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Issues: Whether the High Court's direction permitting refund of sales tax could stand where no refund claim had been made, and whether the State could adjust sales tax liability against the company's outstanding bills under section 14 of the Orissa Sales Tax Act, 1947.
Analysis: The assessment itself was not in controversy in this appeal. The only question was the propriety of the refund direction and the treatment of amounts recovered by adjustment. Section 14 governed refund claims made by a dealer and operated where a refund was sought in the prescribed manner within the statutory period. No refund prayer had been made in the writ petition, so the High Court could not validly order refund on that footing. The State had not adopted coercive recovery proceedings but had adjusted the alleged tax liability against unpaid bills. Such an adjustment, made without the company's assent, did not fall within the refund machinery of section 14.
Conclusion: The refund direction was set aside and replaced by a declaration that the State was not entitled to adjust sales tax against the company's outstanding bills by debiting tax liability, and any such adjustment was to be reopened and readjusted on the footing that sales tax on the works contracts was not payable.
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