Restitution for tax paid by mistake bars interest on excess deposit later adjusted against assessments.

An order imposing interest on a disputed tax liability was treated as appealable under the U.P. Trade Tax Act, 1948 where the dealer contested liability itself, as the statutory scheme allowed appeals against orders of the assessing authority except those under section 10-A. The Court also held that interest under section 8(1) could not be levied on excess tax deposited by mistake and later adjusted, because the payment was recoverable on restitutionary principles under section 72 of the Indian Contract Act, 1872 and was not money lawfully outstanding against the dealer. The levy of interest was therefore set aside.

---

---

Issues: (i) Whether an order imposing interest on disputed tax liability was appealable under the U.P. Trade Tax Act, 1948. (ii) Whether interest under section 8(1) could be levied on excess tax deposited by mistake and later adjusted against subsequent assessment years.

Issue (i): Whether an order imposing interest on disputed tax liability was appealable under the U.P. Trade Tax Act, 1948.

Analysis: The statutory scheme permitted an appeal against every order of the assessing authority except an order under section 10-A. The earlier view treating an interest order as non-appealable was not accepted, and the order demanding interest was treated as an appealable order where the dealer disputed liability itself.

Conclusion: The order imposing interest was appealable.

Issue (ii): Whether interest under section 8(1) could be levied on excess tax deposited by mistake and later adjusted against subsequent assessment years.

Analysis: The excess amount had been deposited by mistake and was not money voluntarily due to the department. The Court treated the matter as one of restitution and quasi-contract under section 72 of the Indian Contract Act, 1872, holding that money paid by mistake, including tax paid under mistake, is recoverable. Section 29 of the U.P. Trade Tax Act, 1948 was held to govern refunds consequential upon assessment or appellate orders, but it did not displace the independent restitutionary claim arising from mistaken payment. On that basis, the department could not insist on interest as if the amount had remained lawfully payable by the dealer.

Conclusion: Interest under section 8(1) was not payable on the excess tax amount deposited by mistake.

Final Conclusion: The revisions succeeded, the levy of interest was set aside, and the dealer was held not liable to pay interest for the relevant assessment years.

Ratio Decidendi: Money paid towards tax by mistake is recoverable under section 72 of the Indian Contract Act, 1872 on principles of restitution, and such excess payment cannot be treated as lawfully outstanding so as to justify levy of interest.

---