TMI Blog1993 (3) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... section 5A(1)(a) of the Act as if the materials concerned had been consumed in the manufacture of other goods for sale or otherwise. Copies of the orders of assessment for these years are exhibits P1 to P10, and all of them show ex facie that the purchases of these materials by the petitioner for the purpose of execution of contract works have been assessed to tax under section 5A. Petitioner as well as the first respondent, assessing authority, were both under the impression that such purchases were exigible to tax under section 5A. The tax so assessed was paid by the petitioner. 2.. While so, and on December 17, 1986, a Division Bench of this Court, of which I was a member, held in the decision in Deputy Commissioner of Sales Tax v. T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore this original petition was filed on December 19, 1988, seeking a direction to the respondents to refund the said amount with interest at 24 per cent per annum. 5.. The respondents have filed a counter-affidavit refuting the claim made by the petitioner, and contending that the petitioner should have taken up the assessments in appeal, and that without doing so, they are not entitled to seek refund of the amount paid. 6.. The Supreme Court had, as early as in 1958 held in the decision in Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf [1958] 9 STC 747 that refund of sales tax paid under a mistake of law could be claimed based on section 72 of the Indian Contract Act, 1872. The court dealt with the scope of section 72 and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was liable to be entertained if it was made within three years from the date on which the mistake became known to the assessee who made payment by mistake. The court went on to observe that it was the duty of the State to investigate the facts when the mistake was brought to its notice and to make refund if the mistake was proved, and the claim was made within the period of limitation, under article 96 of the Limitation Act, 1908, namely, three years from the date when the mistake became known to the person making the payment by mistake. In Commissioner of Sales Tax v. Auraiya Chamber of Commerce [1986] 62 STC 327 the Supreme Court reaffirmed the position as stated above, and held that when tax is collected without the authority of law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Kishore v. State of Madhya Pradesh [1990] 78 STC 404 (SC); AIR 1990 SC 313 the question under consideration was regarding the starting point of the period of limitation of three years for a proceeding of this nature. The Supreme Court observed that when money is paid under a mistake of law, the period of limitation for recovery of the amount does not begin to run until the date on which the plaintiff discovers the mistake or could with reasonable diligence have discovered the mistake. Article 113 of the Schedule to the Limitation Act, 1963 and the provisions of section 17(1)(c) of that Act apply in such cases. It was also observed significantly that though a party could, with reasonable diligence, discover a mistake of fact, even before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of materials made by the petitioner for use in execution of works contracts will not be legal. The petitioner has made his claim for refund, namely, exhibit P11, well within the period of 3 years, from the date of this Court's judgment in Anandan's case [1987] 65 STC 349 when alone the mistake could have come to light. Even this original petition was filed well within the period of three years, on December 19, 1988. Petitioner could have discovered the mistake only after this Court laid down the law authoritatively. Both the petitioner and the first respondent were labouring under a mistake of law and it was because of this mistake that the petitioner paid the tax. The petitioner is therefore entitled to refund of the tax paid as alleged b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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