Refund after assessment is set aside depends on reassessment, and subordinate officers cannot withhold it without statutory authority.

When an assessment order is set aside by the Tribunal, the earlier tax demand ceases to operate as a subsisting demand and the assessee acquires a right to apply for refund. That right is not absolute, because the actual refundable amount may depend on the result of reassessment proceedings following the remand. Refund could not be withheld under Section 14-D by a subordinate officer, since that power vested in the Commissioner alone. The subsequently inserted proviso to Section 14 also could not justify refusal, as it was not in force when the impugned order was passed.

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Issues: (i) whether the assessee was entitled to refund after the original assessment order was set aside by the Tribunal; (ii) whether the refusal of refund could be sustained under Section 14-D of the Orissa Sales Tax Act, 1947 or the subsequently inserted proviso to Section 14 of the Orissa Sales Tax Act, 1947.

Issue (i): Whether the assessee was entitled to refund after the original assessment order was set aside by the Tribunal.

Analysis: Once the assessment order was set aside, the earlier demand could not continue to operate as a subsisting legal demand. The right to seek refund therefore arose, but the Court also noted that reassessment proceedings were contemplated pursuant to the Tribunal's remand and that the actual entitlement to any refundable amount would depend upon the result of such reassessment.

Conclusion: The assessee had a right to apply for refund, but immediate refund was not finally directed.

Issue (ii): Whether the refusal of refund could be sustained under Section 14-D of the Orissa Sales Tax Act, 1947 or the subsequently inserted proviso to Section 14 of the Orissa Sales Tax Act, 1947.

Analysis: Section 14-D vested the power to withhold refund in the Commissioner alone, and not in subordinate officers. The Commissioner had not exercised that power in the case. The proviso to Section 14 was not on the statute book when the impugned order was passed, so the Sales Tax Officer had no jurisdiction to rely on it to refuse refund.

Conclusion: The refusal of refund on those grounds was unsustainable.

Final Conclusion: The writ petition was disposed of by recognising the assessee's right to seek refund after reassessment, while declining an immediate refund order and leaving the matter to the outcome of reassessment proceedings.

Ratio Decidendi: Where an assessment order is set aside, the assessee may seek refund of tax already paid, but the actual refund depends on the result of lawful reassessment, and a subordinate officer cannot withhold refund unless the statute clearly confers that power on him.

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