Sales tax adjustment between State and Central levies allowed where deposits were made under the wrong account and no loss occurred.

Excess State sales tax payment may be adjusted against a short credit of Central sales tax where the tax amounts were deposited concurrently, the gross tax due was not short, and the government suffered no monetary loss. The Calcutta HC noted that both taxes ultimately reached the consolidated fund, distinguished the Mysore ruling as limited to adjustment within State sales tax, and relied on a Central Government circular recognising credits made under the wrong sales tax law. On those facts, technical insistence on separate challan treatment was unwarranted, and adjustment or set-off was permissible without interest or penalty.

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Issues: Whether excess payment of State sales tax could be adjusted against short payment of Central sales tax so as to avoid interest and other consequences.

Analysis: The writ petitioner had inadvertently credited part of the Central sales tax collection under the State sales tax account. The Court held that both taxes were ultimately credited to the same consolidated fund and that the gross tax paid was not short. It distinguished the earlier Mysore decision on the ground that the adjustment rule considered there applied only to State sales tax and not to inter se adjustment between Central and State sales tax. The Court also relied on the Central Government circular recognizing credit under the same enactment where challans had been used under the wrong sales tax law. Since the deposits were made concurrently and there was no monetary loss to the State, insistence on technical formalities was unwarranted.

Conclusion: Adjustment or set-off was permissible, and no interest or penalty was chargeable on the facts.

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