Adjustment of excess input tax credit required fresh consideration; interest and penalty demand was left open for reassessment.

Adjustment of excess input tax credit against a later return period was required to be reconsidered where refund applications had been filed and the revenue had itself adjusted excess payments in other cases. On those facts, the Court found no basis for insisting on immediate liability with interest and penalty without further examination. However, it expressly left open the scope and effect of Section 11(6) and did not decide the substantive statutory controversy on merits. The assessing authority was directed to reconsider the objections raised in response to the notice and pass fresh orders in accordance with law.

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Issues: Whether the matter relating to adjustment of excess input tax credit and the consequential demand of interest and penalty required reconsideration by the assessing authority.

Analysis: The petitioner had sought adjustment of excess input tax credit against the next return period, and the record showed that refund applications had in fact been filed. The revenue also accepted that in other instances it had adjusted excess payments against subsequent assessment years. In these circumstances, the Court found no rationale in insisting on immediate liability with interest and penalty without further consideration. At the same time, the Court expressly left open the scope and effect of Section 11(6) and did not decide the substantive controversy on merits.

Conclusion: The assessing authority was directed to reconsider the petitioner's objections and the other matters arising from the notice and pass fresh orders in accordance with law.

Final Conclusion: The writ petition resulted in a remand for fresh consideration, with the substantive statutory question left open.

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