What is Set – off and refund [Sec. 48]?

Set-off means reduction of tax on purchases
from tax on sales. Set-off (or, Input Credit) is the basis of the entire system of tax
under VAT.
Refund, on the other hand, means returning excess tax paid by a dealer.
Set-off or refund may arise in two cases :
(i) In respect of taxes paid under earlier law or
(ii) In respect of MVAT paid after 1.04.05.
Set-off or refund is allowed only to a registered dealer (and not, for example, to an
unregistered dealer or a consumer). Further, such dealer must be liable to pay tax
under MVAT.