Court orders refund of excess excise duty collected, citing lack of legal authority.

The High Court held that the respondents must refund the excess excise duty collected as it was not in accordance with the law. The Court did not address the validity of Rule 11 but allowed the refund claim made within three years. Relying on precedent, the Court asserted jurisdiction under Article 226 to order the refund of money collected without legal authority. The High Court granted the writ petition, issued a writ of mandamus for the refund, and directed the respondents to pay the petitioner's costs.

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Issues:
1. Refund of excess excise duty collected by the respondents.
2. Validity of Rule 11 of the Central Excise Rules, 1944.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India for refund.

Analysis:

Issue 1: The petitioner claimed that the respondents collected excise duty at a rate of 7 1/2% instead of the correct rate of 2 1/2%, resulting in an excess collection of Rs. 9,322.72. The respondents did not dispute this fact. The High Court held that the excess collection was not in accordance with the law, and thus, the respondents were liable to refund the amount.

Issue 2: The petitioner argued that Rule 11, which requires a refund application to be filed within three months, is ultra vires of Section 37(2)(1) of the Central Excises & Salt Act, 1944. However, the High Court did not delve into the vires of the rule since the claim was made within three years, and any tax collected under a mistake of law can be recovered within three years. The Court cited previous judgments to support the petitioner's right to claim a refund despite the limitation period for filing such suits.

Issue 3: The High Court, relying on the Supreme Court's decision in State of Madhya Pradesh v. Bhailal Bhai, held that in cases where tax is paid under a mistake of law and later found to be invalid, the government must repay the amount. The Court asserted its jurisdiction under Article 226 to order the refund of money collected without legal authority. Following this principle, the High Court directed the respondents to refund the excess excise duty collected. The Court also left the determination of the exact amount to the authorities concerned.

In conclusion, the High Court allowed the writ petition, issued a writ of mandamus for the refund of excess excise duty, and directed the respondents to pay the petitioner's costs.

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