Void tax assessment under ultra vires rule remains refundable despite no appeal and no limitation bar.

Tax collected under an assessment based on a rule later held ultra vires was refundable because a void assessment does not acquire finality merely from the absence of an appeal. The court distinguished an erroneous but valid assessment from one made under a provision beyond legislative competence, and held that restitution was not barred on that ground. It further held that the statutory refund provision was inapplicable where the claimant was never a dealer, and that the refund claim was not defeated by limitation or laches because the mistake was promptly raised and pursued within a reasonable time.

---

---

Issues: (i) whether tax paid under assessments made on the basis of a rule later found ultra vires was refundable despite the assessments not having been appealed against; (ii) whether the claim for refund was barred by limitation or delay.

Issue (i): whether tax paid under assessments made on the basis of a rule later found ultra vires was refundable despite the assessments not having been appealed against.

Analysis: The assessments were founded on a rule which was held to be beyond legislative competence, and the respondent was not a dealer at all within the meaning of the Act. A void assessment does not attain legal finality merely because no appeal was filed. The distinction between an erroneous but valid assessment and an assessment made under an ultra vires provision was treated as decisive, and the absence of a challenge in appeal did not bar restitution.

Conclusion: The tax was refundable, and the failure to appeal did not prevent the respondent from claiming repayment.

Issue (ii): whether the claim for refund was barred by limitation or delay.

Analysis: Section 12(1) of the Bengal Finance (Sales Tax) Act, 1941, was held inapplicable because it governs refunds to a dealer paying tax in excess of what is due, whereas the respondent was never a dealer. The court further held that, although refund claims based on mistake of law should ordinarily be made within a reasonable time, the respondent had promptly brought the mistake to the notice of the taxing authority and persisted in seeking redress. In these circumstances, the court declined to treat the claim as barred by laches or by the three-year standard referred to in the authorities.

Conclusion: The refund claim was not barred by limitation or delay.

Final Conclusion: The respondent was entitled to refund of the tax collected under a void provision, and the appeal failed.

Ratio Decidendi: A tax assessment founded on an ultra vires provision is void and does not become conclusive by lapse of time or by failure to appeal; refund may still be granted if the claim is pursued within a reasonable time in the circumstances and the statutory refund provision does not apply on its terms.

---