TMI Blog1991 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... alling under Tariff Item No. 68, i.e. not elsewhere specified, of the First Schedule to the Central Excises and Salt Act, 1944 ('the Act' for short). Therefore the petitioner paid excise duty on the basis that the product was covered by Tariff Item No. 68. According to the petitioner it was a mistake to consider the article falling in Tariff Item No. 68, inasmuch as the article could be called organic surface active agent and therefore covered by Tariff Item No. 15AA of the First Schedule to the Act. Hence sometime in June 1985 the petitioner applied for reclassification of the product. Samples were drawn by Chemical Analyser on June 27, 1985 and on August 13, 1985. In November, 1985 Chemical Analyser submitted report to the appropriate authority of the excise department. As per the report the product was covered by Tariff Item No. 15AA of the First Schedule to the Act and therefore it was liable to excise duty as organic surface active agents. Tariff Item No. 15AA read as follows : "Organic surface active agents (other than soap) surface active preparations and washing preparations whether or not containing soap. Twenty per cent ad valorem." These products were liable to excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corners of the statute. The Supreme Court has further observed that the period of limitation prescribed in the Act and the Rules framed thereunder must be adhered to inasmuch as the authorities functioning under the Act are bound by the provisions of the Act. In view of this position of law laid down by the Supreme Court, the order passed by the Assistant Collector refusing to grant refund for the period beyond the prescribed period of limitation cannot be said to be in any way unlawful. However, it is submitted that this court should exercise its power under Article 226 of the Constitution of India and should direct the respondents to refund the amount of excise duty illegally recovered from the asses-see. 6. It is contended that the Assistant Collector has rejected the claim of the petitioner for the period commencing from January 28, 1985 to July 2, 1985 on the ground of limitation provided under Section 11B of the Act. As far as the powers of this court under Article 226 of the Constitution of India is concerned, the court can issue appropriate direction in relation to the amount of refund claimed which may be beyond the period of limitation prescribed under Section 11B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stand discriminated against the manufacturers in the State of Maharashtra, Uttar Pradesh, West Bengal, Andhra Pradesh, Tamilnadu, Punjab, Haryana and Karnataka wherein the High Court of the concerned States have held that the writ jurisdiction can be exercised even in respect of refund claim relating to the period beyond the prescribed period of limitation. 7. With utmost respect to the learned Judges of different High Courts, it is not possible to persuade ourselves to agree with the view canvassed by learned counsel for the petitioner. Article 226 of the Constitution of India provides for extraordinary remedy for enforcement of the fundamental rights and for any other purpose. The phrase 'any other purpose' would in the context mean the enforcement of any legal right and for the performance of any legal duty. As far as the fundamental right is concerned, it cannot be contended that to claim refund of the amount of tax paid is a fundamental right. Therefore the question arise - does the petitioner who pays duty of excise under mistake of law prove any legal right to receive back the same? Unless the petitioner proves legal right to claim refund and corresponding legal duty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision the Court observed as follows : Consequently, it must he held that for completing cause of action under Sec. 72 of the Act, the following three basic requirements of the Section have to be pleaded and then proved by the plaintiff against the defendant, (i) that the amount was paid under a mistake by the plaintiff to the defendant and that at the time of payment, both the plaintiff as well as the defendant were labouring under mutual mistake, meaning thereby the plaintiff thought that the amount was legally due by the plaintiff to the defendant. Defendant was also under the same impression ultimately it is found that it was not so; (ii) and/or the amount was paid by the plaintiff under coercion, compulsion or pressure to the defendant; (iii) that if restitution is not granted to the plaintiff, the plaintiff would suffer legal injury or prejudice. Implicit in the three ingredients will be the necessity for pleading in case of claims for refund of tax collected by the defendant from the plaintiff that the plaintiff has not passed on the burden of such tax to anybody else and that the entire burden of tax rested on the shoulders of the plaintiff and that had picked the pocket ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson from whom it was collected. However, the Supreme Court held that the burden of paying the amount in question was transferred by the respondents (plaintiffs) to the purchasers and therefore they were not entitled to get refund. Only on the persons on whom lay the ultimate burden to pay the amount would be entitled to get refund of the same. The Supreme Court further observed that if it is not possible to identify the persons on whom burden had been placed, the amount so collected can be utilised by the Government for the purpose for which the amount was collected, namely, development of sugarcane. In view of this position of law laid down by series of decisions of this Court and the decisions of the Supreme Court, it cannot be said that the petitioner is entitled to claim relief. Therefore the question of exercising discretion under Article 226 of the Constitution of India does not arise at all. 11. The contention that if the amount is permitted to be retained by the Government it would amount to unjust enrichment by the Government and unjust impoverishment of the petitioner has also no merits. In such case, if the question of exercise of discretion is to be considered, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e' under the Indian Constitution is concerned, the character of the same can be gathered from the provisions of the Preamble to the Constitution and other provisions of the Constitution. Sovereignty rests with the people. It is "we the people" who are sovereign. Those who sit in the position of power and exercise power are answerable to people and cannot sit in the position of power beyond specified period unless fresh mandate is obtained. The object of the State is to secure to all its citizens inter alia justice - social, economic and political, and also equality of status and of opportunity. 13. Powers conferred upon the State are subject to the limitation contained in Part III of the Constitution relating to fundamental rights. The directive principles contained in Part IV of the Constitution are to be treated as fundamental in the government of the country and "it shall be the duty of the State to apply these principles in making laws". The State is under obligation to secure a social order for the promotion of welfare of the people (Art. 38). The State is required to direct its policy towards securing. (a) that the citizens, men and women equally, have the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the manufacturer to retain the amount of tax (unauthorisedly collected) would not minimise the inequality in income. It would on the contrary accentuate inequality in income. Similarly either retention of amount of such tax or refund of such amount of tax to the manufacturer would result into operation of the economic system which would concentrate wealth and means of production in few hands. This is bound to be to the common detriment because these persons are not subject to any constitutional obligations and are not accountable to any one as the Government is under constitutional obligation and is also accountable to the people. Similarly, material resources of the community also would not be distributed in such a way so as to subserve common good. Thus, if the discretion is exercised by the High Court and the amount of tax collected by the State is ordered to be refunded, it would frustrate the objects and ideals of the Constitution. On the contrary, as observed by the Division Bench of this Court in the case of Union of India v. New India Industries Ltd., reported in 24 (2) GLR 1108 = 1983 (14) E.L.T. 1763 (Guj.), it would amount to pick-pocketing the pockets of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and commerce and the High Court is also required to bear in mind other constitutional provisions and cannot be indifferent to the consequences which follow on account of its order. 17A. The reality of the world of business and commerce is that indirect taxes such as excise duty, customs duty, sales tax and octroi duty are the taxes on commodity. In economic jargon these taxes are also called commodity taxes. The burden of the tax is to be borne by the commodity and not by the individual who happens to pay the tax. It is the commodity which bears the incidence of tax and carries with it the burden of the tax which is being passed on to the subsequent purchasers either in the shape of cost or as a component of sale-price or separately specified as tax such as excise duty, customs duty, sales tax or octroi. The law has also recognised this position. This can be seen from the provisions of Section 64A of the Sale of Goods Act, 1930 which enables the parties to a contract of sale to make variation in the sale price depending upon increase or decrease in the tax before the goods are sold. Therefore, such cases are not to be examined from the point of view of who happens to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - movable and immovable - vests in the Government in the absence of a heir or successor. In cases of unauthorised levy and collection of taxes in respect of commodity taxes or indirect taxes, the injury or the burden is suffered by unidentifiable innumerable consumers. It is these persons to whom the amount really belongs, but by the very nature of things they cannot be identified. In such cases the doctrine of escheat or bona vacantia contained in Article 296 of the Constitution would apply. 19. In the case of Narendra Bahadur Tandon v. Shanker Lal, reported in AIR 1980 SC 575, in para 7 of the judgment the Supreme Court has inter alia observed : "In India the law is well settled that the property of an intestate dying without leaving lawful heirs and the property of a dissolved Corporation passes to the Government by escheat or as bona vacantia. Of course such property will be subject to trusts and charges, if any, previously affecting it." Here reference may be made to the provisions of Section 555(2) of the Companies Act, 1956 which expressly enjoins a duty on the liquidator to deposit. On the dissolution of the Company, into an account in the Reserve Bank of India known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple is expressed through the chosen representatives of the people. When tax is imposed by the Parliament and other appropriate legislatures, it is the expression of the will of the people. Thus people decide through their representatives to tax themselves. In this view of the matter, when the Court states, 'let the State retain the amount', in effect the Court states, 'let the people retain the amount with them'. If the Court does otherwise, the Court would be doing injustice to many, who never thought that the money paid by them would be retained by the intermediary and they would be exploited under the cover of law, and that too by the decree and orders of the Court. Such a view would both be unjust and improper and against the provisions of the Constitution also. As indicated hereinabove, such argument is advanced on too technical and superficial view of the provisions of law and without examining the Constitutional provisions in detail. For this reason also the contention that the discretion should be exercised in favour of the petitioner cannot be accepted. 22. Learned counsel for the petitioner submitted that different High Courts in the country have taken the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was any hostile discrimination. In view of this law laid down by the Supreme Court there is no substance in the contention that the manufacturers, traders and businessmen in Gujarat would be treated with hostile discrimination. It may also be noted that the learned counsel for the petitioner has not been able to point out that the view taken by this High Court is in any way erroneous or is not in conformity with the constitutional provisions indicated hereinabove. 23. Learned counsel for the petitioner submitted that the decision rendered by the Division Bench of this High Court in the case of Wigman Elec. Engg. Industries v. Union of India, reported in 1991 (2) GLR 1081 holding that Section 11B of the Central Excises and Salt Act, 1944 which prescribes the limitation of six months for claiming refund is constitutionally valid requires reconsideration. It was submitted that the Division Bench has not taken into consideration the difference between the provisions of Section 11A of the Act which provides for recovery from the manufacturers in case of short payment, non-payment and erroneous refunds and the provisions of Section 11B of the Act which provides for refund to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation made in the case of Orissa Cement Ltd. (supra). 25. In the instant case the petitioner claims that though it was entitled to the benefit of exemption Notification No. 208 of 1969 it has not been granted the same on account of mistake of law. The contention proceeds on the footing that the facts are established, and the relevant conditions required to be satisfied as per notification are also complied with. The notification inter alia provided that for claiming exemption from whole of the duty leviable on surface active agents falling under Tariff Item No. 15AA of the First Schedule to the Act, the assessee must fulfil the condition that: The difference between the surface tension value as determined by Stalagmo meter of the liquid obtained by treating one gram of the organic surface active agents or the surface active preparation as the case may be with 100 millimetres of distilled water is not more than 20 dynes per centimetre at the same temperature. Whether the aforesaid condition is fulfilled or not cannot be verified by referring to the record of the petitioner. Even before removal of the goods the manufacturer must apply for exemption and claim exemption from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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