Adjustment of wrongly refunded tax against later admitted liability upheld; contrary notices quashed.

Notices issued under section 29-A of the U.P. Sales Tax Act, 1948 were unsustainable where an amount earlier refunded had been wrongly paid out and was available for adjustment against the assessee's admitted tax liability for a later assessment year. Following its earlier decision between the same parties and the precedent relied on there, the HC held that the refundable amount, already refunded in relation to the relevant earlier assessment years, could be set off against the petitioner's liability for assessment year 1989-90. The impugned notices were therefore quashed and adjustment of the excess refund was directed.

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Issues: Whether the notices issued under section 29-A of the U.P. Sales Tax Act, 1948 could be quashed and the excess amount refunded to the dealer could be adjusted towards its admitted tax liability for a later assessment year.

Analysis: The Court followed the earlier decision between the same parties and the prior decision relied upon therein. On that basis, it held that the impugned notices could not stand and that the refundable amount, having been refunded to the Indian Oil Corporation for the relevant assessment years, was liable to be adjusted against the petitioner's tax liability for the assessment year 1989-90.

Conclusion: The notices were quashed and the excess refund was directed to be adjusted towards the petitioner's tax liability.

Ratio Decidendi: Where a refundable amount has been wrongly refunded in relation to earlier assessment years, it may be adjusted against the assessee's admitted tax liability for a later assessment year, and notices contrary to that entitlement are unsustainable.

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