Statutory vesting and liability scheme bars adjustment of post-vesting refund against pre-appointed day liabilities

Refund arising after vesting of an undertaking could not be adjusted against liabilities attributable to periods before the appointed day, because the acquisition statute preserved a specific liability scheme and liabilities outside section 5(2) could not be enforced against the Central Government, State Government, or the Government company. The High Court also held that refusing to examine the revision on delay alone was unjustified where the statutory vesting and liability framework required merits-based consideration. The adjustment order was quashed and the Commissioner was directed to decide the matter on merits.

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Issues: Whether the refund relating to the assessment year 1978-79, after vesting of the undertaking in the petitioner-Government company, could be adjusted against liabilities attributable to periods prior to the appointed day, and whether the revisional authority was justified in declining to examine the matter on merits.

Analysis: Under the acquisition statute, the undertaking and its assets vested in the Central Government and thereafter in the Government company, while liabilities relating to periods prior to the appointed day remained governed by the specific statutory scheme. The Court held that liabilities not falling within the exceptions in section 5(2) could not be enforced against the Central Government, the State Government, or the Government company. In that statutory setting, refusal to entertain the revision merely on the ground of delay would defeat the legislative mandate, especially where the petitioner sought correction of an adjustment contrary to the scheme of vesting and liability.

Conclusion: The refusal to examine the petitioner's revision was unjustified, and the order adjusting the refund against pre-appointed day liabilities was quashed. The Commissioner was directed to consider the matter on merits.

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