1983 (2) TMI 319 - HC - Central Excise

Summary

Issues Involved:
1. Refund of Tax Paid with Full Knowledge: Whether taxpayers can claim a refund of tax paid with full knowledge of facts and law, without compulsion, simply because the tax was later found to be unlawful.
2. Jurisdiction of Civil Court: Whether the civil court has jurisdiction to entertain the claim for refund of tax.
3. Payment Under Mistake or Coercion: Whether the payment of tax was made under a mistake of law or under coercion.
4. Inclusion of Packing Cost in Assessable Value: Whether the cost of packing materials can be included in the assessable value for the levy of excise duty.
5. Equitable Considerations in Granting Relief: Whether the court can refuse or mold the relief of refund on equitable considerations.

Summary of Judgment:

1. Refund of Tax Paid with Full Knowledge:
The court held that if a taxpayer pays a tax with full knowledge of facts and law, without any compulsion or undue influence, they cannot claim a refund merely because the tax was later found to be unlawful. The trial court erred in ordering the refund without considering whether the payment was made under a mistake or coercion.

2. Jurisdiction of Civil Court:
The court rejected the contention that the civil court lacked jurisdiction to entertain the suit. It referred to the Supreme Court's interpretation in the case of *The Provincial Government of Madras v. J.S. Basappa*, which clarified that such provisions are meant to protect bona fide acts and do not bar the jurisdiction of civil courts.

3. Payment Under Mistake or Coercion:
The court found that the plaintiff-company did not plead or prove that the payments were made under a mistake of law or under coercion. The pleadings and evidence indicated that the plaintiff was aware of the correct legal position and chose to pay the excise duty as assessed by the authorities. Therefore, the claim for refund under Section 72 of the Contract Act was not substantiated.

4. Inclusion of Packing Cost in Assessable Value:
The court noted that the trial court's decision to exclude the cost of packing materials from the assessable value was based on precedents that had been overruled by the Full Bench of the High Court in *Calico Mills v. Union of India*. The inclusion of packing costs in the assessable value is within the legislative competence and does not affect the nature of the excise duty.

5. Equitable Considerations in Granting Relief:
The court emphasized that the relief of refund is a discretionary one and should not lead to unjust enrichment. It held that the trial court should have considered the broader socio-economic implications and the principle of restitution. The court suggested that the amount could be directed to be deposited in a bank account for the benefit of consumers, preventing the plaintiff from gaining unjust enrichment.

Conclusion:
The appeal by the Union of India was allowed, and the judgment and decree of the trial court were set aside. The plaintiff's suit was dismissed, and the cross-objections were also dismissed. The court refused to grant a certificate for leave to appeal to the Supreme Court, as no substantial question of law of general importance was involved.