R.N. Misra, C.J.
1. This application under Article 226 of the Constitution has been filed for quashing the order dated 18th August, 1980, under annexure-1, passed by the Sales Tax Officer (opposite party No. 1), and for a direction that the application for refund be granted.
2. The assessee, a company incorporated under the Companies Act, has a factory for manufacture of paper and board of various varieties at Brajarajnagar in the district of Sambalpur within the territorial jurisdiction of this Court. The company is a registered dealer both under the Orissa Sales Tax Act and the Central Sales Tax Act and has been assigned registration numbers S. A. Ill 81, and S. A. III C. 6 respectively. The petitioners paid the tax due under both the statutes as required by law and had filed appropriate returns for the years 1973-74, 1974-75 and 1975-76. It is alleged that the Sales Tax Officer completed the assessments with undue haste without providing appropriate opportunity to the assessee to produce relevant papers and by unnecessarily drawing adverse inferences. As a result of such assessments, a sum of Rs. 5,72,52,212 was raised against it under the two statutes as per particulars given below :
____________________________________________________________Year Demands under Addl.C.S.T. Act | O.S.T. Act O.S.T.____________________________________________________________1973-74 Rs.1,45,92,135.00 Rs. 2,42,826.00 __ __1974-75 1,86,77,226.00 5,71,376.00 __ __1975-76 2,27,39,020.00 4,09,225.00Rs. 20,404.00____________________________________________________________Total Rs. 5,60,08,381.00 Rs. 12,23,427.00 Rs.20,404.00____________________________________________________________
The assessee appealed to the Assistant Commissioner against the assessments by contending that the assessments were arbitrary, mala fide and based upon surmises and conjectures and had been completed with a predetermined mind. An application for stay of realisation of the demands for the three years was made in the appeals and the appellate authority ultimately directed that there would be stay of realisation of the balance demand on payment of Rs. 50,52,211 out of the demand. The assessee paid that amount with a view to complying with the conditional order of stay passed by the first appellate authority. The Assistant Commissioner reduced the demands but sustained a part of it. This led to filing of second appeals by the assessee before the Sales Tax Tribunal. During the pendency of the second appeals, the assessee deposited a further sum of Rs. 21,098 out of the demands for the three years. On 30th of April, 1980, the Tribunal set aside the assessments and directed the Sales Tax Officer to complete fresh assessments for the three years in accordance with law. On I3th/16th of June, 1980, as per annexure-3, an application for refund of the tax paid was filed before the Sales Tax Officer and by the impugned order dated 18th of August, 1980, under annexure-1, the said Sales Tax Officer informed the petitioners to the following effect :
Subject :-Refund for the years 1973-74, 1974-75 and 1975-76 under the O.S.T., O.A.S.T., and C.S.T. Acts-submission of application in prescribed forms thereof.
Reference :-Your applications for refund dated 16-6-80.
With reference to the refund applications submitted by you relating to the above periods, I am to inform you that the assessments have been set aside and remanded for reassessment by the Additional Member, Sales Tax Tribunal, Orissa, Cuttack. The refund is, therefore, due only after reassessments as directed by the second appellate authority are completed. Submission of refund applications relating to the periods stated above is premature and therefore the refund applications are filed.
You are however instructed to submit refund applications on receipt of reassessment orders on completion of assessments relating to the above period.
Challenge in this writ application is to the said order of the Sales Tax Officer and it is contended that the assessee had paid all the admitted tax for the entire period and nothing according to the assessee was due to the department from it. The amount claimed by way of refund had been paid by the assessee pursuant to raising of demands against it by completing assessments for the three years in the course of first appeals and second appeals as indicated above. With the setting aside of the assessments, the demands had been wiped out and until fresh demand, if any, was raised by completion of reassessment, no amount by way of tax was due from the petitioners under the three statutes. The Sales Tax Officer was therefore not entitled to withhold the amount paid by the assessee. The view taken by the Sales Tax Officer, namely, that the application was premature, it is contended, is without basis, inasmuch as with the setting aside of the assessments and wiping out of the demands, the money deposited has become refundable. It is further submitted that the view of the Sales Tax Officer that the refund is due only after reassessment is completed is contrary to the scheme of the statute, and therefore, this Court should direct the Sales Tax Officer to refund the money of the petitioners. Dr. Pal, appearing for the petitioners, further submits that this is not a case where any direction under Article 14-D of the Orissa Sales Tax Act has been made. The Sales Tax Officer, therefore, has no authority to reject the application for refund.
3. The opposite parties have filed a common counter wherein it has been pleaded :.But in the instant case, the learned Tribunal has merely indicated the line along which the assessment should be made/should have been made and remanded the matter to the assessing authority with a direction to reassess. Therefore unless and until such a reassessment is made, the order of the learned Tribunal cannot be said to have reached its finality so as to enable the petitioner to make an application for refund. That apart, the application for refund can only be made when the amount due and payable, either way, is finally determined. Such a final determination of liability as well as quantification thereof can only be made/known after the reassessment is made. This being the specific direction in the second appellate order, no application for refund can be made or entertained unless the amount due is finally determined. It is further pertinent to mention that the second appellate order did not stipulate or direct that such a refund be made to the petitioners. But even if such a stipulation or direction was there, the same would not change the legal position as the stipulation or the direction can only be given after the question of liability is finally determined. Therefore, until and unless the reassessment is made and the liability finally determined, no refund can possibly be made.
Reliance has been placed on Rule 39 of the Orissa Sales Tax Rules which the petitioners in their application have challenged as ultra vires the scheme of the Act.
4. At the commencement of the hearing, Dr. Pal for the petitioners did not press before us the petitioners' submission that Rule 39 was ultra vires the Act. He contended that with the setting aside of the assessments, the demand was wiped out and until a fresh demand was raised, nothing was due by way of tax to the department. In a case where the .dealer had paid the entire admitted tax, there was no question of any further liability to meet unless a liability was created. Under the taxing statute, a demand could be raised by completion of an assessment. The assessments which had raised the demand were set aside by the Tribunal. With such setting aside of the demand, the foundation for requiring the petitioners to make any payment was annulled and in the absence of a demand, withholding of refund of payment made by the petitioner could not at all be justified.
Article 11 of the Orissa Act provides for making of returns by a dealer. Explanation to Sub-section(3) of that Article provides :
A return unaccompanied by a receipt from the treasury showing full payment of the admitted tax or composition money or by a crossed cheque or crossed bank draft covering the admitted tax or composition money, as the case may be, and by a dealerwise list of sales to the registered dealers in duplicate in respect of which deduction is claimed under item (ii) of Sub-clause (a) of Clause (A) of Sub-section(2) of Article 5 in respect of the period to which the return relates, shall not be deemed to be a return for the purpose of this section and, in case such cheque or bank draft is dishonoured for payment, the return shall not be deemed to be a return for the purpose of this section.
A return to be valid, therefore, postulates payment of entire admitted tax and enclosure of proof thereof in the prescribed manner. Admittedly, the petitioners had made such returns for all the three years. It, therefore, follows that the petitioners had paid all the tax which according to its books of account was payable.
Section 12 of the Orissa Act provides the procedure for making assessments. After assessment is made under Article 12, Article 13, Sub-section(1), provides:
Tax payable under this Act shall be paid in the manner hereinafter provided at such intervals, as may be prescribed.
Article 13(4)(b) relates to tax assessed under Section 12 of the Act and the amount of such tax is to be paid by the dealer into a Government treasury within thirty days from the date of service of the notice issued in that behalf. Now that the assessments have been set aside, the notices of demand pursuant to which part payments had been made in terms of the appellate orders of stay are no more in existence and the amounts paid by the assessee-petitioners and now in the hands of the Sales Tax Officer are no longer relatable to any outstanding and valid demand against the petitioners. In an ordinary situation not covered by the statute, in such circumstances, the money which had been paid by the petitioners could become refundable.
Section 14 of the Orissa Act makes statutory provision for refund and as has been held on several occasions by this Court, refund of sales tax is a statutory process covered by that provision. Section 14 provides :
The Commissioner shall, in the prescribed manner, refund to a dealer applying in this behalf any amount of tax, penalty or interest paid by such dealer in excess of the amount due from him under this Act, either by cash payment or by deduction of such excess from the amount of tax, penalty or interest due in respect of any other period :
Provided that no claim to refund of any tax, penalty or interest paid under this Act shall be allowed unless it is made within twenty-four months from the date on which the order of assessment or order imposing penalty, as the case may be, was passed or from the date of the final order passed on appeal, revision, or reference in respect of the order earlier mentioned, whichever period is later.
The claim for refund under Article 14, therefore, arises when payment by the dealer is in excess of the amount due from him under the Act. As we have already pointed out, but for the demand raised under assessment, nothing was due from the petitioners under the Act. The amount claimed by way of refund is relatable to the demand raised pursuant to assessments which, as already pointed out, have been wiped out as a result of the decision by the second Appellate Tribunal. At present at the most, the petitioners had the liability to be reassessed. That liability is a contingent one. It may be, when reassessment is completed, some demand may be raised. It is also possible, as has been contended by Dr. Pal for the petitioners, that the reassessment may not result in any demand. When the matter stands in such a position, can it be said that the amount, refund of which is claimed, is due from the petitioners under the Act If the money is not due from it, certainly the right to claim refund under the parent provision of Article 14 arises.
The provison to Article 14 is not very material. The entire scope of the proviso is to fix the outer time-limit within which an application for refund has to be made. The proviso does not create the right for refund nor has it anything to say about it. The main provision in Article 14 clearly indicates when exactly a claim for refund is available to be made.
Section 14-D which was inserted into the Act by Orissa Act 2 of 1966 with effect from 30th of April, 1966, provides :
Power to withhold refund in certain cases.-Where an order giving rise to a refund is the subject-matter of. an appeal or further proceeding under this Act, the Commissioner may, if he is of the opinion that the grant of refund is likely to adversely affect the revenue, withhold the refund till such time as he deems proper.
Admittedly, in the instant case, the order has not been made under Article 14-D of the Act. We have been told at the Bar that the power under Article 14-D has not been delegated to the Sales Tax Officer and in the instant case, the order having not been made by the Commissioner, the Sales Tax Officer could not have exercised jurisdiction under Article 14-D of the Act. The legislature has advisedly used the words 'further proceeding' which, in our opinion, cover also cases of reassessment. The learned standing counsel pointed out that the legislature could have in view a 'reference' under Article 24 of the Act.
Under the statute, remedy at the instance of the assessee is either by appeal or reference. Wide revisional powers of the Commissioner under Article 23 of the Act were inserted only by the amending Act 3 of 1976. If the legislature intended to refer to 'appeal' or 'reference' when Article 14-D was introduced into the statute in 1966, there could have been no difficulty for the legislature to use the word 'reference' instead of saying 'further proceeding'. Obviously, reassessments were also intended to be covered within the ambit of Article 14-D. A situation as arising before us could, therefore, be covered by Article 14-D. Read in that context, it must allow that even where reassessment is pending, Article 14-D has application. From this it necessarily means that before reassessments are completed, Article 14 of the Act becomes operative and a refund could be claimed; but refund which become due could be withheld in exercise of the power conferred in Article 14-D. It, therefore, follows that notwithstanding the fact that reassessment is yet to be made, the tax paid in respect of the periods, assessment for which is set aside, is refundable.
5. Dr. Pal for the assessee relied upon a Bench decision of this Court in the case of Orient Paper Mills Ltd. v. State of Orissa  8 STC 749. Nara-simham, C.J., speaking for the court analysing Article 14 indicated :
Under this section, therefore, in considering an application for refund there are only two matters to be decided : (1) Was any tax paid by the applicant in excess of the 'amount due' from him under the Act (2) Is his claim for refund within the period of limitation laid down by the proviso to Article 14?...
The decision of this Court has been varied in appeal by the Supreme Court in the case of Orient Paper Mills Ltd.v. State of Orissa : 1SCR549 . We, however, agree with Dr. Pal's submission that the two questions which Narasimham, C.J., posed are the only questions which have to be considered while dealing with an application under Article 14 of the Act.
The next case relied upon by Dr. Pal is a Bench decision of the Allahabad High Court in the case of Purshottam Dayal Varshney v. Commissioner of Income-tax, U.P. : 94ITR187(All) . The court was dealing with Chapter XIX of the Income-tax Act of 1961, which made provision for refunds. The question that arose for consideration before the Allahabad High Court was, when an assessment '' is set aside and remanded by the appellate authority for reassessment, when does -the period of six months stipulated in the statute after which interest becomes payable under Article 244, commences to run Gulati, J., speaking for the court observed :
Under the Income-tax Act, although the liability to pay tax is cast upon an assessee each year in accordance with the Finance Act of that year, yet the tax becomes due and payable only when an assessment order is passed and a notice of demand under Article 29 of the Indian Income-tax Act, 1922, and Article 156 of the Income-tax Act, 1961, is served upon the assessee. If there is no assessment order, the assessee is not liable to pay any tax. It follows, therefore, that if an assessment order is set aside, the notice of demand becomes ineffective and the tax already paid under such a notice of demand becomes refundable. If a fresh assessment is made, the tax determined as a result of the fresh assessment order again becomes due and payable only after a fresh notice of demand is served upon the assessee.
The learned Judge then proceeded to refer to the contentions of the department and stated :
The contention of the learned counsel for the department is that the refund becomes due only if the assessment is annulled and not when it is merely set aside and the matter is remanded to the lower authorities. The learned counsel has not cited any provision or a decided case in support of his contention. It is true that in majority of cases when an assessment order is set aside and the matter is remanded the assessee would be found liable to some tax and the department might be prejudiced if the amount already deposited by the assessee is refunded to him. But the law has made ample provision to safeguard the interest of the revenue in such a situation. Under Article 241, the Income-tax Officer has been given power to withhold refund when the order giving rise to the refund is the subject-matter of appeal or other proceedings. This is how Article 241 reads :
Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the Income-tax Officer is of the opinion that the grant of the refund is likely to adversely affect the revenue, the Income-tax Officer may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine.
This provision fully covers the cases where remand proceedings are pending after the assessment order is set aside. In such cases the Income-tax Officer can, with the approval of the Commissioner of Income-tax, withhold the refund till the remand proceedings are over. The legislature has taken care that if the refund is withheld the assessee is not deprived of the interest on such refund to which he may be ultimately found entitled....
* * *This provision very clearly shows that as soon as an assessment order is set aside, the tax paid by the assessee under the assessment order becomes refundable to him. But the Income-tax Officer can withhold the refund during the pendency of the remand proceedings and in such a situation the assessee will not be prejudiced.
The provisions in the Income-tax Act under Articles 240 and 241 correspond to Articles 14 and 14-D of the Orissa Sales Tax Act. We agree with the ratio of the Allahabad decision.
Under the Central Sales Tax Act, the machinery provided for collection and refund is as in the State statute. Therefore, even in respect of the demand under the Central Sales Tax Act corresponding provisions of the State Act became applicable.
In view of what we have said above, it follows that with the setting aside of the assessments by the Member, Additional Sales Tax Tribunal, the amounts paid by the assessee-petitioner against demands which have been set aside become refundable and the petitioner's applications, therefore, were not premature. The petitioner does not have to wait till reassessments are completed in order to claim refund.
The learned standing counsel relied upon the observations made by this Court in the case of Sinclair Murray and Company (Pvt.) Ltd. v. State of Orissa  26 STC 451. That was a case where the point for consideration was whether the application for refund was barred by limitation. The court concentrated upon the proviso. We agree with the learned standing counsel that the proviso is interconnected with the parent provision because limitation has to commence from the period when refund becomes due. In the reported decision, however, the court only found that there was a completed reassessment subsequently and since the demand was raised on a particular date, the court chose to accept that the period of limitation ran from the date of reassessment. In that case, this Court did not consider as to when the claim for refund would become due in that background. The learned standing counsel also referred us to an unreported decision of this Court in O.J.C. No. 199 of 1967 (Health Stores, Buxi Bazar, Cuttack v. Additional Commissioner of Sales Tax, Orissa, Cuttack) disposed of on 25th March, 1970, where the Tribunal had reduced the enhanced figure by the Assistant Commissioner by a particular sum and had allowed appeals partly and had directed recomputation of tax. The question arose as to whether an application for refund under Article 14 of the Act could be entertained when tax had not been recomputed. From paragraph 1 of the judgment, it appears that the point for consideration was whether the amount claimed by the assessee without recomputation could be refunded. There it was observed :.In the refund application the petitioner gave a figure on his own calculation.
If the recomputation had been made and the petitioner had made no proper application for refund under Article 14 within one year of the date of recomputation, the application would have been barred by time; but if there is no recomputation the question of any limitation does not arise.
Nothing has been decided in that unreported decision which is relevant for our present purpose.
6. We are, therefore, of the view that the rejection of the refund applications for the reasons indicated in annexure-1 are untenable and irrelevant. With the setting aside of the assessments, the demand even for additional tax has been wiped out and the part payment made out of the demand which has been set aside has become refundable. The order under annexure-1 is quashed and a writ of mandamus shall issue to the Sales Tax Officer to refund the amount paid against assessments which have been set aside, in accordance with law to the petitioner. There will be no order for costs.
B.N. Misra, J.
7. I agree.