Entry tax refund-adjustment mismatch made the 2015-16 assessment unsustainable, leading to quashing of the demand notices.

Entry tax assessment for 2015-16 was found legally unsustainable because the departmental records already reflected a refund for an earlier period as adjusted and carried forward against the later tax period. The court noted that the authorities could not treat the refund as adjusted for one purpose and then ignore that adjustment while raising a further demand on the same basis for 2015-16. The assessment order was set aside, and the consequential demand notices were quashed, with liberty to pass fresh orders in accordance with law.

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Issues: Whether the assessment order and consequential demand notices for entry tax for 2015-16 were sustainable when the petitioner's refund for an earlier period had already been adjusted and the records indicated that the tax payment position for 2015-16 required proper reconciliation.

Analysis: The refund found payable for 2010-11 had been credited and was stated to be adjusted against the next relevant tax period. The later assessment for 2014-15 further recorded a refundable amount to be carried forward for adjustment against 2015-16. In that setting, the impugned order for 2015-16 proceeded on a tax liability figure that did not properly account for the refund-adjustment sequence already reflected in the departmental records. The Court found that the authorities could not simultaneously treat the refund as adjusted and yet raise a further demand for 2015-16 on the same footing. The assessment, therefore, suffered from legal unsustainability.

Conclusion: The assessment order for 2015-16 was held unsustainable and was set aside. The consequential demand notices were also quashed, with liberty to pass fresh orders in accordance with law.

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