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TMI Blog1991 (3) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... of any order passed in appeal or revision under this Act refund of any duty of excise becomes due to any person, the Assistant Collector of Central Excise may refund the amount to such person without his having to make any claim in that behalf. (4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained. (5) Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim. Explanation. - For the purposes of this section, - (A) *** *** *** (B) "relevant date' means, - (a) *** *** **** (b) *** *** **** (c) *** *** **** (d) *** *** **** (e) *** *** **** (f) in any other case, the date of payment of duty." 3. At the time of hearing of these petitions the learned advocates for the petitioners submitted as under :- (1) Sub-sections (4) (5) of Section 11B are ultra vires Article 14 of the Constitution of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of excise could be recovered. It was, therefore contended that if the respondents have recovered duty of excise on the goods which are not excisable or which are not manufactured or which are exempted by notification under Section 5A, no duty of excise could be recovered and if any duty of excise is recovered illegally, the respondents are bound to refund it. The learned advocates have further submitted that article 265 of the Constitution provides that no tax shall be levied or collected except by authority or law. As the Central Excise Act does not empower the levy of duty on certain goods, the levy and collection by the respondents is in violation of Article 265 and, therefore, the petitioners are entitled to get refund. However, Section 11B sub-section (5) provides that claim for refund of any amount collected as duty of excise, made on the ground that goods in respect of which such amount was collected were not excisable or, were entitled to exemption from duty, was required to be filed within six months from the relevant date. The result is that if the application is not filed within six months, the respondents would retain unauthorised and illegal collection of duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 225 if any excisable goods are removed in contravention of any conditions prescribed in the Rules, the producer or manufacturer or the licensee or keeper of the warehouse shall be held responsible for such removal as if he had removed the goods himself. Therefore, it is apparent that the primary liability to pay excise duty is that of the producer or manufacturer. However, it is the settled position of law that even though excise duty is primarily a duty on production or manufacture of goods, it is an indirect tax which the manufacturer or producer passes on to the ultimate consumer. Ultimate incidence of excise duty is always borne by the customer. This does not require much consideration as it is established by various decisions. 6A. In McDowell Co. v. Commercial Tax Officer - AIR 1977 SC 1459, the Supreme Court has dealt with this aspect and has held as under :- "5. Although some controversy was sought to be raised by counsel for the appellants regarding the nature and character of the excise duty and countervailing duty but as rightly pointed out by the learned Attorney General, the matter has been put beyond doubt by the decisions of this Court. In R.C. Jail v. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it be said that the excise duty or sales tax is a tax directly on the goods for in that event they will really become the same tax. It would thus appear that duties of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished from direct taxes like taxes on property and income.' It is, therefore, clear that excise duty is a duty on the production or manufacture of goods produced or manufactured within the country though, as observed by one of us (Khanna, J.) in A.B. Abdul Kadir v. State of Kerala - (1976) 3 SCC 219, laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. 7.Keeping this principle in mind that even though duty of excise is primarily borne by the manufacturer or producer, it is ultimately paid by the consumer, we would be required to test the submissions of the learned advocates for the petitioners whether sub-sections (4) (5) of Section 11B are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of excise under protest, or that if he has filed any appeal or revision against the order of assessment, period of six months for refund would not be applicable. Under sub-section (3) the Assistant Collector has power to refund the amount without his having to make any claim for refund where as a result of any order passed in appeal or revision refund of any duty of excise becomes due to any person. 10. In a few cases period of six months prescribed under Section 11B may cause hardship but that would hardly be a relevant consideration for determining the validity of Section 11B. In the case of P.D. Jambhekar v. State of Gujarat - AIR 1973 SC 309, the Court has held that interpreting a provision in a statute prescribing a period of limitation for institution of a proceeding, question of equity and hardship are out of place. The relevant observations are as under :- "But our attention was not drawn to any provision in the Act, or the rules framed under the Act which obliged the Inspector to conduct an inquiry within any specified period after the receipt of the report into the cause of accident. And in interpreting a provision in a statute prescribing a period of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Limitation Act. It would suffice if we refer to the case of Mahabir Kishore v. State of M.P. - AIR 1990 SC 313 = 1989 (43) E.L.T. 205 (SC). In paragraph 11, the Court has held as under :- "The principle of unjust enrichment requires : first, that the defendant has been 'enriched' by the receipt of a 'benefit', secondly, that this enrichment is 'at the expense of the plaintiff and thirdly, that the retention of the enrichment be unjust. This justifies restitution. Enrichment may take the form of direct advantage to the recipient's wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved". Considering the aforesaid principle of unjust enrichment, it would be clear that even assuming that the duty of excise was illegally collected by the respondents, yet the petitioners would not be entitled to get refund of it because firstly, "this enrichment is not at the expense of the petitioners" as the duty of excise is borne by the consumers and not by the producers or manufacturers; and secondly, retention of the said amount with the public exchequer would not be unjust because the ultimate payers are not forthcoming to get its r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held to be ultra vires. Therefore, the levy and collection of sales tax on forward contracts was also ultra vires. Application for revising the assessment order was filed which was dismissed on the ground that it has been filed after a long delay and was barred by limitation. Thereafter application for refund of sales tax was filed which was dismissed by the Sales Tax Officer as barred by period of limitation prescribed under Article 96 of the First Schedule of the Indian Limitation Act, 1908. The assessee thereafter filed revision to the Court of Additional Judge (Revision) Sales Tax, U.P. The Court of Additional Judge directed refund of sales tax. At the instance of Revenue, the Additional Judge referred the four questions mentioned in the aforesaid judgment for the opinion of the High Court. In paragraph 13 the Court has specifically observed as under :- "The Court emphasised that when moneys are paid to the State which the State has no legal right to receive, it is ordinarily the duty of the State subject to any special provisions of any particular statute or special facts and circumstances of the case, to refund the tax of the amount paid." (Emphasis added) The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also applicable and it is apparent that the application originally was made within time before two years as contained in the proviso. Article 96 of the First Schedule of the Limitation Act, 1908 prescribes a period of limitation of three years from the date when the mistake becomes known for filing a suit. If that principle is also kept in mind, then when the judgment came to be known in May, 1954, then in our opinion, when the assessee had made an application 1955, it was not beyond the time. 31. Where indubitably there is in the dealer legal title to get the money refunded and where the dealer is not guilty of any laches and where there is no specific prohibition against refund, one should not get entangled in the cobweb of procedures but do substantial justice. The above requirements in this case, in our opinion, have been satisfied and therefore we affirm the direction of the Additional Judge (Revisions), Sales Tax for refund of the amount to the dealer and affirm the High Court's judgment on this basis." (Emphasis added) From the aforesaid decision it can be stated that :- (1) with regard to refund of moneys received by the State which the State has no legal right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the Supreme Court in the case of Boota Mal v. Union of India - AIR 1962 SC 1716. In that case the Court had specifically observed that equitable considerations are out of place particularly in provisions of law limiting the period of limitation for filing suits or legal proceedings. 17. From the aforesaid discussion it can be held as under :- (1) The period of six months prescribed under Section 11B for filing an application for refund of the excise duty even though it is collected or paid under mistake of law or facts is not unreasonably short. (2) Even if period of six months in some cases may operate harshly or unjustly, yet it would not mean that it is arbitrary or unreasonable. The Court has no jurisdiction on the so-called equitable grounds to enlarge the time allowed by law or to postpone its operation or to introduce the exception not provided by the law. (3) As stated above, duty of excise is ultimately borne by the consumers. It cannot be said that its non-refund would cause any hardship to the manufacturer or producer. Further, even if great hardship may occasionally be caused by statutes of limitation, in cases of poverty, distress and ignorance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. It is always open to the Legislature to bar the jurisdiction of civil courts with respect to a particular class of statutes of civil nature; (3) when a right is created by the statute and the method of enforcing the right or of redressing grievance caused in the exercise of enforcement of the right is provided by the statute, then the general remedy of filing suit could be barred by statutory provision or it can be held that it is impliedly barred. 19. Under the scheme of Central Excise Act elaborate machinery is provided against any wrongful act of the authority either of classification of goods, whether the goods are excisable or not or whether the goods are exempt from payment of excise duty or against assessment of duty of excise. Apart from the elaborate provision for determining the aforesaid disputes, the Central Excise Act provides for appeal under Section 35 of the Act and second appeal under Section 35B to the Appellate Tribunal if the person is aggrieved by the order passed by the Collector in appeals under Section 35A. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he producer or manufacturer to pay duty of excise in respect of their goods are expressly left to be decided by the appropriate authority under the Act as the matters falling within their jurisdiction. Hence the whole activity of classification of the goods, assessment of the duty of excise, filing of the return and ending with an order of assessment falls within the jurisdiction of the appropriate authority. 20. Similarly, if the petitioner has paid the duty of excise voluntarily by submitting the returns under the relevant provisions of the Act, on the basis that on the goods produced or removed by him duty of excise was leviable, that means that the petitioner himself conceded the character of the goods in question and no occasion arose for the authority to consider whether on the said goods excise could be collected or not. This type of petitioner cannot be placed in a better position than that of a person who objects to assessment and collection of excise duty and challenges the order before the appellate authority or the revisional authority because the decision of the appellate or revisional authority would be final and cannot be challenged in a civil court by a separate s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; but subject to that, an inferior tribunal cannot, by a wrong decision with regard to a collateral fact, give itself a jurisdiction which it would not otherwise possess." After examining the provisions of the Bombay Sales Tax Act the Court arrived at the conclusion that the question whether transaction is assessable under the Sales Tax Act and other allied questions are required to be determined by the appropriate authorities themselves and it would be within the jurisdiction of the said authorities. The Court specifically observed that it was not right that the finding of the appropriate authority that a particular transaction is taxable under the charging section of the Act, is a finding on a collateral fact and it is only if the said finding is correct that the appropriate authority can validly exercise its jurisdiction to levy a sales tax in respect of the transactions in question. The relevant discussion in paragraph (21) is as under :- "(21) It would thus be seen that the appropriate authorities have been given power in express terms to examine the returns submitted by the dealers and to deal with the questions as to whether the transactions entered into by the dealers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the appropriate authorities functioning either under similar Sales-Tax Act, or under the Income-Tax Act." The Court referred to the decision of the Supreme Court in the case of Smt. Ujjam Bai v. State of Uttar Pradesh -AIR 1962 SC 1621, and held that the question about the taxability of a particular transaction falls within the jurisdiction of the appropriate authorities exercising their powers under the taxing Act and their decision in respect of it cannot be treated as a decision on a collateral fact the finding on which determines the jurisdiction of the said authorities. It is a finding on a fact upon which the authority is entrusted with the jurisdiction to deal with. The Court distinguished the judgment in the case of State Trading Corporation of India Ltd. v. State of Mysore - AIR 1963 SC 548, wherein it is held that the taxing officer cannot give himself jurisdiction to tax an inter-State sale by erroneously determining the character of the sale transaction. The Court held that Ujjam Bai's case on which the said conclusion is found does not support that view. The Court thereafter posed the question as under :- "If the appropriate authority, while exercising its juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20, 21 22 of the Bombay Sales Tax Act and held that Section 20 should be construed in the same manner in which Section 18A of the Madras General Sales Tax Act was construed by the Court in Firm of Illuri Subbayya Chetty Sons v. State of Andhra Pradesh - AIR 1964 SC 322. The Court held that the wide words used in Section 20 constitute an absolute bar against the institution of suit and that the said section was constitutionally valid. The Court further negatived the contention that as the transactions were outside: sales and they did not and • could not fall under charging section because of Article 226 and the submission that the tax was levied because the appellant and the appropriate authorities committed a mistake of fact as well as law in dealing with the question therefore refund should be granted. The Court held that these questions fall within the purview of the charging section and it could not be said to be without jurisdiction or nullity. 24. Further, similar contentions were considered by the Supreme Court in the case of Firm of Illuri Subbayya Chetty Sons v. State of Andhra Pradesh - AIR 1964 SC 322. In that case the Court considered Section 18A of the Madras G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority would be final, subject, of course, to the appeals and revisions provided for by the Act. The position of the appellant cannot be any better because it did not raise any such contention in the assessment proceedings under the Act. If the order made by the taxing authority under the relevant provisions of the Act in a case where the taxable character of the transaction is disputed, is final and cannot be challenged in a civil court by a separate suit, the position would be just the same where the taxable character of the transaction is not even disputed by the dealer who accepts the order for the purpose of the Act and then institutes a suit to set it aside or to modify it." Including various other decisions the aforesaid two decisions were considered by the Supreme Court in the case of Dhulabhai v. State of Madhya Pradesh - AIR 1969 SC 78. After discussing in detail the Court held that the result of this inquiry into the diverse views expressed in this Court may be stated as follows :- "(1) Where the statute gives a finality to the orders of the special tribunals the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is apparent that Section 11B, sub-section (5) which excludes civil court's jurisdiction to entertain the suit for refund of duty of excise cannot be held to be in any way arbitrary or ultra vires. As discussed above, the provisions of Central Excise Act provide adequate exhaustive remedies for deciding any dispute or claim arising out of the enforcement of the Act. The remedies provided under the Act are adequate and sufficient. Further, the question of correctness of the assessment, levy and collection of duty of excise apart from its constitutionality are for the decision of the authorities as the said orders of the authorities are declared to be final under sub-section (4) of Section 11B. Further, the Central Excise Act contains machinery for refund of duty of excise collected in excess of constitutional limits or collected illegally. Sub-section (3) of Section 11B provides that even as a result of any order passed in appeal or revision under the Act, if refund of any duty of excise becomes due to any person, the Assistant Collector of the Central Excise may refund the amount to such person without his having any claim in that behalf. Thereafter sub-sections (4) and (5) prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 SC 249 was 'without a vestige or semblance of authority or even a shadow of right'. 21. That is in regard to the power of the authority concerned to re-assess and to levy double duty. Secondly, both the Act and the Rules contain provisions which we have noticed above, enabling the aggrieved party effectively to challenge an illegal assessment or levy of double duty. By reason of the existence and availability of those special remedies, the ordinary remedy by way of a suit would be excluded on a true interpretation of Section 84(3) of the Act. 22. The argument that double duty was levied on the terms of Rule 14(b) goes to the correctness of the levy, not to the jurisdiction of the assessing authority. That rule authorises the imposition of double duty if dutiable articles are imported (a) without paying the duty or (b) without giving declaration to the Octroi Moharrir. It may be that neither of these two eventualities occurred and therefore there was no justification for imposing double duty. But the error could be corrected only in the manner provided in the Act and by the authority prescribed therein. The remedy by way of a suit is barred," The Court further held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute one must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhamption New Water Works Co. v. Hawkesford - (1859) 6 CHNS 336 at p. 356 in the following passage :- 'There are three classes of cases in which a liability may be established founded upon statute * * * * But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it * * * * * the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.' The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd. - 1919 AC 368 and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordown Grant Co. - 1935 AC 532 and Secretary of State v. Mask Co. - AIR 1940 PC 105. It has also been held to be equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in paragraph 17 specifically negative the contention that in all cases the Court should direct the refund of the amount collected. The Court has observed that refund is to be granted unless it causes injustice or loss in any specific case or violates any specific provision of law. The relevant observations are as under:- "17. Similarly, it appears to us that this was a tax realised in breach of the section, the refund being of the money realised without the authority of law. The realisation is bad and there is a concomitant duty to refund the realisation as a corollary of the constitutional inhibition that should be respected unless it causes injustice or loss in any specific case or violates any specific provision of law." Even for exercise of writ jurisdiction under Article 226 Court has held that maximum period fixed by the Legislature as the time within which relief can be obtained can ordinarily be taken to be a reasonable standard by which the delay in seeking remedy under Article 226 could be measured. The relevant observations in paragraph 20 are as under:- "The High Courts had power for the purpose of enforcement of fundamental rights and statutory rights to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be cast in a straitjacket formula for there may be cases where despite delay and creation of third party rights the High Court may still in the exercise of its discretion interfere and grant relief to the petitioner. But where the demand of justice is so compelling that the High Court would be inclined to interfere in spite of delay or creation of third party rights would be their very nature be few and far between. Ultimately it would be a matter within the discretion of the Court; ex hypothesi every discretion must be exercised fairly and justly so as to promote justice and not to defeat it. We are in respectful agreement with this approach also." 30. In our view, the aforesaid decision nowhere touches the question which is sought to be raised by the petitioner in this petition that if the provision of the Act bars the civil suit for refund of duty of excise or any tax then it would be ultra vires Article 14 or 265. The Court mainly dealt with the question whether in an application under Article 226 of the Constitution High Court should have directed the refund of the tax which was illegally collected as the Act under which the tax was recovered was declared as ultra vires t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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