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TMI Blog2018 (11) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... andran, J . These writ petitions are placed before us by reason of a reference order. The issue, bereft of facts, is as to whether duty paid under a mistake of law has to be refunded, in accordance with the Central Excise Act, 1944, specifically under Section 11B thereof. The issue has been referred to us by a learned Single Judge, since another learned Single Judge had held that the payment made by an assessee, on an obviously mistaken understanding of the provisions for levy, under the Finance Act, 1994; the refund for which has to be under the Central Excise Act, 1944, would not be regulated by the limitation as provided under Section 11B. 2. There was a preliminary objection taken by the learned counsel appearing for the petitioners herein that, in fact, there was an appeal filed from the aforesaid judgment, which stood withdrawn by the Revenue, making it obvious that they had accepted the view taken by the learned Single Judge. Hence, it was prayed that the reference be left unanswered for reason of the Department having accepted the view of the learned Single Judge. We are of the opinion that the issue having been referred by a learned Single Judge, even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , C. J, of (i) an unconstitutional levy, (ii) illegal levy and (iii) mistake of law are as follows: Class I ; Unconstitutional levy - where claims for refund are founded on the ground that the provision of the Excise Act under which the tax was levied is unconstitutional . xxx xxx xxx Class II: Illegal levy - where claims for refund are founded on the ground that there is misinterpretation/misapplication/erroneous interpretation of the Excise Act and the Rules framed thereunder . xxx xxx xxx Class III: Mistake of Law - where claims for refund are initiated on the basis of a decision rendered in favour of another assessee holding the levy to be : (1) unconstitutional; or (2) without inherent jurisdiction . 5. The learned Single Judge found that payment of tax made by the assessee with respect to an exempted service, would not fall under any of the categories. The learned Single Judge found that the levy was purely on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been more specific and emphatic . The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters, as will be pointed out presently . This is a bar upon a bar - an aspect emphasised in Para 14, and has to be respected so long as it stands . The validity of these provision has never been seriously doubted . Even though in certain writ petitions now before us, validity of the 1991 (Amendment) Act including the amended S . 11B is questioned, no specific reasons have been assigned why a provision of the nature of Sub-section (3) of S . 11B (amended) is unconstitutional . Applying the propositions enunciated by a seven Judge Bench of this Court in Kamala Mills, it must be held that S . 11B (both before and after amendments valid and constitutional . In Kamala Mills, this Court upheld the constitutional validity of S . 20 of the Bombay Sales Tax Act (set out hereinbefore) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction of a civil Court is expressly barred - vide Sub-section (5) of S . 11B, prior to its amendment in 1991, and Sub-section (3) of S . 11B, as amended in 1991 . . . . xxx xxx xxx ( 77) . . . . Once the constitutionality of the provisions of the Act including the provisions relating to refund is beyond question, they constitute law within the meaning of Art . 265 of the Constitution . It follows that any action taken under and in accordance with the said provisions would be an action taken under the authority of law , within the meaning of Art . 265 . In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provisions, it is not permissible to resort to S . 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions . In other words, it is not permissible to claim refund by invoking S . 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be . ) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the case may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him? Can he invoke S . 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading S . 72 of the Contract Act along with S . 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiyalal is understood as saying that such a course is permissible . Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law . With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition . Acceptance of the said proposition would do violence to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m . His Lordship then summarized the majority view as follows in paragraph 108 of the judgment. 108 . The discussion in the judgment yields the following propositions . We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive . In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment . ( i) Where a refund of tax duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exception : where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be reopened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah, CJ . in Tilokchand Motichand and we respectfully agree with it . Such a claim is maintainable both by virtue of the declaration contained in Art . 265 of the Constitution of India and also by virtue of S . 72 of the Contract Act . In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of Sub-section (1) of S . 17 of the limitation Act, 1963 . A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account . It other words, a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law . A person, whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings . Once the assessment or levy has become final in his case, he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person's case . Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well established principles of law . It also leads to grave public mischief . S . 72 of the Contract Act, or for that matter S . 17(1)(c) of the Limitation Act, 1963, has no application to such a claim for refund . ( v) Art . 265 of the Constitution has to be construed in the light of the goal and the ideals set out in the Preamble to the Constitution and in Art . 38 and 39 thereof . The concept of economic justice demands that in the case of indirect taxes like Central Excises duties and Customs duties, the tax collected without the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 of the Customs Act, 1962, as amended by the said Amendment Act, all claims for refund (excepting those which arise as a result of declaration of unconstitutionality of a provision whereunder the levy was created) have to be preferred and adjudicated only under the provisions of the respective enactment . No suit for refund of duty is maintainable in that behalf . So far as the jurisdiction of the High Courts under Art . 226 of the Constitution - or of this Court under Art . 32 - is concerned, it remains unaffected by the provisions of the Act . Even so, the Court would, while exercising the jurisdiction under the said articles, have due regard to the legislative intent manifested by the provisions of the Act . The writ petition would naturally be considered and disposed of in the light of and in accordance with the provisions of S . 11B . This is for the reason that the power under Art . 226 has to be exercised to effectuate the regime of law and not for abrogating it . Even while acting in exercise of the said constitutional power, the High Court cannot ignore the law nor can it override it . The power under Art . 226 is conceived to serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant provisions of the Act . Rules or Notifications; or by failure to follow the vital or fundamental provisions of the Act or by acting in violation of the Fundamental Principles of judicial procedure: Category ( III ) - Mistake of law - the levy or imposition was unconstitutional or illegal or not exigible in law (i . e . without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, but in a proceeding initiated by some other assessee, either by the High Court or the Supreme Court and as soon as the assessee came to know of the judgment (within the period of limitation) he initiated action for refund of the tax paid by him, due to mistake of law: Xxx xxx xxx 331 . Subject to the above, if a levy or imposition of tax is held to be unconstitutional or illegal or not exigible in law i . e . without jurisdiction, it is open to the assessee to take advantage of the declaration of the law so made, and pray for appropriate relief inclusive of refund on the ground that tax was paid due to mistake of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the learned Single Judge that the facts of the case discussed in WP(C) No. 18126/2015 do not fall under any of the categories. A payment made on a mistaken understanding of law finding the levy to be exigible for the services rendered, would be a levy made or paid under mistake of law and not one categorized as an unconstitutional levy or illegal levy. We cannot agree with the elastic interpretation made by the learned Single Judge that the case would be one on account of mistake of fact in understanding the law. The mistake committed by the assessee may be one on law or on facts; the remedy would be only under the statute. Here we are not concerned with a case as specifically noticed in Mafatlal Industries Limited (supra) of an assessee trying to take advantage of a verdict in another case. Here the assessee had paid the tax without demur and later realised that actually there was no levy under the provisions of the statute. However, that again is a mistake of law as understood by the assessee and for refund, the assessee has to avail the remedy under the provisions of the statute and concede to the limitation provided therein. 10. B. P. Jeevan Reddy, J. after elaborate discu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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