Excess tax under compounding scheme cannot be forfeited where surcharge adjustment and refund rules apply.

Section 7(12) of the Kerala General Sales Tax Act applies only to excess tax situations arising within the specific purchase-tax adjustment scheme under section 7A(1) and cannot be extended to a contractor who paid compounded tax under section 7(7) while tax was separately deducted at source under section 7(7B). In that setting, excess tax remitted cannot be forfeited under section 7(12); it must first be adjusted against surcharge payable, and only any remaining balance is refundable. The text states that an assessment treating the excess as forfeited was beyond jurisdiction and that consequential refund follows after surcharge adjustment.

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Issues: Whether section 7(12) of the Kerala General Sales Tax Act, 1963 authorises forfeiture of excess tax paid by contractors who opted for compounding under section 7, where tax was also deducted at source under section 7(7B), and whether such excess is to be adjusted against surcharge payable and refunded.

Analysis: The statutory bar in section 7(12) applies only where the tax on purchases is found to be in excess of the tax payable under the compounded rate contemplated by section 7A(1). That provision operates in a different setting, where the contractor pays tax on the whole contract value at 70% of the scheduled rate and is permitted to deduct tax already paid on purchases. In the present scheme, the contractor paid tax at the compounded rate under section 7(7) and the awarder was separately obliged to deduct tax at source under section 7(7B). Since no deduction mechanism akin to section 7A(1) was involved, section 7(12) could not be invoked to forfeit excess tax remitted. The excess payment had to be set off against surcharge due, and only the balance, if any, was refundable. An assessment confirming excess under section 7(12) was therefore beyond jurisdiction.

Conclusion: Section 7(12) does not permit forfeiture of excess tax remitted in these circumstances, and the assessees are entitled to adjustment of the excess against surcharge and refund of any remaining amount.

Final Conclusion: The assessment orders were interfered with to the extent they treated the excess payment as forfeited, and consequential refund after adjustment of surcharge was directed.

Ratio Decidendi: A statutory prohibition against refund of excess tax applies only within the precise conditions for which it is enacted and cannot be extended by analogy to excess tax remitted under a different compounding and tax-deduction scheme.

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