Statutory refund mechanism governs excess tax adjustment; unilateral set-off cannot defeat interest, with limited relief for quantified refunds.

Under the West Bengal sales tax framework, a dealer cannot unilaterally set off alleged excess tax paid in earlier periods against later tax liability; adjustment of excess tax is available only through the statutory refund mechanism administered by the prescribed authority, and failure to pay admitted tax attracts interest under section 8A(1). Where an excess amount has already been quantified as refundable, the tribunal recognised limited relief and excluded interest on that identified refundable sum for the period after refund became due and until actual refund, while leaving the general rule against self-adjustment intact.

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Issues: (i) Whether a dealer can unilaterally adjust excess tax allegedly paid in earlier periods against tax payable according to subsequent returns and thereby avoid interest under section 8A of the West Bengal Sales Tax Act, 1954. (ii) Whether interest could be restricted in respect of the amount that had already been quantified as refundable but was refunded only later.

Issue (i): Whether a dealer can unilaterally adjust excess tax allegedly paid in earlier periods against tax payable according to subsequent returns and thereby avoid interest under section 8A of the West Bengal Sales Tax Act, 1954.

Analysis: The statutory scheme required a registered dealer to pay the admitted tax according to the return before filing it and to furnish proof of such payment. Refund or adjustment of excess tax was governed by the prescribed authority under the refund provisions and the relevant rules. The power to adjust excess amounts was conferred on the prescribed authority or its delegate, not on the dealer. The claimed excess amount had not been determined as refundable when the returns for the relevant months were filed, and the taxes then payable had not been paid in accordance with the statutory mandate. The returns were therefore not accepted on the basis suggested by the dealer, and the failure to pay the admitted tax attracted section 8A(1).

Conclusion: The dealer was not entitled to make unilateral adjustment, and interest under section 8A(1) was lawfully leviable. This issue was decided against the assessee.

Issue (ii): Whether interest could be restricted in respect of the amount that had already been quantified as refundable but was refunded only later.

Analysis: Once the excess amount had been quantified as refundable, it could have been adjusted in accordance with the statutory refund mechanism. Though the claim for interest on delayed refund was not directly in issue, the Court treated the situation as one calling for substantive justice. It held that no interest should be charged on the tax component represented by the refundable sum for the period after the refund became due and until the amount was actually refunded. This relief was confined to the identified refundable amount and did not disturb the general conclusion that unilateral adjustment was impermissible.

Conclusion: Interest was directed not to be charged on the identified refundable amount for the specified period. This issue was decided in favour of the assessee.

Final Conclusion: The legal position that a dealer cannot self-adjust excess tax against later dues and thereby defeat statutory interest was affirmed, but limited relief was granted by excluding interest on the quantified refundable amount for the period of delayed refund.

Ratio Decidendi: Under the West Bengal sales tax framework, excess tax can be adjusted only through the statutory refund mechanism by the prescribed authority, and a dealer's unilateral adjustment does not prevent liability to interest on unpaid admitted tax; however, once an excess amount has been quantified as refundable, equity may justify exclusion of interest for the period during which the refundable amount ought to have been available against the tax liability.

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