted that the manner in which the refund has to be granted is provided
in Rules 89 and 90 appearing in Chapter XV.
being so, the High Court was not justified in its view in holding that the dealer
could itself make adjustment of amount.
appeal filed by the appellant deserves to be allowed which we direct. However,
there shall be no order as to costs.
(Dr. ARIJIT PASAYAT)