1968 (8) TMI 170 - HC - VAT and Sales Tax

Summary

Issues:
1. Application for refund of excess tax paid beyond the prescribed time limit under section 29 of the U.P. Sales Tax Act.
2. Whether the limitation period for refund also governs an application for adjustment of excess amount against the tax liability of subsequent years.

Analysis:
1. The respondent, a dealer assessed under the U.P. Sales Tax Act for the year 1953-54, appealed against the assessment, which resulted in a reduction of tax liability. Subsequently, the respondent applied for a refund of the excess amount paid or requested an adjustment against tax liability of subsequent years. The Sales Tax Officer rejected the application as time-barred under section 29 of the Act, which imposes a limitation period for refund claims. The Judge (Revisions) Sales Tax held that although the refund claim was time-barred, the adjustment request should not be refused solely on the basis of time limitation.

2. Section 29 of the U.P. Sales Tax Act provides a summary remedy for dealers to claim a refund of excess tax paid. The first proviso of section 29 sets a time limit of twenty-four months from the date of the assessment order or twelve months from the final order in appeal, revision, or reference, whichever is later, for claiming a refund. This time limit applies when a dealer has paid an amount in excess of the actual tax liability. However, the second proviso of section 29 mandates that before refunding any amount, the assessing authority must first apply the refundable amount towards any outstanding tax, penalty, or fee owed by the dealer. This obligation to adjust against outstanding liabilities is distinct from the right to claim a refund and is not governed by the time limit set for refund claims under the first proviso.

3. The High Court clarified that the period of limitation prescribed for claiming a refund under the first proviso of section 29 does not apply to the adjustment of refundable amounts against outstanding liabilities as mandated by the second proviso. The court emphasized the distinction between the right to a refund and the obligation to adjust against outstanding liabilities, stating that the two are separate and cannot be equated. Therefore, the court answered the reference question in the negative, affirming that the limitation period for refund does not control the application for adjustment of excess amounts against subsequent tax liabilities. The respondent was granted costs, and the reference was answered in the negative.