Mandatory adjustment of excess tax refund must be decided before recovery can be enforced against an assessee.

Section 29 of the Sales Tax Act was read as creating a mandatory adjustment mechanism before any recovery action is enforced. The proviso requires the assessing authority to first adjust refundable excess tax against any outstanding liability under the Act or the Central Sales Tax Act, 1956. Where the assessee had already paid excess tax and had applied for adjustment before recovery was sought, the authority could not proceed with enforcement without first deciding that application and giving effect to the statutory set-off. Recovery was therefore not enforceable until the adjustment request was determined, and the petitioners succeeded.

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Issues: Whether recovery of the demand could be enforced without first deciding the assessee's application for adjustment of the excess tax paid in the earlier assessment year.

Analysis: Section 29 of the Sales Tax Act requires the assessing authority to refund excess tax and, by the proviso, to first adjust the refundable amount against any tax or other amount outstanding under the Act or under the Central Sales Tax Act, 1956. The proviso operates as a mandatory adjustment mechanism and contemplates automatic adjustment of the refund against existing liabilities. As the assessee had already paid excess tax and had applied for adjustment before recovery was sought, the authority could not proceed to enforce recovery without first disposing of that application and giving effect to the statutory adjustment.

Conclusion: Recovery could not be enforced until the application for adjustment of the excess amount was first decided, and the petitioners succeeded.

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