Mistake-based tax refund and restitution claims require timely suit plus proof of personal loss; passed-on duty defeats recovery.

A refund claim for excise duty paid under mistake was held to be within limitation because time ran only from discovery of the mistake. Restitution was nevertheless unavailable under Section 72 of the Contract Act where the duty burden had been passed on to buyers and the mills proved no personal loss; refund in those circumstances would amount to unjust enrichment. Interest was also unavailable because no contractual, trade, or equitable basis for it was shown, and the ancillary claim failed with the refund claim. The analysis applies the principle that a claimant must establish both timely discovery of mistake and a personal entitlement to restitution before recovery can be ordered.

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Issues: (i) Whether the suits for refund of excise duty were barred by limitation; (ii) whether the mills were entitled to refund under the law of restitution despite having passed on the duty burden to buyers; (iii) whether interest was payable on the refund claimed.

Issue (i): Whether the suits for refund of excise duty were barred by limitation.

Analysis: The claim for refund was governed by the residuary article under the Limitation Act, 1963, read with the provision postponing limitation where a suit is founded on mistake. The duty was paid under a mistake of law, and the mistake became discoverable only when the prior judgment declared the levy illegal. In such a case, the period of limitation does not begin to run until discovery of the mistake or until it could have been discovered with reasonable diligence.

Conclusion: The suits were within time and not barred by limitation.

Issue (ii): Whether the mills were entitled to refund under the law of restitution despite having passed on the duty burden to buyers.

Analysis: A claim under Section 72 of the Contract Act rests on restitution and requires the claimant to show that retention of the money by the recipient would unjustly enrich the recipient at the claimant's expense. The duty paid on blended yarn had entered the cost structure of the finished fabric and had been passed on to the buyers. Where no loss or injury was suffered by the claimant, and the burden was shifted to consumers, the claimant could not be treated as the real owner of the money sought to be recovered. The statutory scheme governing excise and sale transactions also supported the conclusion that the benefit of any refund would belong to the buyers, not the mills.

Conclusion: The mills were not entitled to refund under Section 72, as the burden of duty had been passed on and no recoverable loss was proved.

Issue (iii): Whether interest was payable on the refund claimed.

Analysis: The claim for interest was not founded on contract, trade usage, or any established equitable category attracting interest as of right. The materials did not show a legal or equitable basis for awarding the rates claimed. In the absence of entitlement to refund on merits, the ancillary claim for interest also could not survive.

Conclusion: The mills were not entitled to interest on the claimed refund.

Final Conclusion: The levy prior to the relevant amendment was unlawful, but the mills failed in their restitutionary claim because they had passed on the burden of duty to buyers and could not retain a personal claim to refund or interest.

Ratio Decidendi: A claimant seeking refund of money paid under mistake must establish not only the mistake and timeliness of the suit, but also a personal loss or injury warranting restitution; where the tax burden has been passed on to consumers, refund to the payer would amount to unjust enrichment and is not available.

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