Refund under sales tax law requires prior deposit; annual turnover discount adjustments may be handled through credit notes.

Section 23-B of the Rajasthan Sales Tax Act, 1954 operates only where the amount has first been deposited with the Government and is later found not payable, so the special refund mechanism cannot be used before deposit. The annual turnover discount was treated as an ex post facto adjustment through credit notes, outside the taxable sale price, and the credit-note arrangement was not contrary to the Act or the Rules. The dealer could therefore disburse the amount as part of the trade discount scheme. The refund claim lies, in the first instance, with the person who actually bore the tax incidence after deposit.

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Issues: (i) Whether section 23-B of the Rajasthan Sales Tax Act, 1954 applied to the refund claim arising from the annual turnover discount. (ii) Whether the dealer could disburse the amount collected as tax on the discount component as additional trade discount. (iii) Whether deposit of tax with the Government was a condition precedent for invoking section 23-B of the Rajasthan Sales Tax Act, 1954.

Issue (i): Whether section 23-B of the Rajasthan Sales Tax Act, 1954 applied to the refund claim arising from the annual turnover discount.

Analysis: The discount was held to be outside the taxable sale price, and the resulting refund issue arose only because tax had initially been recovered on the undiscounted price and later adjusted through credit notes. Section 23-B was held to operate only where the amount sought to be refunded had in fact been deposited with the Government and was subsequently found to be not payable. A claim that the amount was refundable even before deposit was found inconsistent with the scheme of the provision.

Conclusion: Section 23-B applied only after deposit of the amount with the Government, and not on the facts as assumed by the revenue authorities.

Issue (ii): Whether the dealer could disburse the amount collected as tax on the discount component as additional trade discount.

Analysis: The discount scheme operated as an ex post facto adjustment at the end of the year. Since the discount itself was not exigible to tax, the amount relatable to the discount was recoverable by way of refund to the dealers under the scheme, and the credit notes did not contravene the Act or the Rules. The earlier finding that the amount was unlawfully collected and liable to forfeiture was not the issue before the Tribunal in this revision.

Conclusion: The dealer was entitled to disburse the amount as part of the trade discount arrangement.

Issue (iii): Whether deposit of tax with the Government was a condition precedent for invoking section 23-B of the Rajasthan Sales Tax Act, 1954.

Analysis: The statutory language contemplated a refund only of an amount deposited under the Act or paid as tax and later found not payable. The provision therefore presupposed prior deposit before the special refund machinery could be set in motion. The claim was held to belong, in the first instance, to the person who had actually borne the incidence of tax, after the amount had reached the Government.

Conclusion: Deposit of tax was a condition precedent for section 23-B to apply.

Final Conclusion: The revision failed because the Tribunal upheld the view that the special refund mechanism could operate only after deposit, and the assessee's discount-based adjustment did not justify interference with the order under challenge.

Ratio Decidendi: Section 23-B of the Rajasthan Sales Tax Act, 1954 is attracted only when the amount has first been deposited with the Government and is later found not payable, with refund claimable only by the person who actually bore the tax incidence.

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