1982 (8) TMI 200 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to recovery proceedings for excess payment of sales tax for the assessment year 1975-76 and subsequent adjustment for the assessment year 1976-77.

Analysis:
The petitioners, a partnership firm engaged in the manufacture of electric wires and cables, challenged the recovery proceedings for an excess amount of Rs. 92,617.25 paid as sales tax for the assessment year 1975-76. They sought adjustment of this amount towards the tax payable for the assessment year 1976-77. The petitioners deposited the excess amount and applied for adjustment, but the assessing authority did not pass any order on the application, leading to a demand notice for the subsequent year. The petitioners contended that without adjusting the refundable amount, the recovery proceedings could not be initiated. The Court examined Section 29 of the Sales Tax Act, which mandates the assessing authority to adjust any refundable amount towards outstanding tax liabilities. Referring to a previous judgment, the Court emphasized the duty of the assessing authority to automatically adjust refundable amounts against tax liabilities.

The Court found that the petitioners had indeed made an excess payment for the assessment year 1975-76 and had applied for adjustment towards the tax payable for the subsequent year. Despite the petitioners' clear communication of the adjustment in their returns, the assessing authority did not decide on the application and proceeded with recovery for the subsequent year. The Court held that the assessing authority was obligated to adjust the excess amount paid by the petitioners against their tax liability for the subsequent year before initiating recovery proceedings. Consequently, the petition was allowed, and a mandamus was issued to the respondents to refrain from enforcing the recovery without first deciding on the adjustment application made by the petitioners. No costs were awarded in the matter.