Restitution and tax adjustment principles permit set-off of excess tax paid; interest cannot be charged on the adjusted amount.

Excess tax paid after an assessment is set aside is refundable on restitution principles and may be adjusted against outstanding tax dues under the refund provision. The Court held that "refund" includes such adjustment, so the dealer could apply excess tax already deposited toward later admitted liability. It rejected the view that refund arose only after fresh assessment on remand, holding that amounts due from the department and amounts due to it do not retain separate identity for this purpose. Interest could not be levied on the portion lawfully adjusted against the refundable excess.

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Issues: Whether, under section 29 of the U.P. Sales Tax Act, 1948, the dealer was entitled to have excess tax already deposited pursuant to earlier assessments adjusted against its admitted tax liability for later months, and whether interest could be charged on the amount so adjusted.

Analysis: The provision governing refunds required the assessing authority to refund excess tax and expressly provided that the refundable amount must first be adjusted against outstanding dues under the Act or the Central Sales Tax Act, 1956. The expression "refund" was taken to include such adjustment. The Court applied the settled principle of restitution: once an assessment order is set aside, excess tax collected over and above the admitted liability becomes refundable to the dealer, and the dealer may seek adjustment of that amount against existing tax liability. The Tribunal's view that refund became due only after fresh assessment on remand was rejected as inconsistent with the statutory text and with the established principle that money due from the department and money due to the department do not have separate identity for this purpose. The amount adjusted related only to the excess over admitted liability; interest could not be levied on the part lawfully adjusted against the refundable amount.

Conclusion: The dealer was entitled to adjustment of the excess amount against its admitted tax liability, and the demand of interest on that adjusted amount was unsustainable.

Ratio Decidendi: Where a tax assessment is set aside, excess tax paid beyond the admitted liability is refundable on restitution principles and may be automatically adjusted under the refund provision against outstanding tax dues; interest cannot be levied on the portion validly so adjusted.

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