1. The same point of law arises in each of these special civil applications. The facts are also similar in each case and it will be convenient to dispose of the six special civil applications by this common judgment and that is why we deliver a common judgment in these matters. In order to indicate how the point of law arises, we will take up the facts in Special Civil Application No. 403 of 1972. The petitioner in this special civil application and each of the petitioners in the remaining petitions have been assessed as an individual under the Gift-tax Act, 1958. Each of the petitioners is a coparcener of a Hindu undivided family and he has his own Hindu undivided family consisting of himself, his wife and his children. Each of the petitioners in this group of special civil applications has thrown into the hotchpot of one or the other of the Hindu undivided family his self-acquired properties in the relevant assessment year and each of them purports to have thrown his self-acquired property into the common hotchpot of the Hindu undivided family with the intention of relinquishing his proprietary interest in the property thus thrown into the common hotchpot. These amounts of self-acquired property thrown into the common hotchpot have been treated by the Gift-tax Officer concerned at the relevant time as gifts made by the individual concerned to the Hindu undivided family. Each of these alleged gifts was made in the accounting period relevant to the assessment year 1964-65. In Special Civil Application No. 405 of 1972, some more amounts were also thrown into the common hotchpot in the assessment year 1966-67. In each of these six matters, at the time when the return for gift-tax purposes was filed, the learned advocate representing the petitioner concerned, had addressed a letter to the Gift-tax Officer in charge of the assessment pointing out that the Income-tax Appellate Tribunal, Hyderabad, had held in the case of Goli Eswariah v. Commissioner of Gift-tax that when a separate property of a coparcener becomes impressed with the character of coparcenery property, the act of the coparcener does not amount to a gift and hence no gift-tax is payable. He also pointed out that a similar view had been taken by the Income-tax Appellate Tribunal, Madras Bench, in P. Rangasami Naidu v. III Additional Gift-tax Officer, Madurai, and in view of these two decisions of the different Benches of the Income-tax Appellate Tribunal, the advocate submitted that no gift-tax was payable by the respective petitioners in this group of special civil applications but in order to show the bona fides of the petitioner concerned, each petitioner was filing his return for gift-tax purposes without prejudice, showing the taxable gift as nil. After these returns of gift-tax were filed, the Gift-tax Officer assessed the amount of tax on the footing that the amounts thrown into the common hotchpot were gifts. The letter addressed by the learned advocate in each of these six cases was in identical terms and the letter was dated June 23, 1964. The orders of the Gift-tax Officer were passed in due course some time in the month of February, 1966, so far as all the other matters were concerned and in Special Civil Application No. 405 of 1972, the order for assessment year 1964-65 was passed on February 15, 1965, and the order for assessment year 1966-67 was passed on July 21, 1966. Thereafter, the amounts if gift-tax were duly paid up by each of the different petitioners. On May 5, 1970, the Supreme Court delivered its judgment in Goli Eswariah v. Commissioner of Gift-tax. After the decision of the Supreme Court was received and became known, each of the petitioners in this group of special civil applications addressed a letter dated September 13, 1971, in identical terms. The letter was addressed by the learned advocate on behalf of these six petitioners and it was pointed out that the common point in the cases of these six petitioners was that each assessee voluntarily threw his self-acquired property into the common hotchpot of the Hindu undivided family and the transaction had been treated as a gift chargeable under the Gift-tax Act, 1958, and gift-tax was collected from each of these six petitioners. More than four years had already passed from the date the assessment order was made in each of the cases of the six petitioners. The letter also pointed out that in Goli Eswariah v. Commissioner of Gift-tax, the Supreme Court had held that impressing the character of joint Hindu family property on the self-acquired property owned by a coparcener did not amount to a transfer so as to attract the provisions of the Gift-tax Act, 1958. He said that the facts of the case of these six different petitioners in this group of special civil applications were identical and the ratio of the said Supreme Court judgment applied to their cases. Then the letter proceeded to submit :
'The effect of the decision of their Lordships of the Supreme Court is that the levy of Gift-tax on the property thrown into the hotchpot of the Hindu undivided family by a coparcener was, at no time, good. The levy was invalid and the orders made by the Gift-tax Officer were bad at there inception on the date they were made. In other words, the gift-tax collected from my clients is collected without the authority of law and they are entitled to get refund of the total amount so paid.'
2. A demand, on these submissions, was made in that letter that the Commissioner of Gift-tax might call for the gift-tax records of these different petitioners and on being satisfied about the genuineness of his submission, the Commissioner might direct the Gift-tax Officer to issue the necessary refunds.
3. To this letter of September 13, 1971, a reply was sent by the Commissioner of Income-tax who was also the Commissioner of Gift-tax stating that since no application for rectification was filed by these different petitioners, the request for granting the refund could not be entertained. The Commissioner appears to have treated the request contained in the letter of september 13, 1971, as a request for accepting rectification proceedings and the Commissioner pointed out in his letter dated December 12, 1971, that section 154 of the Income-tax Act imposed a time limit for filing of an application and the time limit prescribed by the statute had expired when the letter of September 13, 1971, was written. The Commissioner stated in his letter :
'The Supreme Court's interpretation makes the law as laid down by the Supreme Court operative from the date of enactment, since the interpretation of the Supreme Court is information, the department can act on receipt of an application in time for rectification to give effect to the state of the law as pronounced by the Supreme Court. But if the time limit has expired nothing can be done.'
4. After receiving this letter from the Commissioner the petitioners have approached this court by these special civil applications and each of the petitioners had claimed that the relevant gift-tax order may be quashed and set aside and the amount of gift-tax paid by the respective petitioner should be directed to be refunded to him. In the alternative the petitioners have prayed that an appropriate direction, writ or order may be issued calling for the records of the case and, after satisfying itself as to the legality thereof, the High Court should quash and set aside the order passed by the Commissioner on December 12, 1971, and the High Court should direct the Commissioner to condone the delay, if any, in preferring revision applications and to hear the petitioners' revision applications on merits.
5. The respondents in this group of matters are the Commissioner of Gift-tax and the Gift-tax Officer concerned and the affidavit-in-reply which has been filed in each of these six matters is on identical lines. The facts are not in dispute and only legal submissions have been made in the affidavit-in-reply in each of these six matters. The main question, therefore, which arises before us is whether the order of the Gift-tax Officer can be quashed and set aside by us, or, in the alternative, whether we can direct the Commissioner to entertain the revision applications on merits after condoning the delay. It must be pointed out that apart from writing to the Commissioner on September 13, 1971, no regular revision application had been addressed by any of these petitioners requesting the Commissioner of Gift-tax to review the decision of the Gift-tax Officer concerned. Apart from writing the initial letter of June 23, 1964, at the time of filing the return and lodging the protest, none of these six petitioners had taken any steps by way of appeal or any other proceeding to keep the matter alive as regards the question whether the transaction of throwing the self-acquired property into the common hotchopt by a coparcener amounts to a gift or not.
6. Mr. Gandhi on behalf of the petitioners has pointed out that, under section 34 of the Gift-tax Act, provision has been made for rectification of mistakes when there was a mistake apparent from the record and, under sub-section (7), no amendment under the section can be made after the expiry of four years from the date of the order sought to be amended or rectified. Each of these orders, as we have pointed out, was passed in the month of February, 1965, and even the order for assessment year 1966-67, in Special Civil Application No. 405 of 1972, was passed in the month of July, 1966. Therefore, the period of four years mentioned in section 34, sub-section (7), had expired by the time the letter of September 13, 1971, was addressed on behalf of the different petitioners in these special civil applications to the Gift-tax Commissioner. It is very clear from the provisions of section 34 that it is not open to the authority which is approached for rectification to condone the delay in filing the application for rectification. Under section 24 of the Gift-tax Act power is conferred upon the Commissioner of Gift-tax to revise orders of subordinate authority. Under section 24, Sub-section (1), clause (c), sub-clause (ii), the application must be made within one year from the date of the order sought to be revised or within such further period as the Commissioner may think fit to allow on being satisfied that the assessee was prevented by sufficient cause from making the application within the period of one year. Thus, it is clear that there was no scope for any appeal. Revision or rectification under the machinery set up by the Gift-tax Act for setting aside the order passed by the Gift-tax Officer in the months of February, 1965, and July, 1966.
7. It is equally clear that in view of the decision of the Supreme Court in Goli Eswariah v. Commissioner of Gift-tax, the unilateral declaration of a Hindu coparcener, whereby he throws his self-acquired property into the common stock of joint family property does not amount to a transfer so as to attract the provisions of the Gift-tax Act nor does it amount to a disposition since there was no bilateral or multilateral act but merely a unilateral act on the part of the coparcener. Thus, it is clear that the orders passed by the Gift-tax Officers in each of these six cases were bad and were liable to be set aside. The only question that has to be considered in the course of this judgment now is, whether thes court can do so in the exercise of its jurisdiction under article 226 of the Constitution.
8. Under section 72 of the Contract Act, a person to whom money has been paid, or anything delivered, by mistake under coercion, must repay or return it. It is clear that if a suit were to be filed and could have been filed for refund of the gift-tax paid by these six different petitioners, then the period of limitation would be three years counted from the date when the date May 5, 1970, the date of the decision of the Supreme Court in Goli Eswariah's case, as the date on which the mistake was discovered by the petitioners or with due diligence could have been discovered by these different petitioners; the special civil applications have been filed in this court within three years from that date.
9. Under section 42 of the Gift-tax Act, no suit can lie in and civil court to set aside or modify any assessment made under the Gift-tax Act, and no prosecution, suit or other legal proceeding can lie against the Government or any officer of the Government for anything in good faith done or intended to be done under the Act. A similar provision of the Bombay Sales Tax Act came up for consideration before the Supreme Court in Kamala Mills v. Bombay State. According to the Supreme Court, section 20 of the Bombay Sales Tax Act, which was similar to section 42 of the Gift-tax Act, protected assessments made under the Act or the Rules made thereunder by appropriate authorities and the clause 'an assessment made' did not mean the assessment properly or correctly made. It took in all assessments made or purported to have been made under the Act. An order of assessment, even if erroneous, and based on an incorrect finding of fact, is, nevertheless, an order of assessment within the meaning of section 20 and it could not be called in question in any civil court. In the penultimate paragraph of the judgment in Kamala Mills' case, Gajendragadkar C.J., delivering the judgment of the Supreme Court, observed that the appellant in that case contended that the transactions were outside sales and they did not and could not fall under the charging section because of article 286, and it was argued by the appellant that the tax was levied because both the appellant and the appropriate authorities committed a mistake of fact as well as of law in dealing with the question and the observation proceeds :
'Assuming that such a mistake was committed, the conclusion that the transactions in question fell within the purview of the charging section cannot be said to be without jurisdiction or a nullity and the assessment based even on such an erroneous conclusion would claim the protection of section 20. If, After discovering the mistake, the appellant had moved the appropriate authorities under the relevant provisions of the Act, its claim for refund would have been considered on the merits. Having failed to take recourse to the said remedy, it may have been open to the appellant to move the High Court under article 226. Whether or not in such a case, the jurisdiction of the High Court could have been effectively invoked is a matter on which we propose to express on opinion. As we have pointed out during the course of this judgment, we are not dealing with the scope and effect of the High Court's jurisdiction under article 226 as well as the scope and effect of this court's jurisdiction under article 32 vis-a- vis such claims for refund of tax alleged to have been illegally recovered.'
10. Thus, In Kamala Mills' case, the Supreme Court clearly pointed out that it was not open to a party from whom a tax had been illegally collected under the provisions of a particular taxing statute to file a suit to recover the tax illegally collected from him when there was a provision in the statute similar to section 42 of the Gift-tax Act, but the question of jurisdiction of the High Court under article 226 was kept open.
11. Subsequently, in Gill & Co. Private Ltd. v. Commercial Tax Officer, the Supreme Court held that the High Court could consider whether the amount of sales tax paid illegally could or could not be refunded. The earlier decision in State of Madhya Pradesh v. Bhailal Bhai was pointed out as the leading cash on the point. In State of Madhya Pradesh v. Bhailal Bhai, the Supreme Court held that the High Courts have power for the purpose of enforcement of fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law. The special remedy provided in article 226 is, however, not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defenses legitimately open in such actions. The power to give relief under article 226 is a discretionary power and this is specially true in the case of power to issue writs in the nature of mandamus. The Supreme Court also pointed out there that where a person comes to the court for relief under article 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion. Will depend in each case on its own facts and circumstances. The Supreme Court observed :
'It is not easy nor it is desirable to lay down any rule of universal application. It may however be stated as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus. Again, where even if there is no such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prime facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the court should ordinarily refuse to issue the writ of mandamus for such payment.'
12. In State of Madya Pradesh v. Bhailal Bhai, the Supreme Court also pointed out that the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be sought could ordinarily be taken to be a reasonable standard by which delay in seeking remedy under article 226 can be measured. The court may consider the delay unreasonable, even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will always be proper for the court to hold that it is unreasonable.
13. In Gill & Company's case, the Supreme Court pointed out its own earlier decision in Bhailal Bhai's case, and observed that the High Court in Gill & Company's case had not examined the merits of the case at all as it could not before admitting the petitions and hearing the sales tax authorities against the cases urged in the writ petitions and the appeals were allowed and the High Court was directed to admit the writ petitions and hear the matters in the normal way. It must be pointed out that in Bhailal Bhai's case, it was void piece of legislation under which the amount of tax had been collected and the Supreme Court had made its observations in Bhailal Bhai's case in the context of that void piece of legislation.
14. A similar case of a void order, that is, order void ab initio under which tax was collected, came up before the Bombay High Court in Arvind N. Mafatlal v. Union of India. In that case there was no provision in the Wealth-tax Act under which the wealth-tax was in fact collected and the tax illegally collected from the assessee was sought to be recovered back by approaching the High Court under article 226 of the Constitution. The facts in that case were that one N died in 1955 and in connection with the wealth-tax liability of the estate of N his executors were assessed and a claim for wealth-tax was made for the assessment year 1961-62. On appeal the tax payable was reduced and the executors finally paid Rs. 1,30,845.40. Subsequently, in the case of Jamnadas v. Commissioner of Wealth-tax, the Bombay High Court held that there was no provision in the Wealth-tax Act for charging and assessing wealth-tax in respect of the net wealth of a deceased individual beyond the financial year in which such person died and that there was no further liability attached to the estate left by the deceased individual and continuing in the hands of the executors, administrators or other legal representatives. This judgment of the High Court was delivered on November 13, 1964, and the executors claimed that they came to know of it through their chartered accountants in the middle of 1965. In May, 1967, they applied under article 226 of the Constitution for a refund of the amount paid by them and it was held by K. K. Desai J., as he then was, sitting singly, that in view of the judgment in Jamnadas v. Commissioner of Wealth-tax, the assessment order was made when the law made no provision for assessment and suffered from want of jurisdiction altogether. The order was, therefore, a nullity. An order which is a nullity need not be quashed or set aside. The Bombay High Court in Arvind N. Mafatlal's case, under these circumstances, passed and order directing that the amount of wealth-tax which had been collected from the executors should be refunded and an appropriate writ was accordingly issued. Here it must be pointed out again that in Arvind N. Mafatlal's case, as in the case of Bhailal Bhai and Gill & Company's case, the question was of nullity in the sense that there was no authority in law in the Wealth-tax Officer to collect the wealth-tax in the assessment year 1961-62.
15. In Khushalchand B. Daga v. T. G. Surendran, 4th Income-tax Officer, again there was a question of nullity though the question before the Bombay High Court was not directly regarding payment made under an order which is a nullity but it entertained the special civil application on the ground that the order of the taxation authority was a nullity. The facts of Khushalchand B. Daga's case were that a best judgment assessment was made on the assessee and he appealed against it. The appeal was dismissed in October, 1961, by the Appellate Tribunal for default of appearance of the assessee. In February, 1969, the Supreme Court decided that rule 24 of the Appellate Tribunal Rules, 1946, in so far as it enabled dismissal of appeals for default of appearance, was invalid. Thereafter, the assessee filed an appeal for restoration of its appeal. The Tribunal dismissed the appeal on the ground that its original order dismissing the appeal was not a nullity but a mistake apparent from the record and the application for rectifying the mistake was barred by time. The assessee filed a writ petition and it was contended on behalf of the revenue that the petition should be dismissed on the ground of laches.
16. On these facts Tulzapurkar J., sitting singly, held that the decision of the Appellate Tribunal rendered in 1961 became a nullity when the Supreme Court delivered its judgment in 1968 and the Appellate Tribunal was wrong in holding that its decision in 1961 was only a mistake apparent on the face of the record requiring rectification and the High Court held that the Tribunal should have set aside its previous order in exercise of its inherent powers and reheard the parties on the merits if it was found that the order passed in 1961 was not a nullity and the Bombay High Court in Khushalchand B. Daga's case directed the Tribunal to hear the petitioner's appeal of 1961-62 on merits and quashed and set aside the orders by which the Appellate Tribunal had declined to rehear the appeal of the petitioner. Thus, in spite of the long lapse of time between the original order dismissing the appeal in 1961 and the preferring of application under article 226 before the High Court, the High Court took notice of the fact that the initial order passed by the Tribunal in 1961 was in pursuance of rule 24 which itself was ultra vires and a nullity and, therefore, the order of the Tribunal of 1961 dismissing the appeal for default of appearance was a nullity. The question, therefore, was that when there is an order which amounts to a nullity, the High Court in exercise of its powers under article 226 can interfere but the question as to what is to be done when the order is not a nullity but is an order passed in the exercise of jurisdiction by the taxation authority concerned which order is ultimately found to be bad in law remains to be considered.
17. The decision in L. Hirday Narain v. Income-tax Officer, on which Mr. Gandhi relied, does not throw any light on this question that no remains for our consideration. It deals with the nature of the power of rectification and revision under the Income-tax Act.
18. In S. A. L. Narayana Rao, Commissioner of Income-tax v. Model Mills Nagpur Ltd., the question was of rectification proceedings when a amount was illegally collected from a party. The facts of that case were that in assessing the respondent-company to tax for the assessment year 1952-53, the Income-tax Officer levied an additional tax on the excess dividend declared by it. Later on, the levy of tax on the excess dividend was declared by the Bombay High Court in Khatau Makanji Spinning and Weaving Co. Ltd. v. Commissioner of Income-tax to be illegal and thereafter the respondent-company applied to the Income-tax Officer for refund of the additional tax. The officer rejected the application and the Commission rejected its application under section 33A of the Income-tax Act to revise the officer's order, on the ground that, treated as an application for cancellation of levy of tax, it was barred by limitation, and treated as an application against refusal or rectification, it was not maintainable, since the error was not apparent from the record. The respondent then move the Bombay High Court under article 226 of the Constitution and the High Court passed and order directing the Commissioner to refund the amount of tax illegally collected. The Supreme Court dismissed the appeal against the High Court's decision holding that though it was not expressly stated in the respondent's application to the Income-tax Officer that the assessment order be rectified under section 35, the request in in substance was that the tax should be declared to be unlawfully collected and on that account refunded, and that could only mean a request for rectification and that the High Court was right in making the order that it did. The Supreme Court pointed out that against the decision in Khatau Makanji Spinning and Weaving Co. Ltd. v. Commissioner of Income-tax, the matter had been carried in appeal by the revenue and in Commissioner of Income-tax v. Khatau Makanji Spinning & Weaving Co. Ltd., the Supreme Court had also held that levy of an additional tax on extra dividend was illegal and all that the Supreme Court held in that particular case was that no Income-tax Officer was entitled to refund tax which had been lawfully imposed and collected but rectification proceedings could be adopted and, therefore, the Supreme Court held that the Commissioner should be directed to refund the amount of tax which had been illegally collected from the assessee concerned. It must be pointed out that on the facts of that particular case the order was passed by the Income-tax Officer levying this additional tax on extra dividend on July 27, 1955, and the additional tax amounting to Rs. 33,348-8-0 had to be paid by the company in pursuance of that order. The application to the Income-tax Officer to refund the tax paid was made on September 28, 1956, and, therefore, within the period allowed by law for adoption of rectification proceedings and these facts must be borne in mind. When reading the observations of the Supreme Court in S. A. L. Narayana Rao, Commissioner of Income-tax v. Model Mills Nagpur Ltd., essentially the Supreme Court treated that as a case of rectification and it was implicit according to the Supreme Court in the application to the Income-tax Officer for refund that it was a request for rectification of the order. Thus, this decision in Model Mills' case also does not help us in answering the question which we have pointed out as the question that survives for our decision.
19. Mr. Gandhi on behalf of the petitioners relied upon certain observations made by a Division Bench of this High Court in Okha Gram Panchayat v. Esso Standard Eastern Corporation. In that particular case the question was to refund of octori duty paid to the Gram Panchayat and the observations were made in that particular context. The Division Bench pointed out that levy of octori is a creature of the statute and the relevant section in the Gujarat Panchayat Act itself provided that the levy was subject to refund in admissible cases. Therefore, refund was also a creature of the statute. Levy, collection and refund are also creatures of the Act and if the special channel to obtain refund provided by rule 34 fails or cannot be made use of on account of circumstances beyond the control of an importer, the liability of the Panchayat to refund it and the right of an importer to obtain refund are not extinguished. Failure of the special machinery, provided by rule 34, to function was clearly distinguishable from the liability of the Panchayat to refund the octori in admissible cases. The procedure could not affect the substantive rights of the importer and failure of the machinery for refund could not lead to the extinguishment of the substantive right to obtain refund. There was no rule or section which rendered an importer disentitled to refund where rule 34 failed to apply. The Division Bench, therefore, held that where the special procedure laid down by rule 34 of the Octori Rules of the Gram Panchayat was rendered inapplicable on account of the facility granted to an importer under rule 34B or on account of any other circumstances beyond the control of an importer, his right to obtain refund and the liability of the Panchayat to grant refund were not extinguished. In addition to the remedy of having recourse to the civil court, it was also open to the importer to approach the Panchayat itself (as distinguished from the sarpanch) for the purpose, because it is that body which had levied and collected the tax and out of whose funds the tax was to be refunded upon the proof of facts specified in rule 32. The Division Bench observed that the claimant had an alternative and effective remedy to approached the civil court. It did not avail of that remedy and instead it approached the State Government under section 305 of the Gujarat Panchayat Act. It was a misconceived remedy. In 1972, when the decision was given by the Division Bench, the civil suit was time-barred and it was, therefore, not available to the importer, and the Division Bench observed that injustice could not be perpetuated so as to deny refund to the importer. The Division Bench observed :
'To dismiss these petitions on this technical ground and to leave Esso without any remedy whatsoever is to perpetuate injustice, to undermine public confidence in the administration of justice and to sacrifice substantive rights on the alter of procedural wrangles and highly technical considerations. We, therefore, reject this preliminary objection. The primary duty of a court of law is to do justice between the parties, and it must do so if it can do so, without violating or infringing any law.'
20. It may be pointed out that a law permitting a local authority like the Gram Panchayat to levy octori can be enacted by the State legislature by virtue of the power conferred upon it by entry 52 read with the relevant article of the Constitution. Entry 52 of List II in the Seventh Schedule is in these terms :
'52. Taxes on the entry of goods into a local area of consumption, use or sale therein.'
21. Therefore, it is obvious that a statute enacted by a State legislature by virtue of the power conferred upon if by entry 52 can only provide for levying of an octori on entry of goods for consumption, use or sale therein, into a local area when goods are brought into that local area. And this is the concept of octori under all laws permitting a local authority to levy octroi. It necessarily, therefore, follows that if the goods are brought into a local area not for consumption, use or sale therein, but for transit purposes or for any other purposes or for re-export, octori cannot be levied because they cannot be said to have been brought into the local area for consumption, use or sale therein. It is, therefore, inherent and obligatory in every scheme of Octori Rules to provide for refund and it is under this obligation which ultimately emanates from the wording of entry 52 in List Ii in the Seventh Schedule that Octori Rules of all local authorities have to provide for refund. It is in this context of octori rules and the refund under the Octori Rules that one has to read the observations of the Division Bench in Okha Gram Panchayat v. Esso Standard Eastern Corporation. The substantive right which the Division Bench held to have existed in the importer in the case was due to the fact that it was a case of octori where there was a question of transit, trade or the goods passing through the local area in the course of transit and under those circumstances the Gram Panchayat was bound to refund the amount of octori and the importer was, as a matter of substantive right, entitled to get back the refund and the observations regarding the failure of the procedure for refund, etc., were made against this background of legislation regarding octori. These observations made in the context of octori legislation also cannot help the petitioners.
22. There are three decisions of the Supreme Court, all delivered after November 22, 1968, which throw light on the question that survives for our determination, the question being what we have pointed out earlier. The first of these three decisions of the Supreme Court is in Tilokchand Motichand v. H. B. Munshi. The decision in that case was by majority. Out of the five judges, two judges, namely, Bachawat and Mitter JJ., took one view, two other judges, Sikri and Hegde JJ., took the opposite view and Hidayatullah C.J., took the same view as Bachawat and Mitter JJ., and hence the decision of the Supreme Court in Tilokchand Motichand's case was by a majority of 3 : 2. The facts of that case were that the Sales Tax Officer on March 17, 1958, ordered a forfeiture under section 21(4) of the Bombay Sales Tax Act, 1953, which provision was similar to section 12A(4) of the Bombay Sales Tax Act, 1946. Tilokchand Motichand, the petitioner, applied by way of a writ petition before a single judge of the Bombay High Court and then by way of a Letters Patent Appeal to a Division of the Bombay High Court against the order of forfeiture and the Division Bench dismissed his appeal on July 7, 1959. The petitioner paid the amount due in various installments and before August 8, 1960, the entire amount was paid up. Subsequently, on September 29, 1967, the Supreme Court in Kantilal Babulal v. H. C. Patel, struck down section 12A of the Bombay Sales Tax Act, 1946, on the ground that it infringed article 19(1)(f). That case was a case from the Gujarat State. On February 9, 1968, the petitioner filed a writ petition under article 32 of the Constitution before the Supreme Court praying that the order of the Sales Tax Officer by which forfeiture had been ordered on march 17, 1958, should be quashed. It was found by the Supreme Court that in the original petition which had been made before 1959, before the Bombay High Court, the petitioner had not set out the ground on which ultimately section 12A(4) was struck down in the Gujarat case nor did he file an appeal before the Supreme Court against the decision of the Bombay High Court dated July 7, 1959, dismissing his appeal. On these facts the majority of the learned judges held that the petitioner could not take advantage of the Supreme Court's decision in the Gujarat case after a lapse of a number of years. His contention that the ground on which the statute was struck down was not within his knowledge and, therefore, he could not pursue it in the Supreme Court could not stand since the law will presume that the knew the exact ground of unconstitutionality. It was his duty to have brought the matter before the Supreme Court for consideration. In any event having set the machinery of law in motion, he could not abandon it to resume did after a number of years. There was no question of a mistake of law entitling the petitioner to invoke analogy of the article in the Limitation Act. The relevant passages are to be found at paragraph 12 in the judgment of Hidayatullah C.J., at paragraph 33 in the judgment of Bachawat J., and paragraphs 48 and 49 of the judgment of Mitter J. These three learned judges were the majority judges who decided Tilokchand Motichand's case. In paragraph 12 of the decision, Hidayatullah C.J., has observed at page 902 of the report :
'The petitioner moved the High Court for relief on the ground that the recovery from him was unconstitutional. He set out a number of grounds but did not set out the ground on which ultimately in another case recovery was struck down by this court. That ground was that the provisions of the Act were unconstitutional. The question is : Can the petitioner in this case take advantage, after a lapse of a number of years, of the decision of this court He moved the High Court but did not comn up in appeal to this court. His contention is that the ground on which is petition was dismissed was different and the ground on which the statute was struck down was not within his knowledge and, therefore, he did not know of it and pursue it in this court. To that I answer that law will presume that he knew the exact ground of unconstitutionality. Everybody is presumed to know the law. It was his duty to have brought the matter before this court for consideration. In any event, having set the machinery of law in motion he cannot abandon it to resume it after a number of years, because another person more adventurous than him in his turn got the statute declared unconstitutionality, and got a favourable decision. If I were to hold otherwise, then the decision of the High Court in any case once adjudicated upon and acquiesced in may be questioned in a fresh litigation revived only with the argument that the correct position was not known to the petitioner at the time when he abandoned his own litigation. I agree with the opinion of my brethren, Bachawat and Mitter JJ., that there is no question here of a mistake of law entitling the petitioner to invoke analogy of the article in the Limitation Act. The grounds on which he moved the court might well have impressed this court which might have also decided the question of the unconstitutionality of the Act as was done in the subsequent litigation by another party. The present petitioner should have taken the right ground in the High Court and taken it in appeal to this court after the High Court decided against it. Not having done so and having abandoned his own litigation years ago, I do not think that this court should apply the analogy of the article in the Limitation Act and give him the relief now.'
23. In paragraph 33, at page 907, Bachawat J., observed :
'In my opinion, the petitioners were not labouring under any mistake of law when they made the payments. As early as March, 1958, they filed a writ petition for restraining the levy under the order dated March 17, 1958, claiming that the order was invalid and that section 21(4) of the Bombay Sales Tax Act, 1954, was ultra vires and unconstitutional. They might not have then known the precise ground upon which the court subsequently struck down a similar provision of law, but they had discovered presumably under legal advice that they were not legally bound to make any payment. After the writ petition was dismissed their properties were attached and they made the payments under coercion in 1959 and 1960. The payments were not made under a mistake of law or as pointed out in Shiba Prasad Singh's case under a mistake in thinking that the money was due. They cannot claim any relief on the ground of mistake.'
24. Mitter J., has observed in paragraph 48, at page 913 :
'Speaking for myself I am not satisfied that the petitioners in this case had made a mistake in thinking that the money paid was due when in fact it was not due. As already noted, in their reply to the show-cause notice dated February 7, 1958, the petitioners' case was that the threat of the sales tax authorities to forfeit the amount was without the authority of law and that the firm had agreed to the condition of refunding the amount received to its own customers under coercion even though in law the authorities were bound to refund without any such condition. The petitioners did not content themselves merely by opposing the claim of the sales tax authorities to forfeit the amount, but suited their action to their belief by a presenting a writ petition to the Bombay High Court describing the order of forfeiture as without the authority of law and in violation of article 19(1)(g) and article 265 of the Constitution and praying for the necessary relief. They did not accept the decision of the learned single judge of the Bombay High Court under article 226 of the Constitution, but filed their appeal raising practically the same contentions as they have done in the present petition except that they did not state having discovered any mistake on a perusal of the decision of any court of law. The grounds of appeal to the Division Bench of the Bombay High Court are illustrative of the frame of mind and view-point of the petitioners then. They complained about the violation of their fundamental rights, the illegality of the order of forfeiture and in particular mentioned the unreasonable restriction on their fundamental rights enshrined in article 19(1)(f) of the Constitution. Further, they had the benefit of the judgment of the Appeal Bench of the Bombay High Court that the case was not being decided on the merits at all and even if there was any violation of the fundamental rights of the petitioners the exercise of discretion by the learned single judge would not be interfered with in appeal.'
25. In paragraph 49 it was observed :
'It was, therefore, clear to the petitioners that there was no adjudication as to their fundamental rights or the merits of their claim and there was nothing to prevent the petitioners then from coming up to this Court by preferring an appeal from the judgment of the Bombay High Court or by instituting a suit for declaration of the order of forfeiture illegal and ultra vires and for an injunction restraining the State from giving effect thereto. Before the Bombay High Court the petitioners questioned the legality of the order of forfeiture, and prayed for quashing it on the ground of the threatened invasion of their fundamental rights. On these facts it is idle to suggest that the petitioners ever entertained any belief or though that the money was legally due from them. The way they asserted their position under the law precludes any inference that they were ever influenced by a mistake of law of that they ever failed to appreciate the correct position under the law. Even after the decision of the Bombay High Court they did not willingly pay up the amount forfeited, but only made disbursements after an attachment had been levied on the business including the tenancy of the premises and its goodwill. They protested against the order of forfeiture not only out of court but in court and only paid after the issue of a legal process.
It is, therefore, not possible to hold that the payments complained of following the order compulsion or coercion. A payment under coercion has to be treated in the same way for the purpose of a claim to refund as a payment under mistake of law, but there is an important distinction between the two. A payment under mistake of law may be questioned only when the mistake is discovered but a person who is under no misapprehension as to his legal rights and complains about the illegality or the ultra vires nature of the order passed against him can immediately after payment formulate his cause of action as one of payment under coercion.'
26. We have quoted extensively from the observations of the three learned judges who constituted the majority of the judges in Tilokchand Motichand's case because in the facts before us, a situation similar to the situation which arose before the Supreme Court is to be found. The petitioners knew even when they filed the gift-tax returns the legal position which ultimately was upheld by the Supreme Court in Goli Eswariah's case or the decisions of the two Benches of the Appellate Tribunal taking the view which was ultimately upheld by the Supreme Court in Goli Eswariah case were actually stated in the letter when the gift-tax returns were filed without prejudice and under a sort of protest. Therefore, to use the language of Bachawat J., in Tilokchand Motichand's case, they were under no mistake whatsoever as regards the legal position. They knew what the law was, but knowing the law, they did not proceed or prosecute the remedies which were open to them. They abandoned all actions and having taken up the contention before the Gift-tax Officer, they did not kept the matter alive. Under these circumstances it is not possible for us to say that the payments which were made by the petitioners in this group of special civil applications under the orders of the Gift-tax Officer levying gift-tax were made under a mistake of law. It is possible that they were made under the feeling of coercion that if the amount was not paid, it would be collected from the petitioners under the coercive machinery of tax collection but even if the amount was so paid without the taxation authorities resorting to coercive machinery, it can be said that it was paid because of the existence of this coercive machinery. Yet the only ground on which they can claim relief, namely, mistake of law, was not a mistake from which the petitioners can be said to have suffered when the amounts of gift-tax were paid. Under these circumstances it is obvious that the grounds on which the learned three judges constituting majority in Tilokchand Motichand's case decided that case would apply to the facts of the case before us. According to the learned three judges, Hidayatullah C.J., Bachawat J. and Mitter J., when the legal position was known and was in fact pointed out to the Gift-tax Officer in the letter of June 23, 1964, forwarding the gift-tax returns and showing the gift-tax liability as nil, the ground that section 721 of the Contract Act can be invoked, namely, that the demand was made under a mistake of law cannot be sustained. Once it is found that there was no mistake of law and the petitioners cannot be said to have suffered any mistake of law, the whole basis of the claim in the separate writ petitions disappears.
27. In Gita Devi Aggarwal v. Commissioner of Income-tax the assessee admitted that she had received all notices of demand under section 29 of the Indian Income-tax Act of 1922, at the address given in her return. A notice under section 33B dated February 25, 1963, fixing March 6, 1963, as the date of hearing was taken by an inspector for service on the assessee at that address on February 25 and again on February 27, and having failed in these attempts the inspector served the notice by affixing it at that address on February 28. The notice sent by the post was presented for delivery on February 28, and March, 2, 4 and 5 and finally on March 7, 1963, it was returned as not having been claimed. On these facts the Supreme Court held that an opportunity of being heard was given to the assessee under section 33B of the Act of 1922. The Supreme Court held in that case that where an assessee gives no explanation in his writ petition against an order of the Commissioner under section 33B of the Income-tax Act, 1922, for not preferring an appeal under the Act against the Commissioner's order and justifying his recourse to the special jurisdiction of the High Court under article 226 of the Constitution, the High Court would be justified in dismissing the writ petition in limine. Therefore, if there is no justification whatsoever the present writ petition could have dismissed on the ground that the assessees, the different petitioners herein, had not given any explanation why they did not proceed in appeal against the order of the Gift-tax Officer when their legal contention that no gift-tax was payable was turned down and they were ordered to pay the gift-tax.
28. In Champalal Binani v. Commissioner of Income-tax the appellant had been assessed for the assessment years 1953-54 to 1960-61. The period within which the assessment could be revised was to expire on November 15, 1963, under section 33B(2)(b) of the Indian Income-tax Act, 1922. On October 28, 1963, the Commissioner issued a notice under section 33B fixing October 31, 1963, as the date for hearing. The notice was affixed at the two addresses sent to the address 'care of' his brother-in-law. On October 31, 1963, the appellant was not present and the Commissioner passed orders setting aside the assessments and directing the Income-tax Officer to make fresh assessment. The appellant did not appeal but filed a writ petition in the High Court to have the orders in revision quashed on the ground that the Commissioner had violated the principles of natural justice and express provisions of the law. A single judge of the Calcutta High Court allowed the petition but, no appeal, a Division Bench dismissed the writ petition and the Supreme Court confirmed the decision of the Division Bench. The Supreme Court held that the notice was affixed at the two places of which addresses were furnished by the appellant in his returns, and it was not suggested that the appellant was not carrying on his business at those two places. There was proper service of the notice. It was further held that if the appellant had any grievance about the sufficiency of the opportunity given to him to make his representations, his obvious remedy was to appeal against the order under section 33B to the Appellate Tribunal and the Supreme Court held that this was not a case in which the writ jurisdiction of the High Court could be invoked. The appellant had an adequate remedy under the Income-tax Act which he could have availed of. He should have moved the Appellate Tribunal which was competent to decide all questions of fact and law which the assessee could have raised in the appeal including the grievance that he had not adequate opportunity of making his representation. No adequate ground was made out for entertaining the petition.
29. This decision in Champalal Benani v. Commissioner of Income-tax also goes to show that the remedy against an illegal order, illegal in the sense that the decision was contrary to the correct legal position, must be availed of (machinery in the instances being provided under the Gift-tax Act for ventilating the grievance) and a party who has not availed himself of that remedy cannot resort to the writ jurisdiction of the High Court for claiming relief regarding tax paid under that illegal order.
30. Our conclusion, therefore, regarding thit group of special civil applications is that, in the first place, the very basis of the claim which the petitioners have put forward in their respective special civil application does not exist, namely, that there is no mistake of law. In view of the facts of this case as read in the context of Tilokchand Motichand's case and the observations of Hidayatullah C.J., Bachawat J. and Mitter J., which we have cited in extenso above, it is apparent that none of the present petitioners can be said to have suffered under a mistake of law or to have paid the amount of the gift-tax under a mistake of law. Each of these petitioners knew very well what the legal position was though that legal position was not finalised by a decision of the Supreme Court at the time when the orders of the Gift-tax Officer were passed in the month of February, 1965, and when one of the orders was passed in Special Civil Application No. 405 and 1972 in the month of July, 1966. It is, therefore, clear that in the light of the majority decision in Tilokchand Motichand's case the petitioners have no case on the ground of mistake of law and the very basis of the superstructure which the petitioners have sought to erect on the alleged mistake of law cannot be said to exist.
31. In the alternative and on another ground altogether in the light of the decisions of the Supreme Court in Gita Devi Aggarwal's case and Champalal Binani's case, it cannot be said that the petitioners have exhausted all their remedies under the special machinery set up under the Gift-tax Act and they not having availed themselves of the special machinery, it is not proper for this court to exercise the discretionary jurisdiction vested in it under article 226. On that ground also none of these special civil applications can succeed. Viewed from either of the two aspects, the petitioners are bound to fail in these special civil applications.
32. We, therefore, hold that each of these special civil applications must be dismissed. The rule will, therefore, be discharged in each of these special civil applications.
33. Before we part with the case, we wish to point out to the authorities concerned that in all these taxation statutes a special provision should be made so that the Government which cannot morally or legally retain any money collected under an illegal order, an order passed with jurisdiction but without a legal basis or on improper appreciation of the law point, cannot retain and should not be allowed to retain such money. We are living under the rule of law and it is unheard of or unthought of that the Government can retain tax collected by it when the very basis for the collection of that tax is subsequently found in the light of the decision of the highest Tribunal of the land to be without any foundation in law. At the same time we also realise the difficulty which would be in the way of the revenue if the taxation authorities also are not allowed to revise their orders either in rectification proceedings or in revision because of the bar of limitation. We, therefore, recommend that in each of four direct taxation statutes, namely, the Income-tax Act, the Wealth-tax Act, the Gift-tax Act and the Estate Duty Act, a special clause should be added in the relevant section providing for the refund by the Commissioner or equivalent officer so that the revisional powers can be exercised by the Commissioner concerned or the equivalent officer concerned irrespective of the period of limitation so long as such revisional powers alter suo motu or on the application of the party affected are sought to be exercised in order to give effect to the legal position as explained by a decision of the Supreme Court since that decision is the final exposition of the law in the land. After all, as article 141 of the Constitution points out, the law declared by the Supreme Court shall be binding on all courts within the territory of India. The taxation authorities and particularly the Appellate Assistant Commissioner, the Commissioner and the Appellate Tribunal, are all quasijudicial authorities and they must also recognise the law declared by the Supreme Court. We, therefore, recommend that in all such cases where in the light of a subsequent decision of the Supreme Court it is found that the order passed by way of the taxing authorities is not sustainable in law, revisional powers should be allowed to be exercised by them for the department and against the department without the bar of limitation. The measure that we recommend has this merit that it will reduce the number of further appeals which are to be filed merely to keep the matter alive and it will thus reduce a lot of burden both on the revenue as well as on the assessees. We hope that effect will be given to our recommendations in this behalf.
34. In the result each of these special civil applications fails and is dismissed. Rule is discharged in each matter. There will be no order as to costs in any of these special civil applications.
35. On behalf of each of these petitioners, an oral application is made after the above judgment was delivered by Mr. Gandhi for certificate for leave to appeal to the Supreme Court. In our opinion the main question involved in this case does raise a substantial question of general importance, namely, whether the Government of the taxation authorities can retain with themselves amount of tax collected by them when the very basis of that collection has been subsequently held by the highest tribunal in the land to be without any legal basis or without any foundation in law. But under article 133(1), clause (b), the matter must be such as in the opinion of the High Court requires to be decided by the Supreme Court. In the instant case we have based our decision on Tilokchand Motichand's case and the other two decisions of the Supreme Court in Gita Devi Aggarwal's case and Champalal Binani's case. Hence, it cannot be said that the question needs to be decided by the Supreme Court. Though one requirement, namely, of clause (a) is satisfied, the other requirement of clause (b) of article 133(1) as it stands after the 30th Amendment is not satisfied. Under these circumstances, we regret that we cannot certify that this is a case which needs to be decided by the Supreme Court. We, therefore, reject the oral application made on behalf of the petitioners.