Civil suit for refund of tax paid under mistake of law held maintainable despite statutory refund provisions and limitation challenge

A civil suit to recover advance sales tax paid under a mistake of law was not barred by the Bombay Sales Tax Act, 1946, because section 20 did not apply where no assessment had been made and the suit did not challenge an assessment or order, while section 13 was confined to post-assessment refund mechanics and did not exclude recovery of tax not constitutionally payable. The claim was also within limitation under article 96 of the Limitation Act, 1908, because time ran from the date the mistake became known, and the concurrent finding that this occurred on 22 December 1952 was not shown to be erroneous.

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Issues: (i) Whether a suit for refund of advance sales tax paid under a mistake of law was barred expressly by section 20 or impliedly by section 13 of the Bombay Sales Tax Act, 1946; (ii) whether the suit was barred by limitation under article 96 of the Limitation Act, 1908.

Issue (i): Whether a suit for refund of advance sales tax paid under a mistake of law was barred expressly by section 20 or impliedly by section 13 of the Bombay Sales Tax Act, 1946.

Analysis: Section 20 was held not to bar the suit because no assessment had been made and the suit did not challenge any assessment or order under the Act. Section 13 was held to provide only a refund mechanism after assessment and did not contemplate adjudication of constitutional objections to the levy. The remedy under that provision was limited to computation disputes and did not furnish machinery for deciding whether the tax was not constitutionally payable at all. In consequence, the statutory scheme did not exclude a civil suit for recovery of money paid under a void levy.

Conclusion: The suit was not barred either expressly by section 20 or impliedly by section 13, and this issue was decided in favour of the respondent.

Issue (ii): Whether the suit was barred by limitation under article 96 of the Limitation Act, 1908.

Analysis: Article 96 governed suits for relief from the consequences of mistake, and the period ran from the date when the mistake became known. Both courts below found that the plaintiff became aware of the mistake on 22 December 1952, and that finding was concurrent and not shown to be erroneous. On that basis, the suits were instituted within the prescribed period.

Conclusion: The suit was within limitation under article 96, and this issue was decided in favour of the respondent.

Final Conclusion: The statutory refund provisions did not exclude the civil remedy and the claim was brought in time, so the dismissal of the appeals followed.

Ratio Decidendi: Where no assessment order exists and the statutory refund provision is confined to post-assessment computation disputes, it does not bar a civil suit to recover tax paid under a mistake of law; limitation for such a suit runs from the date the mistake becomes known.

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