Refund and adjustment mechanism under tax law must be followed before excess security can offset future liabilities.

A taxing statute that provides a specific mechanism for refund of excess security and subsequent adjustment must be followed in sequence. Excess security retained by the tax authorities cannot be directly set off against future security requirements for later transactions, because each transaction is treated separately and adjustment is permitted only after refund is processed under the prescribed rules. The Court rejected the attempt to bypass the statutory refund procedure and noted that direct adjustment would defeat the accounting and scrutiny built into the framework. Compliance with the refund-and-adjustment procedure was therefore required before any post-refund set-off could be made.

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Issues: Whether the petitioners could insist that excess security already lying with the tax authorities be adjusted against future demands for additional security and road challans be countersigned without first following the statutory refund procedure.

Analysis: The statutory scheme under the Central Sales Tax Act, 1956 and the Assam General Sales Tax Act, 1993, together with the relevant Rules, permits realization of security and provides a specific mechanism for refund of excess amounts. The excess security, after assessment and adjustment of tax or other dues, can be refunded under the prescribed procedure and, only after refund is sanctioned, may any amount be adjusted in the manner allowed by the Rules. The Court held that the petitioners sought a shortcut outside the statute. Since each transaction is distinct, accumulated excess security from earlier dealings cannot be automatically treated as security for future transactions. Granting the relief would bypass the accounting and scrutiny contemplated by the statutory framework and could create administrative anomalies.

Conclusion: The petitioners were not entitled to demand direct adjustment of excess security against future challan-related security requirements without first obtaining refund in accordance with the statute. The respondents' insistence on compliance with the statutory procedure was upheld.

Final Conclusion: The challenge to the demand for additional security failed, and the writ petitions were dismissed because the relief sought was inconsistent with the prescribed refund and adjustment mechanism under the taxing statute and rules.

Ratio Decidendi: Where a taxing statute prescribes a specific mechanism for refund and post-refund adjustment of excess security or tax-related sums, that mechanism must be strictly followed and cannot be bypassed by seeking direct set-off against future liabilities.

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