COMMNR. OF SALES TAX, U.P.versusM/S HIND LAMPS LTD.

                         [2008] 11 S.C.R. 594

                                                                      ,;.
A               · COMMNR. OF· SALES TAX, U.P.
                                  v.
                      M/S HIND LAMPS LTD.
                  (Civil Appeal No. 4060 of 2006)
                           JULY 31, 2008
B
        [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]
                                                                       ·"
          Uttar Pradesh Trade Tax Act, 1948: $. 29, proviso, Exp/a-
    nation I and II - Refund - Adjustment of certain amounts by
c   the dealer, with reference to .s.29, from the amounts payable
    as tax - Held: It is not open to dealer to make any adjustment
    on his own - Power of adjustment lies with the assessing au-
    thority under the Act.
       The respondent-Dealer was required to pay tax in
D 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 As-           ~

  sistant Commissioner (Judicial) Sales Tax, which were                     ~

  allowed and the matter was remanded for re-consider-
E ation of the Assessing Authority.                                         ~
                                                                            '
        According to the dealer, Rs.74,8337-; Rs.95,506/-;
  Rs.1,35,666/-; Rs.2,38,435/- was required to be refunded
  for 1968-69, 1969-70, 1970-71and1971-72. The dealer ad-
  justed aforesaid amounts from the amounts payable as
F tax in respect of three months i.e. April, May and August,
  1977. But, in the final assessment proceedings, the As-             ,.
  sessing Officer refused to give credits of the amounts on
  the ground that there was no provision for such adjust-
  ment and the dealer cannot himself adjust the amounts,
G if any, refundable to him. Consequently, interest for late
  payment was levied. The order was confirmed by the first                  ~


  Appellate Authority. In appeal, the Tribunal, affirmed the
  view of the Assessing Officer and first Appellate Author-           "f-

  ity. On revision, High Court held that it was open to the
H                             594
              COMMNR. OF SALES TAX, U.P. v. MIS HIND           595
                          LAMPS LTD.

      assessee to make the adjustment with reference to s.29          A
      of the Uttar Pradesh Trade Tax Act, 1948.
           In appeal· to this Court, revenue contended that the
      High Court clearly misconstrued the provisions contained
      in s.29 of the Act and, therefore, the view of the Assess-
      ing Officer as affirmed by the first Appellate Authority arid   B
      the Tribunal should not have been interfered with.
           Allowing the appeal, the Court
            HELD: 1.1 The approach of the High Court is clearly
      erroneous. A bare reading of the proviso to s.29 of Uttar c
      Pradesh Trade Tax Act, 1948 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 D
      admitted tax has to be construed as refundable. This plea
-ol   is clearly untenable. [Para 7] [599-A,B]
           1.2. The expression used is "found to be refundable".
      In other words, it must be as a result of adjudication. In
      the instant case, there is no such adjudication. Even oth- E
      erwise, 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 F
      the balance has to be refunded. The dealer cannot make
~
      any adjustment on his own, and not certainly under the
      proviso to sub-section (1) of s.29 of the Act as has been
      held by the High Court. Explanation I makes the position
      further clear that the date of refund shall be deemed to be G
      the date on which first intimation regarding preparation
      of the refund voucher is sent to the dealer in the pre-
      scribed manner. Obviously, therefore, date of refund is
      re\atab\e to the intimation regarding the preparation of the
      refund voucher. Explanation II shows that the expression H
    596       SUPREME COURT REPORTS                 [2008] 11 S.C.R.


A "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 pro-
  vided in Rules 89 and 90 appearing in Chapter XV. That
  being so, the High Court was not justified in its view in
B holding that the dealer could itself make adjustment of
  amount.[Paras 8,9] [599-8,C,D,E,F]
         CIVILAPPELLATE JURISDICTION : Civil Appeal No. 4060
    of 2006
C        From the final Judgment and Order dated 24.7.2003 of
    the High Court of Judicature at Allahabad in Sales Tax Revision
    No. 149of1991
      KrishnanVenugopal, Aarohi Bhalla, Manoj Kumar Dwivedi,
  Gunnam Venkateswara Rao and Kamlendra Mishra for the
D Appellant.
        C.N. Sree Kumar, Kavin Gulati, Rashmi Singh, Avinash
    Pandey and T. Mahipal for the Respondent.                          -> ·,
          The Judgment of the Court was delivered by
E       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 ques-
  tion involved lies within a very narrow compass, i.e. whether a
F 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 permis-
  sible under the U.P. Trade Tax Act, 1948 (in short the 'Act') and
G 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
                                                                       f
  returns filed for the months of April, May and August, 1977. In
H respect of the assessment years i.e. 1969-70 to 1971-72, ap-
                   COMMNR. OF SALES TAX, U.P. v. M/S HIND              597
                     LAMPS LTD. [DR. ARIJIT PASAYAT, J.]
    )'-
          pellant. had filed appeals before the Assistant Commissioner        A
          (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:
                                                                              B
               1968-69 Rs.74,833/-
    "f
               1969-70 Rs.95,506/-
               1970-71 Rs.1,35,666/-
               1971-72Rs.2,38,435/-                                           c
                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 provi-        D


.   ~
          sion 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)       E
          (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
                                                                              F
          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 G
          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.                         H
    598       SUPREME COURT REPORTS                    [2008) 11 S.C.R.


A         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.

B         Provided that the amount found to be refundable shall first
          be adjusted towards the tax or any other amount
          outstanding against the dealer under this Act or under the          .,.
          Central Sales Tax Act, 1956 and only the balance, if any,
                                                                                    I
          shall be refunded:                                                        ~

c         (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
D         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
                                                                          }         .
E         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
F         voucher is- sent to the dealer in manner prescribed.
          Explanation -II
          The expression "refund" includes any adjustment under
          the proviso to sub-Section ( 1)."
G         6. The 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 othef amount out-
    standing against the dealer under the Act or the Central Sales
    Tax Act, 1956 (in short the 'Central Act').
H
                  COMMNR. OF SALES TAX, U.P. v. MIS HIND              599
                    LAMPS LTD. [DR. ARIJIT PASAYAT, J.]

              7. The approach of the High Court is clearly erroneous. A .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 B
         construed as refundable. This plea is clearly untenable.
-l
                 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 c
         the authority under the Statute. While granting refund, he has to
         first find out whether there is any amount which has to be ad-
         justed 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 author- D
         ity 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 intima- E
         tion 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 F
         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 G
         amount.
     ~
              1O. The appeal filed by the appellant deserves to be allowed
         which we direct. However, there shall be no order as to costs.
         D.G.                                           Appeal allowed.      H