1. The challenge in this writ petition is to the rejection of the refund application filed by the petitioner on the ground that it is barred by limitation.
2. The petitioner is one of the leading manufacturers of cigarettes. The cigarettes are marketed by the petitioner through M/s. India Tobacco Company Ltd. as well as through other dealers.
3. For the period 1st September, 1970 to 22nd February, 1972 excise duty was paid on the basis that the wholesale price, which was relevant for the purpose of calculating the excise duty payable under section 4 of the Central Excises and Salt Act, 1944, was the price which was being charged by the dealers of the petitioner. In fact excise duty was livable only with reference to the wholesale market price which was charged by the petitioner from the main dealers. This was so held by the Supreme Court in the case of A. K. Roy and another v. Voltas Ltd., : 1973ECR60(SC) .
4. The Supreme Court delivered the judgment in the Voltas case on 1st December, 1972. The same was reported in the law reports sometimes in January, 1973. On 30th March, 1973 the petitioner filed an application for refund of excess excise duty paid by it. According to the petitioner the said excess came to Rs. 64,19,060.13.
5. The Assistant Collector of Central Excise vide order dated 30th August, 1974 rejected the said application for refund. The only ground given for rejecting the application was that the refund has been claimed after a lapse of more than one year of the payment of the excise duty. According to the respondents, thereforee, the provisions of Rule 11 read with the Rule 173J, as they stood at the relevant time, provided for a claim being made within one year of the payment of the excise duty. An appeal was filed against the said order. The Appellate Collector of Central Excise, by his order dated 12th March, 1975, gave partial relief to the petitioner. It was held that the petitioner would be entitled to refund only where duty had been paid under protest. The implication of this order, thereforee, is that but for the question of limitation, the petitioner would be entitled to refund.
6. A revision was filed against the aforesaid order of the Appellate Collector. The Central Government, vide its order dated 22nd May, 1976, rejected the said revision.
7. The petitioner is now seeking to challenge the aforesaid orders in this writ petition under Article 226 of the Constitution of India.
8. The contention on behalf of the petitioner is that the provisions of Rules 11 and 173J are not applicable because what has been paid and collected by the respondents is not duty of excise at all. According to the petitioner, duty of excise would be that duty which was legally payable. In this connection it is further contended that in any event even if it be assumed that no relief could be granted by the Excise Authorities, this Court would, in any case, be competent to grant the necessary relief in exercise of its powers under Article 226 of the Constitution.
9. According to Article 265 of the Constitution the respondents are entitled to levy and collect tax/duty only by authority of law. Any payment which has been received by the respondents in excess of what was legally due to them, cannot thus be regarded as having been collected in accordance with law. It may be that the excise authorities, because of Rule 11 and 173J, may not be able to entertain an application for refund. This, however, would not prevent the petitioner from approaching this Court for appropriate direction under Article 226. If the State has realised tax or duty in contravention of the law, the Court would be fully justified in directing the State to act in accordance with law and to refund the excess amount of tax or duty which it has realised. In this behalf reference may usefully be made to a Single Bench decision of this court in the case of M/s Chemicals & Plastics India Limited and another v. Union of India and others, Civil Writ No. 147 of 1979, decided on 10th July, 1979. S. S. Chadha J. in that case, while following the decisions reported as Prem Raj and Ganpatraj and Company (P) Ltd. v. Assistant Collector of Customs 1977 ELT (J 166) = : (1977)2MLJ302 and Durga Shankar Industries, Vijaywada v. Government of India and others 1979 E.L.T. (J 227), held that a party who had paid duty of excise in excess would be entitled to claim the refund of the same by filing a petition under Article 226 even if the authorities under the Act could not entertain the refund application as the same had been filed beyond the time prescribed by the Act.
10. Even otherwise the decision of the Excise Authorities is not correct. Rule 11 and 173J, as they stood at the relevant time, read as under :-
'11. No refund of duties or charges erroneously paid, unless claimed within three months - No duties or charges which have been paid or have been adjusted in an account-current maintained with the Collector under rule 9, and of which repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded unless the claimant makes an application for such refund under his signature and lodges it with the proper officer within three months from the date of such payment or adjustment, as the case may be.
173-J. Time limit for recovery of short levy or refund of excess levy - The provisions of rules 10 and 11 shall apply to the assessed as if for the expression 'three months' the expression 'one year' were substituted in those rules.'
11. Duty of excise is that which is levied in accordance with the Act. Any money which is realised in excess of what is permissible would be realisation made outside the provisions of the Act. It was held by the Supreme Court in Patel India (Private) Ltd. v. Union of India and others, : AIR1973SC1300 that a limitation provided under the Act, Section 40 in the case of Sea Customs Act, would not apply where excise duty has been assessed and recovered without the authority of law. It was observed by the Supreme Court as follows :-
'Section 40 on which the Union of India relied in its return, provided that no customs duties or charges which have been paid, and of which repayment wholly or in part, is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be returned, unless such claim is made within three months from the date of such payment. The Section clearly applies only to cases where duties have been paid through inadvertence, error or misconstruction, and where refund application has to be made within three months from the date of such payment.'
12. In the present case even if it be assumed that the payment has been made by reason or mistake, the payment which has been made cannot legally to termed to be payment of excise duty. As I have already observed, payment of excise duty would be the payment authorised by law and not any payment in excess thereof. In this view of the matter it may be said that the application made ought not to have been regarded as application under Rule 11 at all. That rule applies to refund of duty or charges which are paid under mistake. The application of the petitioner should have been regarded as a sought representation, not covered by rules 11 or 173-J, and the respondents ought to have applied the law laid down in Voltas case and passed an administrative order directing the refund of the excise duty realised by them in excess of what was permissible under the Act.
13. For the aforesaid reasons, the writ petition is allowed. A writ of certiorari is issued quashing the orders dated 30th August; 1974, 12th March, 1975 and 22nd May, 1976. The respondents are directed to given refund to the petitioner by calculating the excise duty payable in accordance with the principles laid down in Voltas case by ignoring the price which is realised by the petitioner from India Tobacco Co. Ltd. and by taking into consideration the other price which is realised by it from the main dealers. The refund, which would be due to the petitioner, should be calculated, after notice to the petitioner, and paid to the petitioner within six months of the receipt of this order. The petitioner would be entitled to costs. Counsel's fee Rs. 550/-.
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