Restitution of excess tax recovery and statutory interest follow when assessment is set aside and recovery exceeds admitted liability.

Amounts recovered coercively during pendency of an appeal, to the extent they were not referable to admitted tax liability, were treated as refundable after the assessment was set aside on restitutionary principles under section 29(1) of the U.P. Trade Tax Act and Rule 71 of the U.P. Trade Tax Rules. Once the excess recovery was held refundable, section 29(2) governed interest, and statutory interest followed on the refundable sum. The refusal to grant refund was therefore interfered with, and the assessee was held entitled to refund of the excess recovery together with interest.

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Issues: (i) whether the amount recovered during the pendency of the appeal, to the extent not referable to admitted tax liability, was refundable on the setting aside of the assessment; (ii) whether interest was payable on the refundable amount under the Act.

Issue (i): whether the amount recovered during the pendency of the appeal, to the extent not referable to admitted tax liability, was refundable on the setting aside of the assessment.

Analysis: The refund claim was examined in the light of section 29(1) of the U.P. Trade Tax Act and Rule 71 of the U.P. Trade Tax Rules. The assessment had been set aside in appeal, and the amount in question had been realised coercively during the pendency of the appellate proceedings. The governing principle applied was that sums collected over and above admitted tax liability, and not finally crystallised by assessment, are liable to be refunded on restitutionary principles.

Conclusion: The amount recovered during the pendency of the appeal, other than admitted tax, was refundable.

Issue (ii): whether interest was payable on the refundable amount under the Act.

Analysis: Once refund of the excess amount was held to be due, section 29(2) of the U.P. Trade Tax Act governed the entitlement to interest. The direction for refund necessarily attracted payment of interest in accordance with the statutory provision.

Conclusion: Interest was payable on the refundable amount under section 29(2) of the U.P. Trade Tax Act.

Final Conclusion: The revision succeeded, the refusal to grant refund was interfered with, and the assessee was held entitled to refund of the excess recovery together with statutory interest.

Ratio Decidendi: Amounts recovered during the pendency of appeal, if not referable to admitted tax liability and not finally determined by assessment, are refundable on restitution, and statutory interest follows where the governing provision so provides.

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