REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4060 OF 2006
Commnr. of Sales Tax, U.P. ...Appellant
Versus
M/s Hind Lamps Ltd. ...Respondent
JUDGMENT
Dr. ARIJIT PASAYAT, J.
1. Challenge 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 `Rules’).
2. Background facts in a nutshell are as follows:
Dealer-respondent was 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:
1968-69 Rs.74,833/-
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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
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that it is open to the assessee to make the adjustment with
reference to Section 29 of the Act.
3. Learned 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.
4. Learned 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.
5. Section 29 of the Act reads as follows:
“(1) The 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
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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.
Explanation-I
The 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 sub-Section
(1).”
6. The High Court referred to the proviso to sub-section (1)
of Section 29 to hold that the amount found to be refundable
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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’).
7. The 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.
8. The 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
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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.
9. That being so, the High Court was not justified in its view
in holding that the dealer could itself make adjustment of
amount.
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10. The appeal filed by the appellant deserves to be allowed
which we direct. However, there shall be no order as to costs.
……………………………………..J.
(Dr. ARIJIT PASAYAT)
……………………………………..J.
(Dr. MUKUNDAKAM SHARMA)
New Delhi,
July 31, 2008
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