Southern Surface Finishers, V/209 A,B,C,D, Kumarapuram P.O., Erumely, Pallikkkara-683565, represented by Managing Partner and Thrissur District Paddy Marketing and Processing Co-operative Society Limited No.R 923, Athani,Peringandoor P.O.,Thrissur-680 561, represented by its General Manager Shri.Williams Joseph V. V. The Assistant Commissioner of Central Excise, Muvattupuzha Division-686661 and The Assistant Commissioner of Central Excise, Customs and Service Tax, Thrissur Division, S.T.Nagar, Thrissur-680 001

WP(C)/5778/2016

AI Insights

The case involves two writ petitions filed by Southern Surface Finishers and Thrissur District Paddy Marketing and Processing Co-operative Society against the Assistant Commissioner of Central Excise, challenging the rejection of their refund claims under the Central Excise Act, 1944. The petitions were heard together due to a common legal issue regarding the interpretation of Section 11B of the Central Excise Act, particularly concerning the limitation period for refund claims made under a 'mistake of law'. The court examined previous judgments and the legislative intent behind the Act, ultimately deciding that the claims must adhere to the specific provisions and limitations set out in the Act, without extending the limitation period based on judicial decisions in other cases.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 799057 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 09-11-2018
• Assessment Year: misc
• Other Referred Cases: Mafatlal Industries Limited & Others v. Union of India & Others, Kamala Mills Ltd. v. State of Bombay, Income Tax Officer Benaras v. Kanhaiyalal Mukundlal Saraf
• Laws Referred To: Central Excise Act, 1944, Finance Act, 1994
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B RAJESH; TOJAN VATHIKULAN; THOMAS NELLIMOOTTIL
• Assessee Lawyers: ANIL NAIR; MEKHALA BENNY; SOUMYA PRAKASH; O A NURIYA; R SREEJITH
• Keywords: Central Excise Act; Limitation Period; Mistake of Law; Refund of duty
• Section: 11B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY ,THE 09TH DAY OF NOVEMBER 2018 / 18TH KARTHIKA, 1940 WP(C).No. 5778 of 2016 PETITIONER/S: SOUTHERN SURFACE FINISHERS, V/209 A,B,C,D, KUMARAPURAM P.O., ERUMELY, PALLIKKARA-683565, REPRESENTED BY MANAGING PARTNER. BY ADVS. SRI.ANIL D. NAIR KUM.MEKHALA M.BENNY KUM.SOUMYA PRAKASH SMT.O.A.NURIYA SRI.R.SREEJITH RESPONDENT/S: THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, MUVATTUPUZHA DIVISION-686661. BY ADVS. SRI.B.RAJESH (KOTTAYAM) SRI.TOJAN J.VATHIKULAM, SC, CENTRAL BOARD OF EXCISE AND CUSTOMS SRI.THOMAS MATHEW NELLIMOOTTIL, SC, CBEC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09.11.2018, ALONG WITH WP(C).13280/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) 5778&13280/16 -2- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY ,THE 09TH DAY OF NOVEMBER 2018 / 18TH KARTHIKA, 1940 WP(C).No. 13280 of 2016 PETITIONER/S: THRICHUR DISTRICT PADDY MARKETING AND PROCESSING CO-OPERATIVE SOCIETY LIMITED No.R 923, ATHANI,PERINGANDOOR P.O.,THRISSUR-680 561,REPRESENTED BY ITS GENERAL MANAGER SHRI.WILLIAMS JOSEPH V. BY ADVS. SRI.ANIL D. NAIR KUM.MEKHALA M.BENNY KUM.SOUMYA PRAKASH SMT.R.DEVIKA (ALAPPUZHA) SRI.M.BALAGOPAL SRI.R.SREEJITH RESPONDENT/S: THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, THRISSUR DIVISION, S.T.NAGAR, THRISSUR-680 001. BY ADVS. SRI.THOMAS MATHEW NELLIMOOTTIL, SC, CENTRAL BOARD OF EXCISE AND CUSTOMS SRI.RAJESH B. SC CENTRAL BOARD OF EXCISE AND CUSTOMS THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09.11.2018, ALONG WITH WP(C).5778/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) 5778&13280/16 -3- “C.R.” K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- WP(C) Nos.5778 and 13280 of 2016 ------------------------------------------- Dated this the 9th day of November, 2018 J U D G M E N T Vinod Chandran, 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 WP(C) 5778&13280/16 -4- 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 Department has accepted the view, this Court has a duty to lay down the correct law. Further, it has also to be noticed the withdrawal of the earlier appeal filed as W.A.No.2208/2015; wherein the judgment from which the aforesaid reference arises was impugned, was in view of the Litigation Policy on the ground of monetary limit as prescribed in the Policy. This would necessarily leave the question open. Hence, the preliminary objection is rejected. 3. The facts in the above cases are as follows: In WP(C) No.5778/2016, the petitioner does job work of powder coating of thermal cookers for one M/s. Anna Aluminium Company Pvt. Ltd. The petitioner by a mistake in law, paid service tax without collection from its Principal. In fact, there was no service tax payable, since the product sold by the Principal on which job work was done by the petitioner, was excisable and the Principal had not availed of any CENVAT Credit. The petitioner, WP(C) 5778&13280/16 -5- hence, on realizing the mistake, filed an application for refund. With respect to certain invoices, the application was after the time of one year provided under Section 11B; from the relevant date, here the date of payment of duty. Likewise, in WP(C) No.13280/16, service tax was paid on the rental charges payable for storage of wheat, which stands exempted being covered under the negative list for the year 2013-2014. The petitioner failed to take note of the inclusion under the negative list. Here also, an application was made, on realising the mistake, in some instances, after the limitation provided. In the first case, the petitioner had not collected the duty and in the second, the petitioner refunded the tax collected to their lessee, which stands undisputed. The claims within the period of limitation were allowed and that beyond the period were rejected. 4. The facts in WP(C) No.18126/2015 are also similar. The petitioner, a Company engaged in providing financial services; paid service tax on services rendered to a recipient located outside India, which again was exempted. A similar application was made under Section 11B of the Central Excise Act, which was rejected for reason of the limitation period having expired. The learned Single WP(C) 5778&13280/16 -6- Judge noticed the decision in (1997) 5 SCC 536 [Mafatlal Industries Limited & Others v. Union of India & Others]. Three classifications made in the separate judgment of A.M. Ahamadi, 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 account of “(on) mistake of fact in understanding the law” (sic). The reference order indicates that another learned Single Judge did not agree with the interpretation so placed on facts and the law applicable as had been elaborated upon in Mafatlal Industries Limited (supra). 6. We deem it appropriate that Mafatlal Industries Limited (supra) be understood first. The WP(C) 5778&13280/16 -7- questions framed as available from the majority judgment authored by B.P. Jeevan Reddy,J. were as follows: “76. The first question that has to be answered herein is whether Kanhaiya Lal2 has been rightly decided insofar as it says (1) that where the taxes are paid under a mistake of law, the person paying it is entitled to recover the same from the State on establishing a mistake and that this consequence flows from Section 72 of the Contract Act; (2) that it is open to an assessee to claim refund of tax paid by him under orders which have become final — or to reopen the orders which have become final in his own case — on the basis of discovery of a mistake of law based upon the decision of a court in the case of another assessee, regardless of the time-lapse involved and regardless of the fact that the relevant enactment does not provide for such refund or reopening; (3) whether equitable considerations have no place in situations where Section 72 of the Contract Act is applicable, and (4) whether the spending away of the taxes collected by the State is not a good defence to a claim for refund of taxes collected contrary to law.” In finding the answer to the first question, the following extracts are necessary. We first extract the finding with respect to sub-section (3) of Section 11B as it now exists: 77. …It started with a non obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect ofsuch claim. Sub-section (3) of S.11B, as it now stands, it to the same effect - indeed, more comprehensive and all encompassing. It says, \"(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in sub-section\". The language could 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 WP(C) 5778&13280/16 -8- 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) on the ground that the Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation for delay in filing appeal/revision. The Court pointed out that had the Bombay Act not provided these remedies and yet barred the resort to civil court, the constitutionality of S.20 may have been in serious doubt, but since it does provide such remedies, its validity was beyond challenge, To repeat - and it is necessary to do so - so long as S.11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision - or a similar provision - can be doubted. It must also be remembered that Central Excises and Salt Act is a special enactment creating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to \"form a complete central excise code\". The idea was \"to consolidate in a single enactment all the laws relating to central duties of excise\". The Act is a self contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and also for refunding the taxes which have been collected contrary to law, viz., S.11A and 11B and its allied provisions. Both provisions contain a uniform rule of limitation, viz., six months, with an exception in each case. S.11A and 11B are complimentary to each other. (To such a situation, Proposition No. 3 enunciated in Kamala Mills WP(C) 5778&13280/16 -9- becomes applicable, viz.,) where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available - except to the limited extent pointed out in Kamala Mills. Central Excise Act specifically provides for refund. It expressly declares that no refund shall be made except in accordance therewith. The jurisdiction 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., R.11 and S.11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in R.11/S.11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with R.11 or S.11B, as the case may be, in the forums provided by the Act. No suit can be filed for refund of duty invoking S.72 of the Contract Act. So far as the jurisdiction of the High Court under Art.226 - or for that matter, the jurisdiction for this Court under Art.32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Art.226/Art.32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment. WP(C) 5778&13280/16 -10- xxx xxx xxx 79. We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quite. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet (Situation would be the same where he fights upto High Court and failing therein, he keeps quiet.). The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of misconstruction, misapplication 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 several well accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a WP(C) 5778&13280/16 -11- particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long at that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. ... xxx xxx xxx (79). ...Once this is so, it is ununderstandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for reopening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of Central Excise Act also constitute \"law\" within the context of Bombay Sales tax Act and the meaning of Art.265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under \"the authority of law\" within the meaning of the said article. In short, no claim for refund is permissible except under and in accordance with R.11 and S.11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. ... xxx xxx xxx (79). ...We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with R.11/S.11B and under no other provision and in no other forum. 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. WP(C) 5778&13280/16 -12- (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 limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Art.226 - and of this Court under Art.32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will 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 rule of law and not for abrogating it. The said enactments including S.11B of Central Excises and Salt Act and S.27 of the Customs Act do constitute \"law\" within the meaning of Art.265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self contained enactments providing for levy, assessment, recovery and refund of duties imposed thereunder. S.11B of the Central Excises and Salt Act and S.27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and give effect to. S.72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is WP(C) 5778&13280/16 -13- a civil court. (ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way or a suit or by way of a writ petition. This principle is, however, subject to an 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 of this nature is not contemplated by the said enactments and is outside their purview. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any WP(C) 5778&13280/16 -14- real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutory doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to' the State. State represents the people of the country. No one can speak of the people being unjustly enriched. (iv) It is not open to any person to make a refund claim on the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the Court/Tribunal in another person's case has led him to discover the mistake of law under which 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 authority of law shall not be refunded to the petitioner - plaintiff unless he alleges and establishes that WP(C) 5778&13280/16 -15- he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty. (vi) S.72 of the Contract Act is based upon and incorporates a rule of equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision. (vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner - plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State. (viii) The decision of this Court in Income Tax Officer Benaras v. Kanhaiyalal Mukundlal Saraf [1959] SCR 1350 must be held to have been wrongly decided insofar as it lays down or is understood to have laid down propositions contrary to the propositions enunciated in (i) to (vii) above. It must equally be held that the subsequent decisions of this Court following and applying the said propositions in Kanhaiyalal have also been wrongly decided to the above extent. This declaration - or the law laid down in Propositions (i) to (vii) above - shall not however entitle the State to recover to taxes/duties already refunded and in respect whereof no proceedings are pending before any authority/Tribunal or Court as on this date. All pending matters shall, however, be governed by the law declared herein notwithstanding that the tax or duty has been refunded pending those proceedings, whether under the orders of an authority, Tribunal or Court or otherwise. (ix) The amendments made and the provisions inserted by the Central Excises and Customs Law (Amendment) Act, 1991 in the Central Excises and Salt Act and Customs Act are constitutionally valid and are unexceptionable. (x) By virtue of Sub-section (3) to S.11B of the Central Excises and Salt Act, as amended by the aforesaid Amendment Act, and by virtue of the provisions contained in WP(C) 5778&13280/16 -16- Sub-section (3) of S.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 the ends of law and not to transgress them. (xi) S.11B applies to all pending proceedings notwithstanding the fact that the duty may have been refunded to the petitioner/plaintiff pending the proceedings or under the orders of the Court/Tribunal/Authority or otherwise. It must be held that Union of India v. Jain Spinners, 1992 (4) SCC 389 and Union of India v. I.T.C., 1993 Suppl. (4) SCC 326 have been correctly decided. It is, of course, obvious that where the refund proceedings have finally terminated - in the sense that the appeal period has also expired - before the commencement of the 1991 (Amendment) Act (September 19, 1991), they cannot be reopened and / or governed by S.11B(3) (as amended by the 1991 (Amendment) Act). This, however, does not mean that the power of the appellate authorities to condone delay in appropriate cases is affected in any manner by this clarification made by us. (xii) S.11B does provide for the purchase making the claim for refund provided he is able to establish that he has not passed on the burden to another person. It, therefore, cannot be said that S.11B is a device to retain the illegally collected taxes by the State. This is equally true of S.27 of the Customs Act, 1962. 7. K.S.Paripoornan, J., who delivered a separate WP(C) 5778&13280/16 -17- judgment, concurred with the majority view that the refund of duty is always not automatic, especially, when the assessee had passed on the duty to the buyers or any other person. A different view was expressed in respect of any and every claim of refund of illegal or unauthorised levy being only in accordance with the provisions of the Act, ie: Section 11B as of now. It was held that the action by way of a suit or under Article 226 of the Constitution was maintainable when the levy is illegal, void or unauthorised or without jurisdiction. Such action was held to be governed by “the general law and the procedure and period of limitation provided by the specific statute will have no application” (sic). The categories to which the general law was applicable were specified as : Category (I) where the levy is unconstitutional - outside the provisions of the Act or not contemplated by the Act: Category (II) where the levy is based on misconstruction or wrong or erroneous interpretation of the 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: WP(C) 5778&13280/16 -18- 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 law, provided he initiated action within the period of limitation prescribed under the Limitation Act. Such assessee should prove the necessary ingredients to enable him to claim the benefit under S.72 of the Contract Act read with S.17 of the Limitation Act. Dulabhai's case (supra) - para 32 - Clauses (4) and (5). 332. It should be borne in mind, that in all the three categories of cases, the assessee should prove the fundamental factor that he has not \"passed on\" the tax to the consumer or third party and that he suffered a loss or injury. This aspect should not be lost sight of, in whatever manner, the proceeding is initiated - suit, Art.226, etc. 8. B.L. Hansaria, J. concurred with K.S. Paripoornan, J. Suhas C. Sen, J. wrote a dissenting judgment, holding the amended provisions to be a mere device and a cloak to confiscate the property of the taxpayer.; but concurred with K.S. Paripoornan, J. on the question of an action by way of suit or writ petition being maintainable. Ahmadi C.J., though concurring with B.P.Jeevan Reddy, J. expressed a different view on two aspects. In cases of the levy being held to be unconstitutional or void for lack of inherent jurisdiction, the claim of refund as tax paid under mistake of law, was held to be outside the ambit of the Excise Act and the WP(C) 5778&13280/16 -19- limitation applicable was held to be that specified under section 17(1)(c) of the Limitation Act. The other aspect on which dissent is expressed, was with respect to an assessee's challenge to the constitutionality having failed and later, the view being reversed. In such cases Ahmadi,C.J., was of the opinion that the assessee's remedy cannot be held to be foreclosed and he should be left to legal remedies of review etc. of the earlier order. 9. The learned Single Judge who referred the matter, rightly noticed the different views expressed, which however on the question of mistake of law and the manner in which refund has to be applied for; we have to concede to the majority view of five learned Judges. From the above extracts, it has to be noticed that Justice B.P.Jeevan Reddy in his majority judgment; concurred to by a majority of five out of nine, held the refund to be possible only under the provisions of the Act. We need only refer to the category of payment under a mistake of law. We do not agree with 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 WP(C) 5778&13280/16 -20- 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 discussion, finds the Excise Act to be a self contained enactment with provisions for collecting taxes which are due according to law and also for refunding the taxes collected contrary to law, which has to be under Section 11A and 11B. Both provisions were found to contain a uniform rule of limitation, namely six months at that time WP(C) 5778&13280/16 -21- and then one year and now two years. Relying on the decision in AIR 1965 SC 1942 [Kamala Mills Ltd. v. State of Bombay], it was held that where a statute creates “a special right or a liability and also provides the procedure for the determination of the right or liability, by the Tribunals constituted in that behalf and provides further that all questions above the said right and liability shall be determined by the Tribunal so constituted, the resort to Civil Court is not available, except to the limited extent pointed out in Kamala Mills Ltd. (supra). Central Excise Act having provided specifically for refund, which provision also expressly declared that no refund shall be made except in accordance therewith, the jurisdiction of the Civil Court was found to be expressly barred. It was held that once the constitutionality of the provisions of the Act, including the provisions relating to refund is beyond question, then any and every ground, including violation of principles of natural justice and infraction of fundamental principles of judicial procedure has to be urged under the provisions in the Act, obviating the necessity of a suit or a writ petition in matters relating to a refund. The only exception provided was when there was a declaration of WP(C) 5778&13280/16 -22- unconstitutionality of the provisions of the Act, in which event, a refund claimed could be otherwise than under Section 11B. We, specifically, emphasise the underlined portion in paragraphs 79 of the cited decision as extracted hereinabove. The earlier view that the limitation was three years from the date of discovery of mistake of law was specifically differed from, since the refund had to be under the remedy as provided in the statute, which prescribed a limitation. At the risk of repetition, here, the assessees paid up the tax and later realised that they are entitled to exemption. Going by the majority judgment, in Mafatlal Industries Limited (supra), we have to find such cases being subjected to the rigour of limitation as provided under Section 11B. The limitation, in the relevant period, being one year, there could be no refund application maintained after that period. We, hence, find the order impugned in the Writ Petitions to be proper and we dismiss the Writ Petitions. We hold that the judgment dated 6.7.2015 in WP(C) No.18126/2015 [M/s.Geojit BNP Paribas Financial Services Ltd. v. Commissioner of Central Excise] is not good law, going by the binding precedent in Mafatlal Industries Limited (supra). The Writ Petitions would stand WP(C) 5778&13280/16 -23- dismissed answering the reference in favour of the Revenue and against the assessees. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE jg WP(C) 5778&13280/16 -24- APPENDIX OF WP(C) 5778/2016 PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE FORM R DATED 22.7.2015 SUBMITTED BY THE PETITIONER. EXHIBIT P2 TRUE COPY OF SHOW CAUSE NOTICE BEARING NO.14/2015 DATED 28.9.2015 ISSUED BY THE RESPONDENT. EXHIBIT P3 TRUE COPY OF REPLY TO SHOW CAUSE NOTICE DATED 3.11.2015 BY THE PETITIONER. EXHIBIT P4 TRUE COPY OF THE ORDER-IN-ORIGINAL NO.152/2015 DATED 27.12.2015 ISSUED BY RESPONDENT. EXHIBIT P5 TRUE COPY OF THE CORRIGENDUM DATED 06.01.2016 ISSUED BY RESPONDENT. [True Copy] WP(C) 5778&13280/16 -25- APPENDIX OF WP(C) 13280/2016 PETITIONER'S/S EXHIBITS: P1 TRUE COPY OF THE AGREEMENT DATED 11.11.2013,BETWEEN THE PETITIONER AND YAMUNA ROLLER FLOUR MILLS PVT.LTD. P2 TRUE COPY OF THE SHOW CAUSE NOTICE NO.45/2015- ST(R)DATED 04.06.2015 P3 TRUE COPY OF THE REPLY DATED 19.08.2015 FILED BY THE PETITIONER P4 TRUE COPY OF THE LETTER DATED 07.07.2015 ISSUED BY THE LESSEE P5 TRUE COPY OF THE CERTIFICATE FROM THE AUDITOR DATED 15.07.2015 P6 TRUE COPY OF THE ORDER -IN-ORIGINAL NO.10/2015 DATED 29.09.2015. [True Copy] jg "