1964 (3) TMI 73 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the order for refund is maintainable in the given circumstances and facts of the case?

Analysis:
The judgment delivered by the High Court of Allahabad pertains to a reference made by the Sales Tax Judge (Revisions) regarding the maintainability of an order for refund. The case involved M/s. Lord Krishna Sugar Mills Ltd., a dealer in sugar and rab, for the assessment year 1950-51. The respondent had recovered sales tax amounts from customers on sugar sold inside and outside Uttar Pradesh, as well as on rab. The respondent had deposited a specific amount in the Government treasury, clearly indicating that it was for the tax due on sales made inside Uttar Pradesh. Subsequently, the Sales Tax Officer held the respondent liable to deposit an additional amount under section 8-A(4) for sales made outside Uttar Pradesh and on rab, and appropriated the deposited sales tax amount against this liability.

Upon appeal, the Judge (Appeals) determined the tax liability on sugar sold inside Uttar Pradesh and directed the adjustment of the deposited amount against the liability under section 8-A(4). The respondent was required to deposit the balance due and an additional sum towards tax liability. The respondent, in revision before the Judge (Revisions), argued that it was only liable to deposit a specific amount representing the difference between determined sales tax and the amount already deposited. The Judge (Revisions) agreed with this contention and ordered a refund of the excess amount deposited.

The judgment emphasized the debtor's right to appropriate payments to specific debts, as well as the creditor's right to do so if not specified by the debtor. The court referred to legal principles from English Civil Law and the Indian Contract Act to support the decision. It was held that the Sales Tax Authorities were not justified in appropriating the deposit against the liability under section 8-A(4), as no provision of law allowed such appropriation.

Regarding the jurisdiction of the Judge (Revisions) to direct a refund, the court found that the order was valid under section 10(3) as a consequential order following the determination that the respondent was not liable to deposit the additional sum towards tax liability. The judgment also dismissed the State's argument of acquiescence by the respondent, stating that compliance with a demand under the law does not imply acquiescence.

In conclusion, the court answered the reference in the affirmative, directing the issuance of copies of the judgment to the relevant tax authorities and awarding costs to the respondent. The judgment clarified the legal principles governing the appropriation of payments and the jurisdiction of the revising authority to order refunds in such cases.