Refund of excess sales tax carries statutory interest once refundable balance is determined and withheld beyond the prescribed period.

Where excess sales tax had been finally determined as refundable after adjustment of outstanding dues, the taxing authority was required to return the balance under section 29 of the U.P. Sales Tax Act. Interest became payable for delay beyond the statutory period, and a separate express refund order was not a precondition to accrual of interest. Internal departmental instructions and technical objections to the refund application could not justify withholding the admitted amount. The assessee was therefore entitled to refund of the balance and interest on the delayed payment.

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Issues: Whether the assessee was entitled to refund of the excess sales tax amount after adjustment of outstanding liability and to interest on the delayed refund under section 29 of the U.P. Sales Tax Act.

Analysis: The refundable amounts for earlier assessment years stood admitted, and after adjustment of the later assessment liability the balance remained payable to the assessee. Section 29(1) requires refund of tax paid in excess, subject to adjustment of outstanding dues, and section 29(2) makes interest payable when the refundable amount is not returned within the statutory period. The obligation to refund arises from the determination that excess tax has been paid, and it is not necessary that a separate express refund order must first be passed before interest can accrue. A delay of several years in disposing of the refund claim could not be justified by internal departmental instructions or by insisting on technical defects in the application.

Conclusion: The assessee was entitled to refund of the balance amount and to interest at eighteen per cent per annum from 1 November 1978 until payment.

Ratio Decidendi: Where excess tax has been finally determined as refundable after adjustment of outstanding dues, the taxing authority cannot withhold the amount beyond the statutory period without incurring liability for interest under the refund provision, and departmental instructions cannot override that statutory obligation.

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