1969 PLP 490 (PTD)

HAMOODUR RAHMAN, C. J.‑This is a petition by the Commissioner of Sales Tax, Lahore Region, for leave to appeal from a judgment of a Division Bench of the High Court of West Pakistan in a reference under section 17 (1) of the Sales Tax Act, 1951. The respondent‑Company, it appears, had during the year 1957‑58 deposited in the Government treasury a sum of Rs. 21,338‑14‑9 under section 12 (1) of the Sales Tax Act as Sales Tax collected by it from its customers but when the assess ment was made it was found that the said respondent was liable to pay sales tax for the said year only to the extent of Rs., 17,

717. The balance of Rs. 3,621‑14‑9 which was found to have been overpaid by the respondent‑assessee was, however, not refunded to it on the ground that since it was excess payment representing collections from customers, it was not refundable. This decision of the Sales Tax Officer was reversed in appeal by the Appellate Assistant Commissioner who held that the amount was refundable under section 27 (2) of the said Act. The view of the Appellate Assistant Commissioner was also upheld by the Appellate Tribunal. The reference in the High Court was, after a careful examination of all the decisions cited before it, answered in the affirmative and it was held that the Tribunal had rightly decided that the excess amount was refundable to the assessee under section 27 (2) of the Sales Tax Act, even though the amount represented monies collected from customers by way of sales tax. It is contended on behalf of the Commissioner that the High Court is wrong in taking this view, for, the assessee in such circumstances acts only as agent of the taxing authority and therefore, whatever it has collected and deposited with the principal‑the taxing authority ‑must rightfully remain with the taxing authority. To allow the assessee to withdraw the excess amount would, it is contended, amount to allowing the assessee to take advantage of its own fraud. In support of this conten tion reliance is placed on a note appended under section 27 of the Sales Tax Act by Mr. S. M. Raza Naqvi in his book on the law of sales tax in Pakistan. The note is to the following effect :‑ "No refund can be claimed for that part of the sales tax which was collected from customers notwithstanding the fact that the assessee's sales fall below the taxable limit because the tax was not paid from the pocket but was collected from the customers in the name of Government. Failure to deposit such tax may attract sections 406 and 409 of the Pakistan Penal Code for breach of trust." Learned counsel has also relied upon a decision of this Court in the case of Messrs Abbasi Textile Mills Limited v. The Federation of Pakistan and others (P LD 1958 S C (Pak.) 187). We are of the view that the facts of that case were different and the High Court has, therefore, rightly distinguished it. We are also unable to accept the opinion of the learned commentator for which no authority is cited. The allegation of fraudulent conduct on the part of the assessee cannot be taken into account at this stage, for, this allegation was never before made nor was any action taken against the assessee on that account. We are in full agreement with the High Court that to allow the Department to retain the excess amount would be wholly unjustified, for, the taxing Department can only insist upon realizing from the assessee the demand raised by it and no more, If the assessee has, by mistake or by miscalculation, realized some excess amount from its customers, then it is not the Department but the customers who may insist upon the assessee refunding the' amount so collected in excess to the customers concerned but the Department cannot abrogate to itself the right of retaining money which is not due to it. The High Court in our view, decide rightly and we see no legal ground for granting leave in this matter. This petition is, accordingly, dismissed. Leave refused.