1974 (10) TMI 31 - SC - VAT and Sales Tax

Whether the petitioners were entitled to the refund claimed? Held that - The appellants could not be allowed to split up their claim for refund and file writ petitions on this piecemeal fashion. If the appellants could have but did not, without any legal justification, claim refund of the amounts paid during the years in question, in the earlier writ petitions, we see no reason why the appellants should be allowed to claim the amounts by filing writ petitions again. In the circumstances of this case, having regard to the conduct of the appellants in not claiming these amounts in the earlier writ petitions without any justification, we do not think we would be justified in interfering with the discretion exercised by the High Court in dismissing the writ petitions which were filed only for the purpose of obtaining the refund and directing them to resort to the remedy of suits. Appeal dismissed.

Issues Involved
1. Competence of the Mysore State Legislature to levy and collect Education Cess.
2. Validity of the Mysore Elementary Education Act and its amendments.
3. Delay in filing writ petitions for refund of Education Cess.
4. Applicability of the period of limitation for filing writ petitions under Article 226.
5. Relevance of previous judgments and principles related to the recovery of taxes paid under a mistake of law.
6. Discretion of the court in granting relief under Article 226.

Detailed Analysis

1. Competence of the Mysore State Legislature to levy and collect Education Cess:
The appellants contended that the Mysore Elementary Education Act, 1941, and its amendments by the Mysore Elementary Education (Amendment) Act (XII of 1955) were beyond the competence of the Mysore State Legislature. They sought a declaration to this effect and a refund of the Education Cess paid from 1951-52 to 1965-66 on various items. The High Court dismissed the writ petitions, leading to these appeals.

2. Validity of the Mysore Elementary Education Act and its amendments:
The High Court of Mysore had previously struck down the provisions of the Mysore Elementary Education Act and its amendments in D. Cawasji and Co. v. State of Mysore, (1968) 2 Mys. LJ 78. This decision was affirmed by the Supreme Court in State of Mysore v. D. Cawasji and Co., (1971) 2 SCR 799. Subsequently, the Mysore Legislature passed the Mysore Education Cess (Validation and Levy) Act, 1969, which was also held invalid by the High Court.

3. Delay in filing writ petitions for refund of Education Cess:
The appellants argued that they discovered the mistake of law only on May 2, 1968, when the High Court declared the provisions of the Act unconstitutional. They filed the writ petitions within three months of this decision. However, the High Court found that there was a delay in filing the petitions and dismissed them primarily on this ground.

4. Applicability of the period of limitation for filing writ petitions under Article 226:
In State of Madhya Pradesh v. Bhailal Bhai, (1964) 6 SCR 261, it was held that the period of limitation for recovery of money paid under a mistake of law is three years from the date when the mistake is known. This period is considered a reasonable standard for measuring delay in seeking remedy under Article 226. The Supreme Court reiterated that the starting point of limitation is from the date on which the judgment declaring the law void is rendered. Filing a writ petition beyond three years from this date would generally be considered unreasonable.

5. Relevance of previous judgments and principles related to the recovery of taxes paid under a mistake of law:
The High Court relied on the decision in Tilokchand Motichand v. H.B. Munshi, (1970) 25 STC 289 (AIR 1970 SC 898), which emphasized that relief for refund cannot be granted in writ proceedings if there is inordinate delay. The Supreme Court in Tilokchand Motichand's case held that payments made under a mistake of law do not automatically entitle the petitioner to relief, especially if there is significant delay.

6. Discretion of the court in granting relief under Article 226:
The Supreme Court noted that the High Court had dismissed the writ petitions on the ground of delay and directed the appellants to resort to the remedy of suits. The Court emphasized that avoiding multiplicity of legal proceedings should be an aim of all courts. The appellants, having not claimed the amounts in the earlier writ petitions without justification, could not be allowed to split their claims and file writ petitions in a piecemeal fashion. The Court upheld the High Court's discretion in dismissing the writ petitions and directed the appellants to pursue their claims through suits.

Conclusion:
The Supreme Court dismissed the appeals, upholding the High Court's decision to dismiss the writ petitions due to delay and directing the appellants to seek remedy through suits. No order as to costs was made.

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