Refund of tax collected under an ultra vires levy affirmed, with limitation not defeating restitution on these facts.

Tax collected under an ultra vires levy is refundable as money retained without authority of law under Article 265, and the principle in Section 72 of the Indian Contract Act applies to money paid under mistake of law. The Court held that limitation did not defeat the refund claim on the facts because the claim was pursued after the invalidity of the levy became known and no statutory bar applied. It also held that the revisional authority could entertain and allow the consequential refund despite lapse of time from the assessment order, since procedural requirements should not be read rigidly to deny restitution for wrongly collected tax. The refund direction was affirmed.

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Issues: (i) Whether sales tax collected under an ultra vires provision was refundable and whether the refund claim was barred by limitation. (ii) Whether the revisional authority was justified in entertaining and allowing the refund claim despite the lapse of time from the assessment order.

Issue (i): Whether sales tax collected under an ultra vires provision was refundable and whether the refund claim was barred by limitation.

Analysis: Tax collected without authority of law is hit by Article 265 of the Constitution of India. Where the levy itself is ultra vires, the amount retained by the State is not lawfully due. The Act contemplated refund in appropriate cases, and the principle embodied in Section 72 of the Indian Contract Act, 1872 applied to money paid under a mistake of law. The claim was made after the invalidity of the levy became known, and the Court held that the relevant limitation provisions did not defeat the refund on the facts of the case.

Conclusion: The assessee was entitled to refund, and the claim was not barred so as to defeat the relief.

Issue (ii): Whether the revisional authority was justified in entertaining and allowing the refund claim despite the lapse of time from the assessment order.

Analysis: The Court treated the refund claim as consequential to the determination that the levy itself was illegal. In the scheme of the Act, procedural requirements were not to be construed so rigidly as to deny restitution where the tax had been wrongly collected and the claim was pursued without culpable delay. The revisional authority was therefore competent to grant the consequential refund relief.

Conclusion: The revisional authority was justified in entertaining the claim and directing refund.

Final Conclusion: The appeals failed, and the direction granting refund to the assessee stood affirmed on the basis that tax collected under an invalid levy must be returned where the claim is otherwise maintainable.

Ratio Decidendi: Money collected as tax under an ultra vires levy is refundable as money retained without authority of law, and limitation provisions will not defeat the claim where the refund is sought within the legally relevant period from discovery of the mistake and no statutory bar applies.

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