2021 (2) TMI 489 - HC - Customs

Seeking reimbursement of Amount paid twice - time limitation - whether the delay will spoil the right of the petitioner for refund of dual payment/duplicate payment? - HELD THAT - Section 19 of the Lighthouse Act, 1927 provides that where Light Dues have been paid in respect of any ship in excess of the amount payable under this Act, no claim for refund of such excess payment shall be admissible, unless it is made within six months from the date of each payment. It is relying on the said period of limitation prescribed that the Assistant Commissioner of Customs has rejected the application preferred by the petitioner. The Act, 1927 was promulgated for the purpose of effective management of Lighthouses by the Central Government. Section 9 of the Act, 1927 enables the additional 3rd respondent to levy Light Dues in respect of every ship arriving at or departing from any Port in India, for the purpose of providing and maintaining lighthouses for the benefit of ships voyaging to or from India or between Ports in India - Light Dues are directly related to tonnage of the ship/vessel and excess payment can occur when payment of Light Dues is made disproportionately disregarding the tonnage of the ship. Shipping companies and shipping agents are expected to measure the tonnage of the ship/vessel correctly and pay Light Dues with due regard to notified rates. Excess payment of Light Dues may occur if the shipping companies/agents cause mistake in the tonnage of the ship or in respect of notified rates. It is for the refund of such excess payment effected by the shipping companies/shipping agents without regard to the tonnage of the ship or rate of Light Dues, that a period of limitation has been prescribed under Section 19. The dual payment made by the petitioner in this writ petition cannot be described as excess payment, in the sense contemplated by Section 19 of the Lighthouse Act, 1927. What is effected by the petitioner is a dual payment or duplicate payment. The petitioner was forced to make such dual payment due to the failure of the web portal system to generate a receipt, when the petitioner made the first payment through the web portal. This Court is of the view that Section 19 is not intended to operate in such circumstances. If Section 19 does not apply to the dual payment made by the petitioner, then there is no question of a period of limitation under the Customs Act for making an application for refund of the dual payment - The State and its authorities are not expected to act in a Shylochian manner and squeeze money from its citizens. Levy of any tax/dues should have the authority of law. If the petitioner calculated Light Dues in respect of the Vessel correctly and remitted the correct amount, then Section 19 of the Act, 1927 cannot be resorted to withhold an erroneous double payment or dual payment made by a citizen due to a system error or failure. The State is not expected to get itself unduly enriched by erroneous or forced or inadvertent payments of money made by its citizens. The State is not expected to bring in defence of limitation in respect of such payments resulting in unjust enrichment. The claim of the petitioner for refund of the dual payment, in the circumstances, would not fall within the ambit of Section 19 of the Customs Act. Exts.P5 and P9 orders are therefore otiose. The 2nd respondent and additional 3rd respondent are directed to refund to the petitioner the dual payment made, within a period of one month - Petition allowed.

Summary

Issues:
1. Refund of duplicate payment of Light Dues made by the petitioner.
2. Applicability of Section 19 of the Lighthouse Act, 1927 for refund claim.
3. Interpretation of dual payment as opposed to excess payment under the Act.
4. Legal principles governing refund claims under mistaken payments.
5. Duty of the State in refunding payments made under a mistake of law.
6. Consideration of limitation period for refund claims in case of mistaken payments.

Analysis:

Issue 1: The petitioner sought a refund of a duplicate payment of Light Dues made under Ext.P2, totaling &8377; 6,33,144. The petition was based on inadvertent dual payment made due to a system error, requesting the Commissioner of Customs to return the excess amount.

Issue 2: The rejection of the refund application by the Assistant Commissioner of Customs, citing Section 19 of the Lighthouse Act, 1927, raised the question of the provision's applicability. Section 19 imposes a six-month limitation for refund claims of excess payments, which was the basis for the initial rejection.

Issue 3: The distinction between dual payment and excess payment under the Act was crucial. The petitioner argued that the dual payment did not fall under the purview of Section 19, emphasizing the unique circumstances that led to the duplicate payment.

Issue 4: Legal precedents, such as Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf, were cited to support the petitioner's claim for refund under mistaken payments. The judgment highlighted the entitlement to recover money paid under a mistake of law, emphasizing the duty of the State to investigate and refund such payments.

Issue 5: The duty of the State to refund payments made under a mistake of law was underscored, drawing on cases like Commissioner of Sales Tax v. Auraiya Chamber of Commerce. The principle that tax collected without legal authority is refundable to the payer was reiterated.

Issue 6: The judgment examined the limitation period for refund claims in cases of mistaken payments, referencing Mahabir Kishore v. State of Madhya Pradesh. It emphasized that the limitation period starts from the date the mistake is discovered, ensuring fairness in refund proceedings.

In conclusion, the Court allowed the writ petition, directing the respondents to refund the dual payment within one month. It emphasized that the State should not benefit from erroneous payments made by citizens and rejected the application of Section 19 of the Lighthouse Act, 1927 in the case of dual payments.