TMI Blog1980 (2) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... tted classification lists showing the tyres for fork-lift trucks as being assessable to duty under Item 16 (1) which was applicable to tyres for motor vehicles and not under Item 16 (3) which was the Item applicable to all other tyres. Further according to the petitioner, under the same mistake of law and misapprehension of the correct legal position, the petitioner from time to time cleared these tyres and paid excise duty payable thereon under Item 16 (1). 2. On 15th October 1973, Voltas Ltd., to whom the petitioner had sold its tyres for fork-lift trucks, addressed a letter to the petitioner, stating that according to Voltas Ltd., the tyres supplied by the petitioner for fork-lift trucks of Voltas Ltd. should be classified under Item 16(3) as the fork-lift trucks were work trucks and could not be described as motor vehicles. By this letter, Voltas Ltd. also informed the petitioner that in the case of Voltas Ltd. a decision to that effect had been given on 21st December 1971 by the Appellate Collector of Customs, namely, that fork-lift tyres could not be classified as motor vehicle tyres. By this letter, Voltas Ltd. requested the petitioner to arrange to refund to Voltas Ltd. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 and 17th March 1976 passed by the 2nd and 3rd respondents respectively and for a refund of the amount of Rs. 2,38,481.24. 3. One Joseph Leo D'Cunha, Assistant Collector of Central Excise, has filed an affidavit-in-reply, contending that the petitioner has not exhausted its legal remedy by way of revision. Here it may be stated that this ground of resistance to the petition was not pressed by Mr. Dalal, the learned Counsel appearing on behalf of the respondents. The next ground of resistance urged in the affidavit-in-reply is that petitioner's refund application was rejected as it was for a period prior to one year from the date of the application. It is further contended that there is no provision in law for considering any question of mistake of law under Rule 11 and hence the impugned orders passed under Rule 11 are valid orders. It is further contended that under Rule 11, refund could be granted only for a period of one year prior to the date of the application. In the affidavit-in-reply, it is not admitted that there was any mistake of law or that there was any misapprehension as to the correct legal position on the part of the petitioner in submitting its classification l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appropriate writ petition as the present, where there was no triable issue. On the other hand, it was urged by Mr. Dalal that the impugned orders are legal and valid inasmuch as under Rule 11 refund could be granted only for a period of one year which was done. It was further urged by Mr. Dalal that the impugned orders are within jurisdiction and hence were not susceptible to challenge. Mr. Dalal further urged that the proper remedy of the petitioner was to have filed a substantive suit as a triable issue had arisen whether the amounts were in fact paid by the petitioner under mistake and also regarding the point of time when the petitioner came to have knowledge of its mistake. 5. At this stage, it would be pertinent to refer to Section 72 of the Contract Act. Section 72 provides that the person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it. In the present case, the question of coercion does not arise. The question that however does arise is whether the excess duty paid from time to time by the petitioner was under mistake. Rule 11 read with Rule 173-J provided that no duties or charges paid or adjusted in an account-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise, that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving it. It was further held that where it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party is entitled to recover the same and the party receiving it is bound to repay or return it. No distinction can be made in respect of a tax liability and any other liability on a plain reading of the terms of Section 72 of the Contract Act. To hold that tax paid by mistake of law cannot be recovered under Section 72 will be not to interpret the law but to make a law by adding some such words as "otherwise than by way of taxes" after the word "paid" 8. Patel India v. Union of India, A.T.R 1973 Supreme Court 1300, was a case under Section 40 of the Sea Customs Act, 1878, which provides that no customs duties or charges which have been paid and of which repayment wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassine Paper. The petitioner imported various kinds of paper including the 3 varieties which were a trade name Greaseproof Paper, Vegetable Parchment Paper and Glassine Paper and went on paying 100% duty on Glassine Paper as also on the Vegetable Parchment Paper. On Greaseproof Paper the duty charged was only 50%. On the other two papers, the duty charged to the petitioner was 100%. This was because the petitioner was not aware, due to mistake of fact or law or both, that the other two varieties were also entitled to exemption of 50% duty. Accordingly the petitioner presented as many as 17 bills of entry from time to time pertaining to Vegetable Parchment Paper and Glassine Paper between April 1965 and April 1966 and 100% duty was recovered from the petitioner, which was paid. In September 1966, the petitioner received information that for these two varieties of paper only 50% of duty was being charged in the Madras and Calcutta ports. Thereafter an Officer of the Customs Department was contacted by the petitioner to whom this information was given. On 4th October 1966, the petitioner made a written representation and ultimately the Central Board of Excise and Customs decided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit because of the delay in filing the petition, the court should not entertain the petition but should refer the party to a substantive suit. On these facts and rival contentions, it was held by Deshmukh J. (as he then was) that the moment the notification was issued by Government, Greaseproof Paper became a commodity liable to duty at 50% ad valorem and not more and that any demand in excess of 50% was therefore a demand either in excess of jurisdiction or one not backed by any provision of law. It was observed as under:- "...the word 'mistake' used in Section 72 of the Contract Act is used in an unqualified manner and it covers all mistakes whether of fact or law. That has been fairly established by the Judgment of the Supreme Court in Sales Tax Officer v. Kanhiya Lal, A.I.R. 1959 S.C. 135. Their Lordships quoted with approval a passage from the Judgment of the Privy Council in Shiva Prasad Singh v. Shirish Chandra Kandi, A.I.R. 1948 P.C. 297 and agreed that the mistake referred to in Section 72 can be either mistake of fact or law. The observations of the Privy Council which are quoted with approval are these : 'Payment by mistake' in Section 72 must refer to a payment wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake of fact and/or law on the part of the petitioner for no rational person would go out of his way and pay a higher 'tax or duty than what he would be liable to do. At this stage, the procedure for payment of the duty may briefly be recapitulated, namely, the clarification list had to be filed (Rule 173-B); thereafter the price list was filed (Rule 173-C); payment of the duty was then made by the petitioner itself after determining its liability for duty and thereafter the petitioner removed such goods on which it had paid duty (Rule 173-F); the petitioner thereafter submitted its monthly returns [Rule 173-G (iii)]; assessment was made on the basis of information furnished by the assessee in his returns subject of course to further enquiries (Rule 173-I). This procedure reveals in no uncertain terms that it was on the assumption and mistake of law and/or fact that its tyres were assessable to duty under Item 16(1) and not under Item 16(3) that the petitioner filed the requisite classification and price lists and paid the duty on self assessment on that basis. No doubt the Department did collect such higher duty paid by the petitioner. That does not mean that the department was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is a sham or bogus letter nor was it rightly so urged by Mr. Dalal. In these circumstances, what point or purpose can there possibly be in any witness from Voltas Ltd. being put in the witness box. Even the present writ petition has been filed within 3 years from the discovery of the mistake, which was discovered on receipt of Voltas' letter dated 15th October 1973. Thereupon after making further investigation, the refund application was made on 19th April 1974. On 24th May 1975, the impugned order was passed by the 2nd respondent, and on 17th March 1976 by the 3rd respondent and the petition was filed on 15th September 1976. These dates establish that the refund application was made within 3 years from the earliest date of payment and that the present petition was filed within 3 years from the discovery of the mistake and within six months from the date of the appellate order. Therefore, looked at from any angle, the present petition has been filed within 3 years from the discovery of the mistake. There is also no merit in Mr. Dalal's contention that the petitioner could have discovered its mistake earlier, if it had shown due diligence or contacted other tyre manufacturers. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12. Mr. Dalal relied on the decision of the Division Bench of this Court in Ogale Glass Works v. Union of India, 79 Bom. LR. 37 1979 E.L.T. (J. 468). In that case the petitioners were manufacturers of glass and glassware. According to the price list approved by the excise authorities the petitioners had from 1962 to 1972 paid whatever moneys were demanded from time to time by the Excise authorities. In this manner the petitioners had paid a sum of over Rs. 12 lakhs. Part of the moneys paid represented legitimate excise duty on the excisable goods, namely glass and glasswares but the amounts so paid also included moneys purporting to be excise duty on the cost of packing and packing materials. On 10th September 1971, the Mysore High Court held in the case of Alemic Glass Industries Ltd. that the value of packing materials or packing charges was not chargeable to excise duty. In December 1972, the petitioners made a representation to the Excise authorities that revised price lists should be approved in accordance with the law by excluding the packing charges. The Excise authorities refused to comply with the petitioners' request who thereupon filed a petition for appropriate dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly against the same within a reasonable time, if not within forty five days thereof. There is also a distinction between the orders, that are void and nullified for reasons known to law and the orders act so void. Section 72 of the Contract Act can be availed of in the former case in a civil suit based on the composite cause of action of (1) the order being void and (2) payment having been made under the mistake of law of its being valid. But the order falling under the latter category, even if discovered to be patently erroneous, would continue to be final and binding on the parties, if not corrected, in spite of the remedies, and the question of claiming refund of money paid thereunder, on discovery of mistake of law in such an order, at any later stage, can never arise. 'Mistake of law', can have no relevance whatsoever in such cases excepting for extension of limitation for availing of the remedies provided the concerned statute itself admirs of such extension. Rights and liabilities of the person so bound by such final valid but erroneous orders get settled down in terms thereof permanently and mere subsequent discovery of any errors of law therein cannot unsettle the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof the department collected excess duty without the authority of law, and which otherwise it would not have received. The department cannot collect amounts without the authority of law and then be heard to say, it will not refund them. Thus these observations relied on by Mr. Dalal can avail the respondents nothing in the facts and circumstances of this case. 14. Mr. Dalal next relied on the decision in Ujjam Rai v. State of Uttar Pradesh, A.I.R. 1962 Supreme Court 1621, where it was held that the characteristic attribute of judicial act or decision is that it binds whether it be right or wrong. An error of law or fact committed by a judicial or quasi-judicial body cannot in general be impeached otherwise than on appeal unless the erroneous determination relates to a matter on which the jurisdiction of that body depends. Mr. Dalal also relied on the decision in Bata Shoe Co. v. Jabalpur Municipality, A.I.R. 1977 Supreme Court 955 where it was held that the provisions of C.P. Berar Municipalities Act 1922 showed that the defendants indubitably possess the right and the power to assess and recover octroi duty and double duty on goods which are brought within the municipal limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of one year from the discovery of the mistake. This contention of Mr. Dalal cannot be entertained. If Section 72 of the Contract Act is attracted, which it is, it would be open to the petitioner to file a petition within 3 years from the discovery of the mistake that the petitioner has done. Mr. Dalal urged that even assuming that the period for filing a writ petition is 3 years, the Court should not exercise its discretion in the petitioner's favour. In support of this contention Mr. Dalal relied on the decision in State of Madhya Pradesh v. Bhailal Bhai, A.I.R. 1964 Supreme Court 1006. In that case, the norms which should prevail for relegating a party to a suit have been set out. The relevant observations are to be found in para 17 at page 1011 of the Report as under :- "...we cannot lose sight of the fact that the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a Civil Court or to deny defences legitimately open in such actions...the power to give relief under Article 226 is a discretionary power. This is specially true in the case of power to issue writs in the nature of mandamus. Among th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earliest date of payment and the petition within 3 years from the date of discovery of the mistake and within 6 months from the date of the impugned appellate order. If the petitioner had, instead of first moving the department for refund, straightway filed this petition, no doubt the department would have taken its standard defence, that the petitioner had not exhausted its remedy of first moving the department and the standard query would have been raised as to why the petition should assume it would not get relief from the department itself. Now that the petitioner moved the department and failing to get satisfactory redress, has filed this petition within 6 months from the date of the appellate order, the department alleges delay on the part of the petitioner and says it should have moved the Court first and filed a suit. Surely the department cannot have it both ways. On the fact of it, the question of limitation, be it in the present petition or in the suit, had one been filed by the petitioner, did not arise. Furthermore, one has only to ask onself: What is the triable issue raised by the respondents in this case ? The answer is one word: None. In view of these circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I can do not better than to reproduce the observations made in that case as under :- "...It is true that in so many words the petitioners have not asked for quashing the assessment orders. Mr. Rana argued that if such plea was taken earlier either in the pleading or in the several exhaustive hearing before the various judges of this court when the matter was referred to reconsider the assessment, the petitioners would have complied with the technical requirements, if need be by amending the petition. However, apart from the mere technical approach what I find is that the legality or otherwise of this tax has not been yet decided. The petitioners pleaded specifically in the body of the petition that the recovery of the dues by the Customs Authorities is without the authority of law and wholly illegal. That has been the theme of paragraph 10 and the whole petition narrated how the two kinds of paper fall within the exempted category and are outside the purview of Entry 44 which generally deal with 100% levy on paper. I am of the view that this technical approach should not come in the way of the petitioners if they are otherwise entitled to the refund. The petition read as a whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aste of public time and money ? Had the plaintiffs failed in the suit on this point, they could have immediately filed a writ petition under Article 226 of the Constitution for the same relief. There being no answer on the merits, they would have been granted the relief prayed for. From our, experience of litigation of this type, we of course, can contemplate some technical defences which would have been raised in that writ petition. One of them would have been that of delay, but the answer to that defence would have been furnished by the period taken up by the pendency of this case. Another technical defence very likely would have been that the respondents' proper remedy was to file a suit. We are not saying this in a facetious vein, because in the very suit from which this appeal arises, in the written statement filed by the Union of India a defence has been taken that the suit is barred by limitation, and immediately thereafter another defence is taken that the suit is premature. This we may well expect from a private litigant who seeks to postpone the evil day, but these are certainly not pleas which we expect from the Government and its officers... Thus there was no real objec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
