Defective tax return and unlawful collection: assessment quashed and refund allowed where mandatory payment requirements were not met.

A return filed without prior payment of the tax due and without the prescribed treasury receipt was treated as non est and could not validly initiate assessment proceedings. The Court held that such a defective voluntary return did not satisfy the mandatory statutory preconditions for assessment, so the assessment and demand notices founded on it could not stand. It also held that tax deposited under the invalid assessment was refundable, since sums collected without authority of law fall within the refund provision and are governed by restitution, unjust enrichment, and the constitutional rule that tax may be levied or collected only by authority of law.

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Issues: (i) whether a return submitted without payment of the tax due and without the prescribed treasury receipt was a valid return for initiating assessment proceedings; (ii) whether the amount already deposited pursuant to the impugned assessment and demand notices was refundable.

Issue (i): whether a return submitted without payment of the tax due and without the prescribed treasury receipt was a valid return for initiating assessment proceedings

Analysis: The statutory scheme required the producer or dealer to furnish returns within the prescribed time and, before furnishing the return, to pay the tax due into the Government treasury and enclose the treasury receipt. The return filed by the petitioner-company was voluntary, was not accompanied by the requisite payment, and no notice under section 7(2) had been served for that period. The Court held that a return not complying with these mandatory requirements could not be treated as a valid return for the purpose of assessment and must be treated as non est.

Conclusion: The return was invalid and could not sustain the assessment proceedings.

Issue (ii): whether the amount already deposited pursuant to the impugned assessment and demand notices was refundable

Analysis: Once the assessment based on the invalid return was set aside, the Court examined the refund provision and the broader principles governing recovery of money retained by the State without lawful basis. It held that the expression covering sums paid or realised in excess of the sum due was wide enough to include tax collected when no tax was payable. The Court further relied on the constitutional principle that tax can be levied or collected only by authority of law, and on the doctrines of restitution, unjust enrichment, and refund of money paid under mistake of law. The prayer for refund was also treated as maintainable in proceedings where quashing of the assessment was sought as consequential relief.

Conclusion: The amount of Rs. 3,439.86 deposited by the petitioner-company was refundable.

Final Conclusion: The impugned assessment and demand notices were quashed, and the petitioner-company was held entitled to refund of the amount deposited under the invalid assessment.

Ratio Decidendi: A return filed without compliance with mandatory statutory preconditions for payment and verification is non est, and tax collected without authority of law must be refunded because the State cannot retain money received without lawful entitlement.

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