GULATI, J. - (1.) THIS is a reference under section 11(1) of the U.P. Sales Tax Act. The assessee is a dealer in iron furniture and other furniture goods. The assessment year involved is 1964-65. The assessee filed an appeal against the assessment order. The assessee had admitted the liability to tax to the extent of Rs. 2,583.56, but he deposited a sum of Rs. 2,583.53. Thus there was a shortage of three paise.
(2.) IT was contended on behalf of the department before the appellate authority that the appeal was not competent, because the assessee had not deposited in full the admitted tax. The appellate authority found that a sum of Rs. 620 was refundable to the assessee from the department. In its opinion the shortage of three paise could very well be adjusted against the refund due to the assessee and as such the appeal could not be said to be incompetent. The department was not satisfied and went up in revision. The revising authority has upheld the objection of the department and has held that because the assessee had failed to pay in full the admitted tax, the appeal had been wrongly entertained by the appellate authority. The present reference has been submitted by the revising authority at the instance of the assessee and the following two questions of law have been referred : "(1) Whether on the facts and in the circumstances of the case the revising authority was justified in law to set aside the appellate order and restore the assessment order for the year 1964-65. (2) Whether on the facts and in the circumstances of the case the petitioner's appeal was rightly entertained and decided by the appellate authority under the provisions of section 9 of the U.P. Sales Tax Act." Section 9 deals with appeals. The first proviso to section 9 states "that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due ..........." The short question that arises is whether in the circumstances of the present case it could be said that the assessee had paid the admitted tax for purposes of the first proviso to section 9. It is admitted that a sum of Rs. 620 was due to the assessee from the sales tax department and he was entitled to the refund of that amount. It is also admitted that he applied for the refund by way of adjustment towards his tax liability on 30th April, 1964, at the time of filing the fourth quarterly return for the assessment year in question. The adjustment was not made. It appears that there is no dispute about the amount or the right of the assessee to its refund. It is also admitted that had the adjustment been made, there would have been no shortage as the shortage of three paise would have been wiped out. We are of opinion that in the facts and in the circumstances of the case the revising authority was not right in taking the view that because of the shortage in the deposit of the admitted tax, the appeal was incompetent. Section 29 of the Act deals with refund. That section provides that the assessing authority shall refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under the Act. The proviso attached to this section reads : " Provided that the amount found to be refundable shall first be applied towards the tax or any other amount outstanding against the dealer and only the balance, if any, shall be refunded."
(3.) THIS proviso, in our opinion, clearly casts a duty upon the assessing authority to adjust the refund due to an assessee towards the outstanding liability of tax or penalty, etc. When a tax liability is to be discharged by an assessee, he can ask the Sales Tax Officer to adjust against such liability any amount which may be refundable to him. Under this proviso, there is a provision for an automatic adjustment so that in a case like the present one, there shall be deemed to have taken place an automatic adjustment of the amount refundable to the assessee against his liability of admitted tax.;