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TMI Blog1990 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of this petition may be briefly stated as follows:- The petitioner is a public charitable trust as also a society registered under the Societies Registration Act, 1860. The petitioner-trust was registered under the Public Trusts Act as early as on 31st March, 1983. The objects of the Trust are set out in paragraph 1 of the petition. Briefly speaking, the objects are to promote social service, including educational and rural development. One of the important objects of the Trust is to set up various financial self-sufficient and viable projects. The constitution of the Trust was placed before us. It has got quite some relevance for the purposes of the petition. There are quite a few laudable activities but activities Nos. 4.1, 4.3, 4.4, 4.8, 4.9, and 4.10 may be specially referred to. They are set out hereunder :- ".4.1 Creating facilities and offering guidance to intellectually gifted and other pupils as regards school, college, university and higher education. ".4.3 Encouraging students to achieve meritorious careers in business, industry, agriculture and such other areas, where persons can shape themselves on their own, almost independently. " 4.4 To provide sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree years from the date of the assessee's knowledge about the excess payment. A general instruction was given to all the relevant officers concerned as to how they should conduct themselves so as not to burden the Department with unnecessary litigation and unnecessary costs. This is the gist of the circular. Plea appears to be that the circular has no relevance while considering the question whether the Assistant Collector should honour the application for refund. To continue with the chronology in relation to the present dispute, the starting point of the entire question is the year 1975. In that year, the petitioner classified the above-mentioned articles, viz., the condensers used for electric motors under Tariff Item No. 68. This they did by virtue of the general opinion expressed by the Department. The petitioner has contended that the Trust did it as per the advice received from the Department itself. This is not unequivocally admitted by the Department; but it may also be stated here that the Department has not come out with the plea that no such opinion was expressed by the Department. The plea of the Department is that that was their opinion which they expressed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assistant Collector for the period between 3-3-1978 and 21-9-1981. We may mention here at this stage itself that the undisputed legal position is that, if the petitioner got the realisation of their mistake of law regarding the exemption which they could claim and if they could claim subsequently refund of the amount paid by them in the past under mistake, then, they would be entitled to refund under the general law of the land by filing a suit within three years from the date of the realisation of the said mistake. This means that they could have filed the suit for refund of the amount paid by them by way of excise duty, which they need not have paid because they were entitled to the complete exemption, for the entire period from 1975 when they had made a wrong classification of the goods under Tariff Item No. 68. Fact, however, remains that they were advised to make a claim for refund of the tax paid by them within three years before the date of the application to the Assistant Collector and this is the reason why the petitioner made the claim for refund for the period from 3-3-1978 and not from the earlier point of time. Upon this application being made, a notice was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iduary article) was, therefore, patently erroneous. It follows that the tariff paid by it under that Tariff Entry was the result of a mistake. The petitioner has contended that the mistake was a result of the advice received from the Department itself. As stated above, this position is not admitted by the Department. The Department contends that they gave no advice as such; but they expressed the opinion that the Tariff Entry 68 would be the correct entry. Now, the petitioner is entitled to say that the opinion expressed by the Department was as good as their advice but, all that apart, point remains that the classification by the petitioner under Entry 68 was a mistake of law on their part. The tax paid by them is, therefore, under a mistaken notion of law and the moment they realised that mistake, they should be held entitled to the refund of the amount from the Department. The cause of action for such claim would be the date of realisation by the petitioner about their mistake. Now, in the present case, there is no dispute even on the question as to when the petitioner-trust realised the mistake. The facts stated above show that the mistake was realised by the Trust in July, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner to file a suit for refund of the duty, can be entertained. Position strongly urged by Mr. Desai for the Department is that, if a suit was filed for recovery of such claim, it would have been barred by limitation because the period of three years provided by the residuary Article 113 of the Limitation Act had clearly expired and the contention is that, if the period for suit expired, then, as a normal rule, the Court would not or should not be inclined to exercise its writ jurisdiction which is subject to the condition relating to laches and delay. 5. It is in this connection that Mr. Shroff appearing for the petitioner-trust invited our attention to a few authorities but, before the authorities are examined, let us state the reasoning that he placed before the Court. According to him, firstly, if there was any delay on the part of the petitioner-trust in the matter of approaching this Court in its writ jurisdiction, that delay was fully explained by intervening events and proceedings. The chronology of events set out above leaves no room for doubt that the petitioner filed an application for refund to the Assistant Collector because of the above-mentioned circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Evidently, this position was realised by the Department and the Board had a healthy thought that the Department should not be involved in unnecessary litigation where the claim of the assessee is indefensible. In fact, it should be a healthy practice that the claim should be recognised even if no suit as such is filed. The claim should be accepted by reference to the provisions of law. The Excise Department and the other Tax Authorities have a platoon of Advocates and legal advisers at their beck and call to advise them on the legal position. They can see as to whether the claim is well-founded or not. They should not direct their clients, viz., the Departments, to wait until the decree is passed by the Court. Such a practice adds to the work of the Court, it also adds to the litigation expenses and wastage of energy. The time and money spent by the Department in defending the rightful claims would be better utilised for other purposes with which the Taxing Department is concerned. This was the obvious and evident view healthily taken by the Department and it was on this basis, evidently, that the said circular was issued. The said circular is not only within the competence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner filed the Appeal. It will, thus, be seen that the petitioner filed an application for refund in pursuance of the circular issued by the Board. It filed an appeal to the Collector in pursuance of the information given to it by the Assistant Collector himself. That Appeal remained cooling its heels in the Office of the Collector for a full period of four years and, while disposing of the Appeal, the Collector does nothing but puts a virtual rubber stamp upon the order passed by the Assistant Collector. In view of this, respectfully questions the learned Counsel, is it open for the Department to turn round and say that this petition should have been filed within three years from the date of realisation of the mistake, that is to say, within three years from July 1981 because if a suit was not filed within that time, it would be barred and, therefore, the present petition should not be entertained? The learned Counsel rightly submits that there is no delay on the part of the petitioner as such. The boot is, in fact, on the other foot. It is the Collector who has kept the Appeal cooling its heels in his office for all this period and now he has taken advantage of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application for refund within less than two years of the realisation of its mistake in payment of the tax. Even in that case, its claim was not accepted and, hence, it had to file an Appeal to the Collector. The Collector took his own time for deciding the Appeal as appears to be his wont. He dismissed the Appeal and the petitioner-assessee filed a writ petition in this Court, which is, as in the present case, without any delay. In those circumstances, the learned Single Judge held that the petitioner was not guilty of any unreasonable delay in filing the said writ petition. The facts of the present case are identical. While allowing the petition, the learned Judge has placed reliance upon the self-same judgment of the Supreme Court, referred to above, in Salonah Tea Co.'s case. In the case of The Assistant Collector of Central Excise v. Kashyap Engineering and Metallurgical Pvt. Ltd. reported in 1990 (45) E.L.T. 375 (Kar.), the facts were that the period during which the duty paid was from 1975 to 1980. On 12-4-1979, the petitioner in that case was orally informed about the Notification which existed in favour of the assessee by virtue of which Notification he would be exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise duty had been paid by mistake, its refund was refused." (Emphasis supplied) The High Court further observed as follows :- 'The contention of the appellant is that there has been inordinate delay on the part of the respondent and therefore, the writ petitions were liable to be dismissed in limine. But the difficulty to accept this subscription is that the respondent believed that in view of Circular dated 8-5-1973 issued by the Central Board of Excise and Customs, they were entitled to make an application for refund within the time fixed for suit i.e. within a period of three years from the date on which the mistake came to be known. In fact, the applications for refund were made on 27-9-1980 and 29-12-1980 i.e. within three years from 12-4-1979 the date of discovery of the mistake. But for the circular issued on 8-5-1973 enabling the persons to apply for refund within a period of 3 years from the date of discovery of mistake cannot with any justification reject the applications made within three years and then take the stand that the respondent had filed the writ petitions after the time fixed for suit and therefore the writ petitions should be dismissed on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that case was called upon by the High Court to contest this view because, evidently, the said High Court could proceed upon the assumption that the circular had that effect and could still grant the relief to the petitioner in the writ petition for the reasons mentioned in the said judgment which reasons apply on all fours in the case, with which we are dealing. But we make it clear that our view on this point is exactly the opposite. We do not see any force in the submission that the circular has the effect of supplanting the Rules. We are sure that the Karnataka High Court would have come to this same conclusion after full examination of this aspect of the question. We have mentioned the reasons for coming to this conclusion in the other part of the judgment. But it is worthwhile stating, once again, a few words on this point. We may state once again what Mr. Desai stated before us. He specifically stated that he was not going to argue that the circular was illegal. This means that he has not done either of the two things. He (a) has not denied the existence and continuance of the said circular; (b) has not challenged the legality of the circular. In our opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit should not have been required to be filed by the plaintiff against the defendant at all. The Government or the Department of Excise is in no way different from private persons so far as the general law contained in Section 72 of the Contract Act is concerned. In these matters of liabilities under the law, the Government is expected to set up model of behaviour. The Government is itself instrumental to the making of law; the Government should be the first person to abide by it. When the Department states that it will not refund the monies to the tax-payer which monies have been received by the Department under a mistaken understanding of law (and it knows it to be so), what the Department is, in fact, doing is that it is violating the law made by the Legislature with the help of the Government itself. This conduct of the Government flies in the face of our constitutional injunctions. Article 372 of the Constitution recognizes all the laws existing in this country on 27th January, 1950. It means that it has recognized those laws (may be to the extent that they do not clash with the provisions of the Constitution). Contract Act is one such law and Section 72 of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We make it clear that we are making these observations in spite of the absence of any argument that the circular was illegal. We have done so because, even though the Department's Advocate refused to comment upon the legality of the circular, in spite of our repeated questioning addressed to him in that behalf, what he has done in effect is that he has deprecated the circular. By saying that the circular has the effect of enlarging the period of limitation provided by Section 11B of the Act, he meant what he did not want to say. We could see the reasons why he could not do so. But we do not propose to set out the same in this judgment, mainly with a view to obviate avoidable acrimony. We only wish to state that the Department's Advocate found it fit to generate lot of heat in the Court; but there was no light. But assuming that there existed some defect in the circular, fact remains that the circular is still kept alive by the Department. It has not been withdrawn. It, therefore, does not lie in the mouth of the Department to tell the citizenry that the circular issued by themselves would not be followed by them. No Court has set aside or quashed the circular and no proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dulgence in litigation in their own interest and doing such a thing must be held to be an inherent jurisdiction of every authority. This is not a jurisdiction in the nature of Section 151 of the Code of Civil Procedure; it is the basic jurisdiction of every administrative authority to conduct itself in a businesslike manner. Then the learned Counsel relied upon the judgment of the Supreme Court reported in 1978 (2) E.L.T. (J 154) (D. Cawasji and Co. and Others v. State of Mysore and Another). He relied upon some observation of the Supreme Court without reading the context in which the observation was made. In that case, it was held by the Supreme Court that, normally speaking, a writ petition for recovery of the tax paid by mistake should not be entertained by the High Court under Article 226 of the Constitution if a suit for the relief was barred by the time the writ petition was barred. What is lost sight of is that, in that case, there existed no cogent reasons whatsoever explaining the so-called delay on the part of the petitioner in filing the petition. That was not a case in which the Department itself was at fault in allowing the petitioner to file the application for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are fully covered by the judgment of the Full Bench of this Court in Writ Petition No. 1336 of 1987 (since reported in 1990 (46) E.L.T. 23 (Bom.) decided by C. Mookerjee, C.J., and S.P. Bharucha and T.D. Sugla, JJ., on 27th November, 1989. It has been held there that though the plea of unjust enrichment by the petitioner who claims refund of the tax paid by him by mistake is a relevant plea, still, the Government, as such, is not entitled to retain the amount unjustly recovered by them in violation of the constitutional embargo contained in Article 265 of the Constitution of India. In this connection, the Full Bench has observed as follows :- "....... the (High) Court has to exercise its own discretion according to the facts of each case for achieving the object of benefiting those who had borne the ultimate burden. Again we may mention only some of the instances of forms in winch such consequential relief may be granted. A fund may be created under a scheme for welfare of the particular industry and for the benefit of the consumers of the product. In case the excisable product is of mass-consumption, benefit of refund may be given by way of reduction of its price for a certa ..... 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