The prescribed authority shall refund to a employer or person the amount of tax, penalty, interest and fees (if any) paid by such employer or person in excess of the amount due from him. The refund may be made either by cash payment or, at the option of the employer or person, by deduction of such excess from the amount of tax, penalty, interest and fee due in respect of any other period:

Provided that, the prescribed authority shall first apply such excess towards the recovery of any amount due in respect of which a notice under section 7 has been served, and shall then refund the balance, if any.