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Shiv Steel Works and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil First Appeal No. 76 of 1977 and D.B. First Appeal No. 5 of 1978
Judge
Reported in1982(10)ELT373(Raj); 1980()WLN237
ActsCentral Excise Act, 1944 - Sections 40 and 40(2); Central Excise Rules - Rules 9, 10, 11 and 173J; Constitution of India - Article 226; Limitation Act, 1963 - Sections 17(1) - Schedule - Article 113; Code of Civil Procedure (CPC) - Sections 80
AppellantShiv Steel Works and ors.
RespondentUnion of India (Uoi) and ors.
Appellant Advocate L.R. Mehta, Adv.
Respondent Advocate R.R. Vyas, Adv.
Cases ReferredIn D. Cawasji and Co. v. State of Mysore
Excerpt:
.....and limitation act, 1963--section 17(1)(c) and article 113--limitation--excise duty realised under mistake--mistake known when judgment of allahabad high court saw light on 18-1-74--held, mistake may be of fact or law and suit filed on 12-11-1976 is within limitation.;article 113 of the limitation act, 1963, is residuary article which would be applicable in the present case & the period is fixed as three years.;the mistake may be a mistake of fact or mistake of law and both are within purview of the term 'mistake'. a terminus a quo under section 17(1)(c) is the date on which the mistake became known to the plaintiff and that date has to be determined upon the materials and evidence on the record.;we are, of therefore, of opinion that the period of limitation which would be applicable..........years. section 17(1)(c) of the limitation act, 1963, further provides that wherein the case of any suit or application for which a period of limitation is prescribed by this act, the suit or application is for relief from the consequences of a mistake the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could with reasonable diligence, have discovered it. the mistake may be a mistake of fact or mistake of law and both are within the purview of the term 'mistake'. a terminus quo under section 17(1)(c) is the date on which the mistake became known to the plaintiff and that date has to be determined upon the materials and evidence on the record.13. the plaintiff's case is that they discovered the mistake when they came.....
Judgment:

C.M. Lodha, C.J.

1. These are two cross appeals arising out of the judgment and decree dated August 5, 1977, by the Additional District Judge, Sirobi, whereby the learned Judge decreed the suit of the plaintiffs in part to the extent of Rs. 40,485/- only on account of the excise duty paid under mistake and dismissed the suit for the rest of the amount, i.e., Rs. 1,12,517.35 paise out of the total amount of Rs. 1,53,002.35 paise as being time barred. The plaintiffs have, therefore, filed this appeal for the amount of Rs. 1,12, 517.35 paise disallowed by the court below. Their appeal is registered as No. 76 of 1977. The defendant Union of India has also filed the appeal for setting aside the decree for Rs. 40,485/- passed against it by the trial court. The defendent's appeal is registered as No. 5 of 1978.

2. The facts of the case are that the plaintiffs firm M/s. Shiv Steel Works, Falna, carries on the business of rerolling and making iron, angles, bars etc., from ingots purchased by them from third parties. It is alleged that in January, 1972, the Inspector, Central Excise, Rani, while inspecting the premises of the plaintiffs factory, realised excise duty to the tune of Rs. 2,850.75 on 38.010 kg. angles manufactured by the plaintiffs. The plaintiffs' case is that they paid in all excise duty totalling Rs. 1,53,002.35 paise during the period 21-1-1972 to 28-2-1974. However, the High Court of Allahabad held in M/s, Bansal Steelsons Co. Pvt. Ltd. v. Union of India and Ors. (decided on 18-1-74)-1979 E.L.T. (J 262) that so long as Notifications No. 206/63-C. and 123/65-C of the Central Government were in force, no excise duty was leviable on Iron and Steel products falling under sub-item i.e., of Item No. 26-AA of the First Schedule of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The plaintiffs alleged that they came to know about the aforesaid judgment in February, 1976 that the impugned duty had been realised from them under a mistake. Thereupon, the plaintiffs made an application for refund of the same before the Assistant Collector, Customs and Central Excise, Jodhpur, on 20-3-1976 but by this order dated 30-8-1976, the Assistant Collector, Customs and Central Excise, Jodhgur, dismissed the application on the ground that it was time-barred under Rule 11 of the Central Excise Rules of 1944 (hereinafter referred to as the Rules). After serving a notice under Section 80, Civil Procedure Code, the plaintiffs filed the present suit on 12-11-1976 for refund of Rs. 1,53,002.35 paise along with interest, pendentelite and future interest with costs.

3. The defendants did not appear inspite of service with the result that the case was proceeded against them ex-parte. After recording the evidence produced by the plaintiffs, the learned additional District Judge, as stated above, decreed the suit in part.

4. We shall first take up the appeal filed by the defendant Union of India. It is urged by Mr. Ram Raj Vyas that the whole suit is time barred and no part of it should have been decreed. His contention is that under Section 40 of the Act read with Rules 11 and 173-J of the Rules, the suit for refund of excise duty erroneously paid does not lie after the expiry of one year from the date of payment of adjustment, as the case may be. At this stage, we may observe, that Mr. Vyas has not challenged the right of the plaintiffs to file a suit under ordinary law. His contention, however, is that even though the suit is maintainable yet in the present case it is barred by time, as it has been instituted after more than 12 months from the date of payment. We may, here, take note of the relevant provisions of the Act and the Rules relied upon by the defendant.

5. Section 40 of the Act reads as under :-

'Sec. 40. Protection of action taken under the Act :-

(1) No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer or the Central Government or a State Government for anything which is done in pursuance of this Act or any rule made thereunder.

(2) No proceeding, other than a suit, shall be commenced against the Central Government or any Officer of the Central Government for anything done or purported to have been done in pursuance of this Act or any rule made thereunder, without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof after the expiration of three months from the accrual of such cause.'

RULE 11.

'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 in advertence, 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.'

RULE : 173-J.

'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 assessee as if for the expression 'three months', the expression 'One year' were substituted in those rules.'

In Union of India vs Maharaja Shri Umed Mills Ltd. Pali-1973 Tax. L.R. 2488, it was held that the words 'anything done or ordered to be done under this Act,' would not mean anything done in violation of the provisions of the Act, nor they would include a malicious act or an act done in bad faith.

6. In the present case, it is candidly conceded before us by the defendant's counsel that the duty in question was not chargeable according to the correct interpretation of the two notifications referred to above. Consequently, the act of the Excise Department in realising the duty in question cannot be said to be an act done or ordered to be done under this Act and therefore, the suit is undoubtedly maintainable, and is not barred under Section 40 of the Act.

7. Now, as to limitation for the suit, we are unable to accept Mr. Ram Raj's contention that the suit would be governed by the limitation prescribed for an application for refund of duty under Rule 11 read with Rule 173-J of the Rules. That is'the limitation prescribed for an application for refund under the special act but when a suit is instituted, it will be governed by the general law of limitation. There is no gainsaying the fact that under ordinary law, limitation for such a suit is three years. The position is not disputed by the learned counsel for the defendant either. We are, therefore, of opinion that the suit filed by the plaintiffs is maintainable and that the limitation prescribed for such a suit is three years from the accrual of cause of action.

8. In State of Madhya Pradesh v. Bhailal Bhai-AJ.R. 1964 S.C. 1006 Das Gupta J. observed that the period of limitation prescribed for recovery of money paid under a mistake of law is three years from the date when the mistake is known and that period may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Article 226 can be measured. He further said that the court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action, but, where the delay is more than this period, it will almost always be proper for the court to hold that it is unreasonable.

9. In State of Kerala v. Aluminium Industries Ltd.-(1965) 16 S.T.C. 689 a Bench of Seven Judges of the Supreme Court followed the view taken in State of Madhy Pradesh v. Bhailal Bhai (Supra) on the question of period of limitation within which the petition is to be filed.

10. In Rohtas Industries Ltd. v. Union of India-A.I.R. 1967 Pat. 363 the plaintiffs had filed a suit for recovery of the amount paid by him to the defendant Union of India on account of excess duty on soap. When the plaintiffs came to know of the exemption, it applied for refund of the amount which had been paid by it to the defendant as excise duty by mistake. The application for refund was rejected by the Assistant Collector and an appeal to the Central Excise Collector and a revision application before the Joint Secretary, Ministry of Finance also failed and thereafter the plaintiff instituted the suit for recovery of the amount after due service of notice under Section 80, Code of Civil Procedure. The trial court dismissed the suit as barred by limitation umder Section 40(2) of the Act. The learned Judges held that the suit cannot be said to be a suit in respect of anything done or ordered to be done under the Act and, consequently, Section 40(2) does not operate as a bar to the suit and the special period of limitation provided therein has no application to the case.

11. In Sales Tax Officer Banaras v. Kanhaiyaial Makundlal-AIR 1959 S.C. 135 it was observed that where it is once established that payment of tax has been made by a party who was labouring under a mistake of law, the party is entitled to recover the same and the party receiving the same was bound to repay or return it.

12. Article 113 of the Limitation Act, 1963, is residuary article which would be applicable in the present case and the period is fixed as three years. Section 17(1)(c) of the Limitation Act, 1963, further provides that wherein the case of any suit or application for which a period of limitation is prescribed by this Act, the suit or application is for relief from the consequences of a mistake the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could with reasonable diligence, have discovered it. The mistake may be a mistake of fact or mistake of law and both are within the purview of the term 'Mistake'. A terminus quo under Section 17(1)(c) is the date on which the mistake became known to the plaintiff and that date has to be determined upon the materials and evidence on the record.

13. The plaintiff's case is that they discovered the mistake when they came to know of the judgment of the Allahabad High Court in February, 1976. Vilamchand supported this allegation in the plaint by his statement as P.W. 1 and there is no rebuttal on the point. However, we find it difficult to accept the version of the plaintiff not corroborated by other evidence. In these circumstances, the date of the judgment of the Allahabad High Court may be taken to be the starting point of limitation, that is, it may be presumed that the plaintiff came to know the mistake when the judgment of the Allahabad High Court on the point, referred to above, was pronounced. That was on 18-1-1974. We are, therefore, of opinion that the period of limitation which would be applicable to the present suit is three years and the right to sue accrued to the plaintiffs when they will be deemed to have come to know of the mistake, that is, 18-1-1974, when the judgment of the Allahabad High Court saw the. light of the day.

14. In D. Cawasji and Co. v. State of Mysore-1918 E.L.T. (J. 154), the Supreme Court observed as follows : -

'Section 17(1)(c) of the Limitation Act, 1963, provides that in the case of a suit for relief on the ground of mistake, the period of limitation does not begin to run until the plaintiff has discovered the mistake or could, with reasonable diligence, have discovered it. In a case where payment is made under a mistake of law as contrasted with a mistake of fact, generally the mistake becomes known to the party only when a court makes a declaration as to the invalidity of the law. Though a party could, with reasonable diligence, discover a mistake of fact even before a court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law.

15. Therefore, where a suit will lie to recover moneys paid under a mistake of law, a writ petition for refund of tax within the period of limitation prescribed i.e., within three years of the knowledge of the mistake, would also lie. For filing a writ petition to recover the money paid under a mistake of law this court has said that the starting point of limitation is from the date on which the judgment declaring as void the particular law under which the tax was paid was rendered, as that would normally be the date on which the mistake becomes known to the party.

16. We are, therefore, of opinion that even if the starting date is considered as the date of the judgment of the Allahabad High Court, that is, 18-1-1974, the suit would be within limitation as it was filed within three years on 12-11-1976.

17. An argument was also made by Mr. Vyas that the plaintiffs having made an application for refund before the Assistant Collector and the same having been rejected, the present suit is not maintainable. In this connection, we may point out that the application made by the plaintiffs for refund of the amount of tax in dispute was rejected on the ground that the application was time barred under the provisions of the Act and the Rules. In other words, the application was not dismissed on marits. Apart from that, Mr. Vyas was unable to place before us any authority in support of his submission that where a summary remedy provided under the Special Act is refused to a party on the ground that the special limitation prescribed for that remedy has expired, the suit will not lie. Once it is granted that the general remedy by way of a suit under the common law is available to a party, we fail to see why the remedy of suit could be denied to it merely because the summary under the special Act has become barred by limitation. In this view of the matter, we are of opinion that even though the plaintiffs application under Rule 11 for refund was dismissed by the Assistant Collector on the ground of limitation, the suit is maintainable. The defendant's appeal, is therefore, liable to be dismissed.

18. The natural corollary of the foregoing discussion is that the entire suit being within limitation should be decreed.

19. No other point was argued by any of the parties.

20. The result is that we dismiss Appeal No. 5 of 1978 filed by the Union of India and allow Appeal No. 76 of 1977 filed by the plaintiffs and enhance the decretal amount from Rs. 40,485/-to Rs. 1,53,002.35 paise with costs of both the courts. The defendant shall pay the decretal amount within four months from today failing which they shall be liable to pay interest on the unpaid decretal amount at the rate of 9% per annum from today.


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