1. - This is a petition for claiming refund of the Customs duty paid in excess of 50% upon the importation of Vegetable Perchment paper and Glassine paper. All paper is liable to duty under item 44 of the First Schedule to Indian Tariff Act, 1934. The Government has the power under section 25 to grant exemption from duty either generally or with conditions from the payment of duty, certain articles. This power is to be exercised by issuing a notification.
2. Such a notification was issued by the Government of India on 28th February, 1965 under which as many as nine varieties of papers were exempted from paying duty in excess of 50% where the initial duty payable was 100%. The importers had to pay 100% duty on all these papers initially. We are concerned in this case with item 5 in this notification, being Greaseproof paper.
3. According to the Petitioners, they imported various kinds of paper including the three varieties which were a trade name Greaseproof paper, Vegetable Perchment paper and Glassine paper in the year 1965-66. They went on paying 100% duty on Glassine paper as also Vegetable Perchment paper. So far a the Greaseproof paper was concerned, it was so imported by this name, and they were charged only 50%. On the other two items 100% duty was charged to them. This was because the petitioners were not aware due to mistake of fact or law or both that the other two varieties are also entitled to exemption of 50% duty. Accordingly, as many as 17 Bills of Entry were presented between April 1965 to April 1966 relating to Vegetable Perchment paper as also Glassine paper. 100% duty was recovered from them which was paid.
4. In or about September 1966 the Petitioners got information that for these two varieties of paper only 50% of duty was being charged at Madras and Calcutta ports. This was because of two varieties were being treated as Greaseproof paper for the purpose of classifying them under Entry No. 5 to the Customs Notification.
5. An officer of the Customs Department one Mr. Lal was immediately contacted on 23rd September, 1966 and a discussion took place with him. He was apprised of the information and on his suggestion a written representation was made on 4th October, 1966. As there was no response for quite some time another letter was written in April of 1967. In the representation dated 4th October, 1966 evidence was offered from Dictionary and Encyclopaedia pertaining to paper production and also a certificate of Swish Manufacturer. It appears that ultimately the Central Board of excise and Customs, who has a right to decide the representations, took a decision that Vegetable Perchment paper as also Glassine paper is to be treated as Greaseproof paper for the purpose of exemption notification. Accordingly an intimation was sent to the Petitioners dated 15th June, 1967 that instructions are being issued to Customs Authorities to charge 50% duty. In due course a Tariff ruling was issued sometime in February of 1968 and that Tariff Ruling was made effective from 19th June, 1967.
6. When the Petitioners realised that they had overpaid, they claimed refund by filing applications. It appears that some of the applications which were in time under section 27 of the Customs Act, 1962 were granted and 50% of duty was refunded. It is also the case of the petitioners that in respect of at least three applications which were beyond time under section 27 of the Customs Act refund was also granted to them. However, in respect of others, refund was refused purely on the ground that the application were beyond time.
7. It may be noted that the import of the Vegetable Perchment paper as also Glassine paper was made between April 1965 and April 1966. Applications for refund were filed on 9th of August 1967. These application were rejected by the Chief Customs Appraiser on 18th August 1967. Appeals were carried to the Appellate Authority and the appeals were rejected on 25th November, 1967. A revision was filed before the Union of India, which was also rejected on 4th October, 1968. Thereafter the present petition has been filed on 7th August 1969.
8. In this petition there is no specific prayer for quashing any decision or ruling. What is pleaded is that the decisions of the authorities under the Act are illegal. It is further asserted that since the two varieties of paper specifically fell under exemption notification Entry 5. viz. Greaseproof paper, the authorities had no right at all in law to charge anything more than 50% duty. The assessment as well as the payment has been by mutual mistake of fact and law. The Petitioners never specifically represented that the two varieties of paper were in fact Greaseproof paper. There was, therefore, no occasion when Customs Authorities were ever called upon to decide that question. On the mistaken assumption that specific exemption is not attracted because the trade name of these two varieties of papers are different, the taxation went on as a matter of mistake. If that is so, Petitioners say that even though the petitions for refund were filed after the limitation under section 27 of the Customs Act, refund should have been allowed as the recovery was without the authority of law. If within three years, which would be a legitimate time to claim refund by a Civil action, the authorities themselves should have refunded the excess amount.
9. So far as the present petition is concerned, it is urged that the Petitioners came to know that the two varieties of paper could be taxed at a lesser rate for the first time in September 1966. In other words, the alleged mistake was discovered for the first time in September of 1966. If that is so, the present Petition filed within three years therefrom is clearly within the period of limitation. There is therefore no reason why this petition should not be allowed. The Petitioner merely wants the Court to decide that the recovery is without the authority of law and at once give a mandate to the respondents to refund the duty collected by them in excess of 50% on the 17 consignments.
10. The Petition is opposed. Respondents specifically deny most of the allegations of the Petitioners. They point out that the Petitioners are in the trade for several years and knew all along that the two varieties of papers which were charged 100% could be Greaseproof papers. Even then they never raised a dispute and the Customs Authorities charged in due course 100% duty on the footing that the two varieties are not covered by the exemption notification. This is, therefore, clearly a case where the authorities were to classify the commodities either under the general entry No. 44 or the exemption under the Government notification. This being the nature of the duty performed by the Officers they were clearly acting under the Act. If any refund is to be claimed, it must be in terms of section 27 and within the period of time allowed by that section.
11. In this view of the matter, what is further urged is that the Authorities were acting under the provisions of the Act and rejected the applications for refund as time barred. That could not be treated as decision which is not under the Act. If that is a decision under the Act, the procedure provided by Section 27 together with appeal or revision, as is allowed, is the only procedure available to an assessee for refund of the excess amount. Sub-section (4) of Section 27 of the Customs Act offers the procedure laid down by that section as the only procedure for obtaining refund. If it is to be said that the recovery was without the authority of law and, therefore, beyond the provisions of the Customs Act, the Petitioners should be directed to file a regular Civil Suit. A Writ Petition is not always a substitute for the filing of a civil suit. Several defences would be then open to the Union of India. In the present case it could be legitimately urged that suit instituted on 7-8-1969, when the present petition is presented would certainly be barred by time for the refund of amounts paid between April 1965 and April 1966. The theory of knowledge dawning upon the petitioners for the first time in September of 1966 is being denied by the respondents. Whether, therefore, the Petitioners got knowledge of the mistake for the first time in September of 1966 is a matter which will require evidence to be led. This always depends upon a frame of mind of the party and the information available to him. Prima facie the petition having been filed beyond the three years, a suit would also be barred by limitation. Where an important defence like limitation is available to the suit because of the delay in filing the Petition, the Court should not entertain this petition at all.
12. It is further added that the Pleading regarding Article 14 of the Constitution of India is also not available to the Petitioners. It is not true that duty was being charged at 50% on some papers at Madras and Calcutta. The alleged information of the Petitioners seems to be fictitious. It has been ascertained that at Madras all along 100% duty was charged. In Calcutta the procedure was that actual samples were taken and examined. Where the Vegetable Perchment paper or Glassine paper was actually found to be Greaseproof paper, refund of duty was permitted. It is not therefore correct that some different procedure was followed at Madras or Calcutta. So far as the record goes no general instructions seem to have been issued regarding refund to be made if the applications for refund are within three years. To ascertain the correctness of the quotation of the affidavit of Mr. Lahare, the Assistant Collector of Customs, Goa, efforts were made but the Counsel was unable to procure the correct copy to the said affidavit. It is not possible to say whether any such affidavit was made. It is ascertained from the records that no general instructions were issued as are alleged by the Petitioners. For all these grounds, the petition deserves to be dismissed.
13. The first actual point that was argued by Mr. Rana before me is that the V.P. paper and Glassine paper are Greaseproof paper. In paragraph 3 of the Petition it is alleged that 17 consignments of Bleached Glazed Glassine paper, Opaque Glassine paper and Pure Vegetable Perchment paper were imported between April 1965 and April 1966 and they all fell under Item 44 of the Indian Customs Tariff which prescribes duty at 100% ad valorem. It is then stated that after some correspondence, the department accepted that these papers are nothing but Greaseproof papers. The Petitioners have convinced the Central Board of Revenue by giving references from Dictionaries and Encyclopaedias that the two disputed types of paper were in fact Greaseproof papers. On 15th of June 1967 the Petitioners received a letter from the Under Secretary, Central Board of Excise and Customs to the effect that with reference to the letter of the petitioners dated 25-4-1967 on the subject of exemption from import duty on Greaseproof paper. Along with the affidavit in reply, the respondents have produced a copy of the Notification from the Collector of Customs, Bombay, dated 9th February, 1968 which refers to a Tariff ruling given by the Central Board of Excise.
14. I was told that when certain dispute arose and reference was made to the Central Board, it is customary for the Central Board to take some decision which is given in the form of ruling and that goes in the department as Tariff Ruling. This is not gazetted as it is only an interpretation of the Board with reference to a particular limited point. It may bind a Customs Officer in the assessment but may not necessarily bind a citizen who is free to dispute that ruling and claim exemption in respect of any particular duty.
15. All said and done it is no more now in dispute that Vegetable Perchment paper and Glassine paper have to be treated as falling under the category of greaseproof paper and accordingly benefit of exemption notification No. 33-Customs, dated 28th February, 1965 is to be extended to the two varieties of paper. The communication also says that Tariff becomes effective with effect from 1966-67. The Petitioners have thus established the fact that the two types of papers in dispute are Greaseproof papers entitled to 50% of exemption in terms of the exemption notification.
16. The main dispute, however, centres round the question, whether the recovery of the duty at 100% until the dispute was raised and settled by the Central Board of Excise and Customs could be said to be wholly outside the Act and wholly illegal. The department's pleading is that even though all kind of papers fall within the general entry No. 44 of the Indian Customs Tariff, the exemption referred to certain type of paper only. When a certain variety of paper is imported, it is for the importer in the first instant to plead that the paper falls under the exempted category and not the general category. The Customs Authorities also have a duty and a right to decide how they will charge the duty.
17. In the present case what is alleged by the respondents is that the Customs Officers classified the papers as falling under Entry No. 44 but not entitled to the exemption under the Customs Notification. This is legitimate function of the Customs Officers in the exercise of jurisdiction vested in them and they are entitled to classify it under some of the relevant entries in the Customs Tariff. It may not necessarily be that there is a conflict regarding two different entries and the question to be decided is whether a particular commodity falls under one particular entry or the other, and whether to grant exemption to such paper as is the subject-matter of this dispute, so also a matter within the jurisdiction of the Customs Officers.
18. On the contrary Mr. Rana for the Petitioners argued that once a notification is issued granting exemption, the notification under section 25 becomes a part of the statute itself. The disputed paper thus was not liable at all to pay anything more than 50% ad valorem. Any excess recovery is normally unlawful and wholly outside the provisions of the Customs Act. This is also argued with a view to point out that in that case the party may not be bound by the procedure prescribed by section 27 of the Customs Act. The procedure and the limitation prescribed by that section as also the appeal and revision provided under the Act would be relevant only when the imported commodity falls under some of the categories of goods described in the Customs Tariff. Since the Act itself will not apply to a commodity outside the Customs Tariff, the procedure may not limit the rights of the parties.
19. Mr. Dhanuka, however, argues that sub-section (4) of section 27 prescribes only one mode for the purpose of claiming refund, viz. application within six months from the date of payment of duty. If the decision goes against the party he may file an appeal as also revision under section 131. The language of these sections does not make the decision final in so many words but the provisions of sub-section (4) of section 27 clearly indicated that claim for refund of any duty shall be entertained in no other manner than as provided by section 27. The only exception is incorporated in section 26.
20. It is not possible for me to accept the argument of Mr. Dhanuka. It is well settled that the jurisdiction of the Civil Court can be said to have been deprived either by express provision or necessary implication. Where there is no express provision, an inference against taking away of the Civil Court's jurisdiction is not to be readily drawn. If a given Act offers a complete substitute machinery for disposing and deciding claims and shows by express language or by implication that the Civil Courts shall not deal with claims, then only that inference will be drawn. The usual section which gives immunity to the Government officers acting bona fide under the provisions of the Act is not by itself an indication that the jurisdiction of the Civil Court has been taken away.
21. In the case of Provincial Govt., Madras v. J. S. Bassapa, : 5SCR517 , the Supreme Court has pointed out that original section 18 of the Madras General Sales Tax Act (19 of 1939) merely applies to suits for damages and compensation in respect of acts done under the Act. It protects and indemnifies authorities including Government in respect of bona fide acts done or purporting to be done under the powers conferred by the statute. The period of limitation prescribed in the section does not apply to a suit by an assessee for refund of tax on the ground that it is illegally recovered. The Supreme Court referred to the provisions of section 18A which were added by amendment of the Madras General Sales Tax Act and points out how that section clearly deprives the civil court of its jurisdiction to entertain any claim for refund. While doing so the legislature also provided a detailed machinery and it seems to be enough that the citizen is given one full fledged remedy with the right to be heard. The general immunity under section 18 would not cover a case where the tax is unlawfully recovered. The issue in the case before the Supreme Court related to the recovery as well as imposition of tax in relation to transactions which took place outside the State. They were not taxable in the State. When evidence disclosed that the moment it is also proved that the sales have taken place outside the State and are not liable to pay any taxes, the recovery of the sales tax in relation to such transaction is illegal recovery of the tax and outside the provisions and scope of the taxing statute. In the case of such claims, if applications for refund are rejected on the ground of being filed beyond the time prescribed by the Act, the claim is still recoverable from the State in the Civil Court by filing a suit. The period for recovery of such claim would be three years under Article 24 of the Limitation Act, 1963 and the starting point of limitation would be when the money is received.
22. In a dispute that arose before this Court in Tarachand v. Union of India 73 Bom. L.R. 558, the Plaintiff had imported certain spare parts of a motor-cycle known as Moped. He had a valid licence under which he imported the parts in two different lots. The Customs Authorities took the view that if these parts in two lots are joined together, they would create a perfect Moped motor-cycle. Import of such a motor-cycle was prohibited and the act of the Plaintiff amounted to a breach of the Import Control Order. They therefore issued a show cause notice and confiscated all the imported parts and also imposed a penalty. The departmental appeals having failed, the plaintiff filed a suit for a declaration that the decision of the Customs authorities was clearly wrong and that he was entitled to the recovery of the parts on payment of appropriate duty under entry No. 295 of the Import (Control) Order. A learned Single Judge of this Court held in favour of the Plaintiff on facts. According to him, all the parts were properly imported in consequence of the terms and conditions of the import licence. The Customs authorities could not put the parts together in an imaginary manner and treat the imported goods as falling under a different entry altogether. Having given that finding in favour of the plaintiff, the suit was still dismissed because, according to the learned Judge, the decision of the Customs Authorities could not be challenged in a civil court as it had no jurisdiction to interfere with the finding of the Customs Authorities. The Division Bench while allowing the appeal, however, took a contrary view. According to them, the Customs Authorities had no right to do what they did. The import was a valid import under item in Entry No. 295 and by a certain manipulation a different entry could not be invoked by allowing extraneous considerations to intervene. The Customs Authorities cannot classify imported goods under a different entry than under which it prima facie appears to have been imported and the goods answered the description of that entry. For doing so they have no jurisdiction or in fact they exceeded the jurisdiction for the purpose of making such a classification and seek to attach the imported goods. Since this was an action of the Customs Authorities beyond their jurisdiction a remedy in the Civil Court was not barred. In that view the Division Bench allowed the appeal and quashed the orders of the Customs Authorities. It may be merely noted that this decision of a Division Bench of this Court has been confirmed by the Supreme Court in Appeal filed by the Union of India reported in : 1983(13)ELT1456(SC) .
23. The point that is mainly being argued is whether the assessment made was an erroneous exercise of jurisdiction or was one without jurisdiction altogether, or was in excess of jurisdiction which to the extent of the excess could amount to an order without jurisdiction. Before the Supreme Court reliance was placed in an earlier Bombay decision in the case of D.P. Anand v. M/s. Thakore & Co. being O.C.J. Appeal No. 4 of 1959, August 17, 1960. Assistance was drawn to argue that parts when assembled would result in a completed Article of which import was prohibited. The Supreme Court, however, points out in paragraph 18 of the report that the real distinction between that case and the case of Girdharilal, A.I.R. 1964 S.C. 1591, is not what in the end the result would be, but whether the same goods can be classified under this entry or that. They clearly point out that a complete Moped may be prohibited so far as import under licence entry No. 294 is concerned, but that would not affect the importation of parts under entry No. 295 which permits parts being imported. If that is what the importer was doing, the goods cannot be said to be classified under Entry No. 294 after imaginary joining all parts and creating complete Moped.
24. Though many of the cases cited did not directly assist me in deciding the question before me they are being relied upon for the broad proposition that there are various sheds to the question of the erroneous exercise of jurisdiction and an exercise of jurisdiction which does not exist in the Customs Officers. In other words, if the importation does not fall under the Act at all, or is beyond the jurisdiction of the officer, the order can be challenged before the Civil Courts. It is entirely different that under the Act certain limits have been laid down. If applications are disposed of only on technical ground of limitation, as has been done in the present case, it would not be a decision on the merits in the sense whether the article was in fact classified under a particular entry and, therefore, the refund is not permitted on the merits.
25. Mr. Rana also relied upon the judgment in Coffee Board v. Joint Commercial Tax Officer, : 3SCR147 , for two propositions. According to him, if the action is ultra vires of the statute or though intra vires is without jurisdiction, or principles of natural justice are violated, a right to move the Supreme Court under Article 32 of the Constitution for enforcement of fundamental right exists. Since the order clearly affects property of a citizen he can move the Supreme Court by an application. If that could be done, there should be no objection in a case like this to file a Writ Petition for getting refund from the respondents. He also pointed out that the Supreme Court in paragraph 9 of the report refers to the decision in Ujjam Bai v. State of U.P. A.I.R. 1962 S.C. 1621, and explains what precisely has been decided in that case. Since the judgment is being relied upon by Mr. Dhanuka for the respondents, Mr. Rana felt that the real meaning and interpretation of that judgment by the Supreme Court itself should be accepted by this Court.
26. In that case the question was whether assessment of Sales Tax under valid Act was open to challenge under Article 32 of the Constitution on the ground of misconstruction of the Act or a notification under it. It was held that the answer was in the negative. The Supreme Court itself proceeds to observe that the case has given some trouble to it in view of the different opinions expressed in it. It was therefore necessary to state simply the propositions which are settled by that Court. Law observing, the Supreme Court summarises the law laid down by itself. It is said that the ruling recognises the existence of a right to move the Supreme Court under Article 32, where the action is taken under an ultra vires statute, or where, although the statute is intra vires the action is without jurisdiction or the principles of natural justice are violated. Error of law or fact committed in the exercise of jurisdiction founded on a valid law do not entitle a person to have them corrected by way of petitions under Article 32. It is also pointed out that the proper way to correct them is to proceed under the provisions for appeal etc. or by way of proceedings under Article 226 of the Constitution.
27. In paragraph 16 of the same judgment, the Supreme Court further observes that if a demand for tax is not backed by valid law it is a threat to property and gives a right to move the Supreme Court under Article 32. Mr. Rana therefore wants to argue in this case that the assessment and demand of tax at 100% ad valorem in the present case is without the authority of law. The moment the notification was issued by Government, Greaseproof paper became a commodity liable to pay duty at 50% ad valorem and not more. Any demand in excess of 50% is therefore a demand either in excess of jurisdiction or one not backed by any provisions of law. I do not think that this proposition can be seriously challenged.
28. Some more judgments were cited by way of illustration of this proposition as to what constituted a demand or assessment of a tax or duty without the authority of law. In the case of Dattatraya Nagesh Deodhar v. The Poona City Municipal Corporation, 62 Bom. L.R. 71, the facts were that the Poona Municipal Corporation was not entitled to recover any octroi duty on goods in transit. However, under the Rules of the Corporation which were continued even after the passing of the Bombay Provincial Municipal Corporation Act, 1949, the Municipality was charging 10% on the octroi paid, when the goods went out of the Corporation limits at the other end. This recovery of 10% was challenged as unlawful recovery and a civil suit was filed by Plaintiff Deodhar in the Poona Civil Court. As he did not succeed he carried an appeal to this Court. The Division Bench in the above judgment held that the Poona City Municipal Corporation was not competent to impose a tax on octroi refunds after February 15, 1950, when the Bombay provincial Municipal Corporation Act, 1949 was applied to it. Such tax would be ultra vires the powers of the Corporation and illegal and ineffective and the Corporation would be bound to refund any amount recovered by it in enforcement of that tax. This was a clear case where certain deductions were made without the backing of any valid law. This judgment was also confirmed by the Supreme Court in the appeal filed by the Poona Municipal Corporation as reported in A.I.R. 1955 S.C. 555.
29. Yet another instance was cited in the case of Kirpalsingh v. Municipal Board, : 3SCR551 . Under the Rules of the Municipality if goods were imported for the use of Government they were initially charged octroi at the entry point. However, if a certificate of the appropriate officer was produced that the goods were actually handed over to Government and became the property of the Government, a full refund of the octroi was contemplated as goods brought within the municipal area for the use of government were not taxable with octroi. In spite of the production of the requisite certificate the Municipality refused to refund the amount. A civil suit was, therefore, filed which was decreed by the trial court and the decree was confirmed by the First Appellate Court only in respect of amounts paid after December 13, 1954. With reference to certain period of limitation for refund, the High Court confirmed the order of the Appellate Court. Against that order, the original plaintiff filed an appeal. Allowing that appeal the Supreme Court said that the Rules made under the rule making power did not oust the jurisdiction of the Civil Court and the period of limitation for refund is not relevant, as the period of limitation will be counted under the general law of the land. Since the claim was otherwise in time they upheld the entire claim even though the applications for refund would have been barred on the day the suit was filed. In other words, mere rules of the type made by the Municipal Board, Ghaziabad, did not give finality to the decision and the Civil Court jurisdiction is still open.
30. Yet another angle from which Mr. Rana argued for the petitioner was that the present payment was a payment under a mistake of fact and law. That being so, the Petitioners have a right under section 72 of the Indian Contract Act to claim back the amount paid through mistake within three years from the date of the discovery of the mistake. There are two aspects to this argument. One is the right to recover the amount paid through mistake, which is the right given under section 72 of the Contract Act. The period of limitation for the recovery of that amount paid under mistake is with reference to Article 24 of the Limitation Act of 1963. That period is three years when the money is received by the defendant. That being so, he wants to rely upon section 17(1) of the Limitation Act for making the limitation commence from the date of the realisation of the mistake. Mr. Rana has to argue in that manner because the view to which I have already referred shows that the present petition is not within three years on the date of payment. All the payments are between April 1965 and April 1966. The present petition is filed on 7th August, 1969. According to the Petitioners, they realised the mistake for the first time in September 1966 and immediately took an appointment with the Collector of Customs Mr. Lal. If this is the point of time when the mistake was discovered, the present petition on 7th August 1969 is within three years from that date and should be entertained as being within the period of limitation. This is stated even though there is no specific period for filing a writ petition. Accordingly, the High Court did not entertain a writ petition where the claim is found to be barred by the law of land and a civil remedy for the recovery thereof appears to be barred by the law of limitation.
31. I will discuss a little later the precise factual position in this case, which will determine which approach of law is available to either of the litigants in order to canvass the proposition, which cannot be doubted that the word 'mistake' used in section 72 of the Contract Act is used in an unqualified manner and it covers all mistakes whether of fact or law. That has been fairly established by the judgment of the Supreme Court in Sales Tax Officer v. Kanhiya Lal, : 1SCR1350 . Their Lordships quoted with approval a passage from the Judgment of the Privy Council in Shiva Prasad Singh v. Shrish Chandra Nandi, A.O.R. 1949 P.C. 297 and agreed that the mistake referred to in section 72 can be either mistake of fact or law. The observations of the Privy Council which quoted with approval are these :
'Payment 'by mistake' in S. 72 must refer to a payment which was not legally due and which could not have been enforced; that 'mistake' is thinking that the money paid was due when in fact it was not due.'
They thus point out that there is no inconsistency between sections 21 and 22 of the Contract Act on the one hand and section 72 of that Act on the other hand.
32. In order to further develop the factual aspect that the payments in this case must be held to be under a mistake of fact as well as law, Mr. Rana took me to an approach adopted by the Supreme Court in the case of State of Kerala v. Aluminium Industries Ltd. (1965) 16 STC 689. That was a case relating to a sale outside the State and therefore outside the jurisdiction of the taxing officer in view of Article 286(1)(a) of the Constitution of India. On the Return filed by the assessee regarding his total income, assessment took place and the tax demanded paid. Subsequently assessee pointed out that under a mistake certain transactions which are sales outside the State and are not liable to tax have been included in the Return. Whether the transaction in intra State, inter State is a matter within the knowledge of the assessee himself. In spite of that the Supreme Court observes that when an assessee does not bring to the notice of the Sales Tax Officer that certain sales outside the State will not give rise for the determination by the Officer and the tax is levied by mistake of law, ordinarily, therefore, it is the duty of the State to refund the tax subject to the provisions of the Act and if a Civil Court is approached subject to limitation under the Act or under Article 96 of the Limitation Act, viz. three years. On that conclusion being reached, the matter was remanded down for finding out how much tax relates to outside State and whether writ petition was filed within three years from the date of the mistake.
33. Similar approach regarding limitation has been adopted by the Supreme Court also in the case of Gill & Co. Pvt. Ltd. v. Commercial Tax Officer, Hyderabad (1968) 22 STC 524. The writ petition related to the tax paid for the years 1959-60, 1960-61, 1961-62 and 1963-64. It was alleged that the payment was made under mistake and the writ was filed in the year 1967. The High Court summarily rejected the petition. The Supreme Court holds that it was not a proper course to adopt and the High Court ought to have investigated as alleged whether the mistake was discovered for the first time in January of 1967 and after such investigation it should have disposed of the petition. The petition was accordingly remanded to the High Court for deciding in the normal way according to law. This is undoubtedly on the footing that even in the writ petition the allegations about discovery of a mistake on or about a certain date can be agitated before the High Court and the High Court may decide that point before dismissing writ petition.
34. Shri Dhanuka's approach to this litigation is that the entire dispute relating to the imposition of duty on the imported paper relates at best to an erroneous exercise of jurisdiction or to the commission of some error in the exercise of jurisdiction. It cannot be doubted that the Customs Officers were entitled to impose duty and every kind of paper is not exempted from paying 100% duty. When the Notification dated 28th February 1965 was issued by the Union of India it became necessary for the Customs Officers to exempt the imported paper on seeing whether it falls under any of the categories exempted by the Notification or otherwise fall under the general category under Entry No. 44. This being a statutory duty of the officers, it must be assumed that they have applied their mind to it and have actually classified the disputed paper as not Greaseproof paper but other than Greaseproof. On the subsequent developments, viz. the representation of the traders including that of the petitioner and the application of mind by the Central Board of Revenue, the two categories of paper in dispute may be deemed to fall under item No. 5 of the exemption Notification dated 28-2-1965. That does not mean that the Customs Authorities had no right to determine the nature of the paper and assess the proper duty thereon. If an error has crept in the exercise of this jurisdiction it was correctable only under the procedure laid down by the Act in the form of appeal and revision application and that too within the period of limitation prescribed by that Act. Since the applications are beyond time, it was within the jurisdiction of the Customs authorities to determine whether the prescribed limitation really applies. The view taken by the Customs authorities undoubtedly shows that they rejected the application on the ground of limitation alone, as they felt that any dispute regarding the classification should have been raised under the Act within the prescribed period of section 27 of the Customs Act. The same approach has been confirmed in appeal and revision. If this court wants to interfere, it must come to the conclusion that the approach was also erroneous without which interference under Article 226 of the Constitution should not be made.
35. Before citing authorities to support this approach Mr. Dhanuka raised one more point which was not pleaded earlier. According to him, in this petition the petitioners merely asked for the refund of duty. They have not asked for quashing the assessment orders and refund by way of consequence thereof. A mere prayer for recovery of money which is at best be made in a civil suit cannot be the subject-matter of a writ petition. He relied for this purpose on Suganmal v. State of Madhya Pradesh and Ors. : 56ITR84(SC) . This is not a defence taken in the pleadings by the respondents. The recovery under the Indore Industrial Tax Rules 1927 was held by the appellate authority to be unlawful. However, there was no provision to order refund by appellate authority even if it allowed the appeal. Hence a writ petition was filed. It was obvious that the recovery was already declared unlawful and what was to be done in the writ petition was mere recovery of tax. The Supreme Court points out that for such a recovery, a Civil Suit was a proper remedy and the writ petition would not lie.
36. I am afraid that the principle of that judgment cannot be made applicable to the facts and circumstances of the present case. It is true that in so many words the Petitioners have not asked for quashing the assessment orders. Mr. Rana argued that if such plea was taken earlier either in the pleadings or in the several exhaustive hearings before the various Judges of this Court when the matter was referred to reconsider the assessment, the petitioners would have complied with the technical requirements, if need be by amending the petition. However, apart from the mere technical approach what I find is that the legality or otherwise of this tax has not been yet decided. The petitioners pleaded specifically in the body of the petition that the recovery of the dues by the Customs authorities is without the authority of law and wholly illegal. That has been the theme of paragraph 10 and the whole petition narrated how the two kinds of paper fall within the exempted category and are outside the purview of Entry 44 which generally deals with 100% levy on paper. I am of the view that this technical approach should not come in the way of the petitioners if they are otherwise entitled to the refund. The petition read as a whole does require this Court to hold in the first instance that the recovery is illegal and if such a conclusion could be arrived at the refund is to be directed as a relief flowing from that.
37. Mr. Dhanuka then relied upon the judgment of the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai and Ors., : 6SCR261 . Group matters relating to Madhya Bharat Sales Tax Act, 1950 was decided by the Supreme Court by that judgment. The provisions under which the tax was levied were declared unlawful or ultra vires of the M.P. Legislatures in view of the guarantee, of commerce included in Article 301 of the Constitution of India. Even then the Supreme Court refused to grant relief of refund as the remedy resorted to was a writ petition and not a suit. A plea of limitation was raised on behalf of the appellant-State. The Supreme Court points out that the special remedy provided in Art. 226 of the Constitution is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. If reasonable defence of limitation or a triable issue of limitation arises from the pleadings of the party the claimant should be referred to a regular civil suit when all the circumstances will be proved by leading evidence. It will then be possible for the court to come to a conclusion whether the action prima facie beyond limitation must still succeed in view of the provisions of section 17 of the Indian Limitation Act. There is no doubt that this approach will have to be borne in mind when I discuss the factual aspect in the present case. At the same time this judgment helps the petitioners to some extent. Where sales tax, assessed and paid by the dealer is declared by a competent court to be invalid in law, the payment of tax already made is one made under a mistake within section 72 of the Contract Act and so the Government to whom the payment has been made by mistake must in law repay it. The High Court has in exercise of its jurisdiction under Article 226 of the Constitution in such circumstances to enforce the fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law, and thereafter the Supreme Court suggests the above approach regarding limitation and says that mere declaration that the recovery is unlawful may not necessarily lead to the consequence of granting immunity under Article 226.
38. Mr. Dhanuka also relied upon certain observations of the learned Single Judge of this Court in I.T.C. Ltd. v. M.K. Chigkar, Asstt. Collector of Central Excise and others, Misc. Petition No. 1151 of 1975 decided on 6-4-1977. Undoubtedly the learned Judge observes that in order to hold that the mistake was discovered on or about a particular time or date evidence must be led. Not only that but mental approach of the petitioner has got to be analysed and understood before it is possible to conclude that the mistake is discovered on a particular day. Better remedy for deciding such a disputed issue is a civil court and the High Court should not ordinarily grant relief under Article 226. The learned Judge has also relied upon certain judgments of the Supreme Court for accepting that approach.
39. What I, however, think is that in a writ petition if pleadings before the Court raise such a disputed issue and more evidence is likely to come, the Court may consider whether to invite further evidence or to direct the party to the Civil Court. It cannot be an invariable rule that the moment the Revenue raises the plea of limitation, the Writ Court must take its hands off the matter. I will undoubtedly bear this in mind when I further analyse the facts and circumstances of the case.
40. Developing this theme of a mere erroneous exercise of jurisdiction and want of jurisdiction Mr. Dhanuka took me through a few cases. In M/s. Madras Rubber Factory Ltd. v. Union of India, : 1983(13)ELT1579(SC) the dispute was whether V.P. Latex was to be classified under Item 87 or Item 39 of the Tariff Act. In relation to such a dispute which was raised before the Customs Authorities, a finding was given regarding the classification of the commodity V.T. Latex. The Supreme Court points out that in such a case even if the party is aggrieved by the classification made in spite of representation, the Customs Officers must at best be deemed to have committed an error but they could not be said to have acted without jurisdiction. The remedy under the Act was the only remedy and it had to be undertaken within the limitation prescribed. Every application for refund was beyond time and the time varied between one month to four months. The Supreme Court held that the authorities were right in rejecting the refund applications, being beyond time.
41. This judgment at best shows that where the jurisdiction existed in the officer concerned, but there was an error in the exercise thereof, the only remedy was to go through the procedure prescribed by law within limitation and if remedy is not resorted to within limitation the Writ Court would not help the Petitioner of that type.
42. The next judgment relied upon by Mr. Dhanuka is the case of M/s. D. Cawasji & Co. v. State of Mysore, : 1978(2)ELT154(SC) . This case particularly turns upon the facts before the Court. In an earlier petition when the provisions of certain Mysore Act were challenged as unconstitutional no refund was claimed. It was only subsequently that refund was claimed and that too in the petition filed after inordinate delay. The High Court refused to grant any relief and that approach of the High Court is considered reasonable in dismissing the appeal. They specifically observed that no reason was assigned as to why refund was not claimed earlier and in the circumstances the discretion was properly exercised by the High Court. I do not think that any principle of general application can be deduced from this judgment.
43. The next judgment on which reliance is placed is the case of Tiloakchand Motichand v. H. R. Munshi, : 2SCR824 . The circumstances under which the Supreme Court will interfere in the application under Article 32 of the Constitution of India have been enumerated by the Supreme Court. The petitioner before the Supreme Court had already filed an application earlier before the High Court and it failed on the same point. The Supreme Court gave a subsequent judgment which helped the petitioner in making the same claim which was once barred. After a number of years petition came to be filed before the Supreme Court. The Supreme Court points out that normally it does not entertain belated and stale claims. The party claiming fundamental rights must move the Court before other rights of innocent parties emerge by reason of delay on the part of the person moving the Court. Ordinarily when claim by way of suit is barred under the provisions of the Limitation Act, the Supreme Court will not entertain a writ petition for such relief. However, these observations have been considered and explained in a subsequent judgment of the Supreme Court in the case of R.S. Deodhar v. State of Maharashtra 1974 S.C. 259. The petitioner before the Supreme Court had applied in the year 1969 for relief against the State of Maharashtra in the matter of gradation list of the Mamlatdars which enabled them to be considered for the post of Deputy Collectors. In another litigation which reached the Supreme Court, the party in the position of the petitioner had succeeded. Thereafter this petition came to be filed after almost ten years, as the original gradation list was prepared in the year 1959. Referring to the observations in the above mentioned judgment, the Supreme Court points out that the rule which says that a court may not inquire into belated or stale claims is not a rule of law but a rule of practice based on sound and proper exercise of discretion and there is no inviolable rule that whenever there is delay the court must necessarily refuse to entertain the petition. The question is one of discretion to be followed on the facts of each case. The court then explains that the petitioner as a Tahsildar had received a letter from as high Officer as a Commissioner of Division that the gradation list made in 1959 was only provisional. He never heard that this was final list. Only after the judgment of the Supreme Court, he realised that he had a case to agitate. In the circumstances, the Supreme Court felt that the petition should be entertained under Article 32 and appropriate relief granted to the petitioner.
44. There are a few judgments cited by him which deal with the wrong classification of goods under this entry. It cannot be doubted that the law is clear enough, viz. that mere classification of entries cannot amount to the passing of order beyond jurisdiction. It is also the law that mere wrong interpretation either of the provisions of law or entries of taxing statutes by themselves do not create a situation where fundamental right is involved. In order that the threat should be really one to property by way of affecting fundamental right, it must be shown that the action was beyond jurisdiction or that it was ultra vires the Act itself or the provisions were unlawful and unconstitutional. He relied upon Kailash Nath v. State of U.P., : AIR1957SC790 ; M/s. Pioneer Traders v. Chief Controller of Imports and Exports, : 1983(13)ELT1376(SC) and Kamala Mills Ltd. v. State of Bombay, : 57ITR643(SC) . By way of contract to this approach he also brought to my notice the judgment of the Supreme Court in Bharat Kala Bhandar v. Municipal Committee, Dhamanegon, 69 Bom. D.R. 1969. In that case the levy itself was held unconstitutional. The Supreme Court therefore observed that if the levy itself is unconstitutional how could it fall under the provisions of the Municipal Act and how could it be said that the provisions for refund will conclude the rights of the parties.
45. In the face of these judgments and conclusions which I have indicated, I have to examine the facts of the case before me and find out whether the recovery of the duty in excess of 50% is without any authority of law. I have also to find out whether the payment has been made in mistake and whether that mistake was in fact realised or discovered in September of 1966. I have already pointed out that at this stage it is not possible to doubt that the two varieties of paper fall under Item No. 5o of the exemption notification and these items could not be taxed in excess of 50% ad valorem. When a notification is issued under Section 25 of the Customs Act, 1962 granting exemption, it becomes a part of the Act and it has the same force as the provisions of the Act and it must be now held that in relation to Greaseproof paper the authorities had no right to recover anything more than 50% of duty. To me, therefore, it appears that the recovery of anything more than 50% is clearly without the authority of law.
46. In this case, the petitioner never specifically made a representation that the paper fell under the exemption Notification and was liable to pay 50% duty. No occasion therefore therefore arose for the decision by the Customs Authorities as to whether the paper falls under the exemption Notification or whether it falls under general category of Item 44 of the Tariff. In this behalf the learned Counsel for the respondent Mr. Dhanuka relies upon three Bills of Entry. When the 17 Bills of Entry were produced earlier before the learned Judge of this Court, it was discovered that on Bills Nos. 1, 13 and 15 there are certain endorsements. On Bill No. 1 the endorsement dated 5-1-1964 states that the petitioners require the goods originally for their factory and they are ready to pay higher rate of duty. They want to clear the goods under protest and they would lodge the claim after payment of duty. The same endorsement is made on Bill of Entry No. 13. What is stated there is that these goods were required urgently for the factory. The Petitioners therefore request that they may be released without test on payment of higher rates of duty. They did not want any refund. On the third Bill of Entry at Serial No. 15 the Petitioners say that they did not claim lower rate of excise duty and hence the samples may not be sent for test.
47. It may now be noted that there is a further endorsement on Bill of Entry at serial No. 13 by the Customs department and that endorsement is in the following terms :
'Gms. of the goods as per invoice is 45. An examination order was given because if, the grammage falls between 40-45 excise duty will be 42 paise. Party states (in reverse) that we will pay higher rate of duty and want prefer any claim for refund. A sample however, will be drawn for test in Second Check.'
These are the total remarks that are available on the basis of the Bills of Entries.
48. In an affidavit dated 2nd December 1975 Mr. Talwar, a Director of the Petitioner Company explains what precisely these endorsements meant from the remark of the Customs Officers it is clear that the paper imported was liable to pay two different types of duties. The grammage of the paper was relevant for the purpose of charging the excise duty at a certain rate. Even though in respect of Item No. 13 the party was willing to give higher excise duty the endorsements of the Customs Authorities show that the sample was to be drawn for test in the second check. What that precisely means one does not know but it may be that in other cases of similar import a check may be necessary where less than the higher duty is claimed. The affidavit of Mr. Talwar therefore seeks to explain that all the three endorsements are similar and it is the excise duty alone which was the subject-matter of these endorsements. In the first case the payment is made under protest and there was intention to take refund. However, that stand is given up later.
49. In the present petition being anxious to claim refund and to avoid defence of limitation, one of the approaches agitated is that the endorsement on Bill of Entry No. 1 takes the Bill out of the provisions of section 27(1) of the Customs Act. The limitation for refund does not apply where the demand is under protest. Thinking that such an approach is available a plea raised was that this was a common endorsement on some of the Bills and the petitioner' case may be deemed to fall under sub-section (1) of section 27 of the Customs Act. Realising that such an argument was not possible on facts, this attempt has been expressly given up by Mr. Rana. He has that the correct interpretation of this endorsement merely relates to the payment of excise duty and it was not in the mind of any one at that stage, viz. the Assessing or the Customs Officers that to the two types of paper an exemption Notification applies. Since the nomenclature of the paper is different, it did not occur either as a matter of fact or as a matter of law to the petitioners that they could take advantage of the exemption Notification.
50. It was only when they got some information from Madras and Calcutta regarding the sample testing of the papers for determining whether they are Greaseproof papers that the Petitioner go inkling of the whole situation. It then dawned upon them to collect information and they obtained an opinion from Aktiebolget Jan Libeign Ltd. from Sweden who were the manufacturers of these papers. A person belonging to that organisation who were the manufacturers of paper certified by a letter that Glassine paper is a glazed Greaseproof paper and it has been explained in the letter by pointing out that different processes of manufacture, which make one paper glazed and the other unglazed. Otherwise it is a Greaseproof paper. When this information became available because of the doubt created from the information received from Calcutta and Madras, the Petitioners realised for the first time in or about September 1966 that two varieties of paper in fact fell under the exemption Notification.
51. I may point out there that the Petitioners plead specifically in their petition that on 23rd September, 1968 the Petitioners made oral representations to Mr. Lal, the Secretary of the Central Board of Revenue and brought to his notice, viz. difference in the assessment of similar paper at the ports of entry at Calcutta and Madras. On his directions they made a written representation on 4th October, 1966 and made out a full fledged case for exemption by attaching the information of the Manufacturers themselves. I may at once state that the respondents did not at all point out in their pleadings whether Mr. Lal is or is not still in service. The representation dated 4th October, 1966 specifically refers to this oral discussion. The affidavit on behalf of the department is filed by one Mr. Kharkar, who is an Assistant Collector of Customs, Bombay. Though he denies the alleged conversation it is only on the basis of the record. If the conversation is oral it can never find place in the record unless. Mr. Lal had taken care to retain notes of his discussion with the petitioners. The more telling circumstances, however, is the specific reference in the letter dated 4th October, 1966 to this earlier event. No affidavit of Mr. Lal is put in and no explanation is offered by his affidavit could not be procured by the respondents. In the circumstances I am satisfied that this is a case where the two varieties of paper in dispute were being assessed 100% duty in a routine manner even after the exemption Notification dated 28th February, 1965. The Petitioners never realised until September of 1966 that the goods directly fell under the exemption Notification. Payments made earlier therefore must be deemed to be payments under the mistake of fact as well as law and the recovery must be deemed to be without any authority of law. Such a case attracts the application of section 72 of the Indian Contract Act.
52. The above discussion also shows that there is no specific denial of the manner in which the Petitioners came to realise the mistake. In the absence of any affidavit from Mr. Lal or any explanation in that behalf after obtaining information in that behalf, I see no reason why the affidavit of the Petitioners in that behalf should not be accepted. It practically goes unchallenged. In the circumstances, whether the mistake was realised for the first time in September 1966, does not remain a disputed fact and the pleading in this petition did not create any triable issue in that behalf. If no triable issue seems to exist it is futile to argue that the parties be referred to a civil suit and the relief in a writ petition be denied to it.
53. If once this finding is reached, it is clear that the present writ petition filed on 7th August, 1969 is well within three years of the discovery of the mistake and the respondents do not seem to have any right to retain the duty unlawfully recovered.
54. The Petition thus must succeed. I would therefore make the rule absolute in terms of prayers (a) and (b) of the petition. However, I quantify the costs at Rs. 1,000/-.
55. Two months' time given to the respondents to pay the amount to the petitioners.