Refund proceedings cannot reopen an unmodified assessment's exemption finding; the inquiry stays confined to the existing record.

Refund proceedings under section 22 of the U.P. Sales Tax Act, 1948 are limited to determining whether excess tax was deposited and whether refund follows from the existing assessment record. The assessing authority cannot use a refund inquiry to reopen or re-adjudicate the correctness of an earlier assessment order granting exemption or concession on turnover covered by form III-B unless that assessment has first been modified or rectified under the Act. An enquiry into the exemption issue was therefore not to proceed in the pending refund matter, and the refund proceedings were to remain in abeyance until final disposal in accordance with law.

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Issues: Whether, in proceedings for refund of excess tax under section 22 of the U.P. Sales Tax Act, 1948, the assessing authority could reopen and examine afresh the correctness of the earlier assessment order granting exemption or concession on the sale turnover covered by form III-B.

Analysis: The dispute arose from a refund application based on an assessment order already passed for the relevant assessment year. The Court noted that, unless the assessment order had been modified or rectified in proceedings under section 21 or section 22 of the U.P. Sales Tax Act, 1948, the refund proceedings could not be used as a fresh forum to re-adjudicate whether the earlier exemption had been rightly granted. The scope of the refund inquiry was confined to whether excess tax had been deposited and whether refund followed from the existing assessment record. Since the impugned notice proposed to continue an enquiry into the correctness of the exemption itself, the Court held that such enquiry should not proceed until the refund proceedings were finally disposed of in accordance with law.

Conclusion: The impugned notice could not be acted upon to the extent it sought to reopen the exemption issue in the pending refund proceedings, and those proceedings were to remain in abeyance until final disposal of the section 22 matter.

Ratio Decidendi: In refund proceedings, the assessing authority cannot reopen the merits of an unmodified assessment order and may act only on the basis of a rectified or modified assessment under the Act.

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