Refund claim after delayed assessment: tax paid with returns must be returned, and set-off rules cannot defeat repayment.

Where a dealer filed returns and paid tax, but the authority did not complete assessment within the statutory period, the tax could not be retained by relying on refund-set-off conditions in Rule 44. The Gujarat High Court held that, in the absence of any default under Section 41(3) or Section 41(4) and without a timely assessment under Section 42, the refund claim remained maintainable. The State was therefore directed to return the tax amount with interest.

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Issues: Whether refund of tax could be directed where returns were filed and tax was paid, but no assessment was completed within the statutory period, and whether the set-off conditions in the Rules could be invoked to defeat the refund claim.

Analysis: The application was founded on Article 226 seeking refund under the Gujarat Sales Tax Act, 1969. The returns had been filed for the relevant years, and the State did not allege any default under Section 41(3) or Section 41(4), nor that the returns were incomplete or that any assessment had been made within the time prescribed under Section 42. In that situation, the Court held that the conditions relating to set-off under Rule 44 of the Rules had no application. Once tax had been paid and no valid assessment was made within the prescribed period, the State had no basis to retain the amount, and the refund claim was maintainable.

Conclusion: The refund claim was held to be valid, and the petitioner was entitled to refund with interest.

Final Conclusion: The writ petition succeeded, and the State was directed to return the tax amount with interest.

Ratio Decidendi: Where a dealer has filed returns and paid tax, but the authority fails to complete assessment within the statutory period, the amount cannot be retained on the strength of refund-set-off conditions in the Rules, and refund must follow.

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