Excess trade tax recovery after paddy-to-rice adjustment was forfeitable, with refund available only to the buyer.

Under the U.P. Trade Tax Act, 1948 and section 15(c) of the Central Sales Tax Act, 1956, a dealer who paid tax as the first purchaser of paddy was entitled only to adjustment of that tax against the tax payable on rice, not to an independent refund. After such adjustment, any amount recovered from the buyer in excess of the tax payable on rice was not refundable to the dealer and was liable to forfeiture under section 29(2), while section 29(3) provided refund to the buyer. The excess amount was therefore rightly forfeited.

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Issues: Whether the amount recovered from the buyer, after adjustment of tax paid on paddy against the tax payable on rice, was refundable to the dealer or liable to forfeiture under the U.P. Trade Tax Act, 1948.

Analysis: The dealer, being the first purchaser of paddy, had paid tax under section 3D of the U.P. Trade Tax Act, 1948. Under section 15(c) of the Central Sales Tax Act, 1956, the dealer was entitled only to adjustment of the tax paid on paddy against the tax payable on the sale of rice; there was no independent right to refund of tax paid on paddy. After such adjustment, the amount realised from the buyer in excess of the tax payable on rice was not refundable to the dealer. Under section 29(2) of the U.P. Trade Tax Act, 1948, such excess realisation was liable to forfeiture, and section 29(3) provided refund to the buyer, not to the dealer.

Conclusion: The excess amount was not refundable to the dealer and was rightly forfeited under section 29(2) of the U.P. Trade Tax Act, 1948.

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