Refund of duty paid under mistake of law depends on discovery date, with stale claims vulnerable to laches

Excise duty paid on aerated waters manufactured without blended flavouring concentrates was treated as recoverable when the levy was not authorised by law and the payment was made under mistake of law. The text states that such refund claims are not defeated by estoppel and that limitation in refund matters may be reckoned from the date of knowledge of the mistake in cases where duty was collected on goods not legally exigible. Claims brought within six months of discovering the mistake were described as maintainable, while stale claims were said to be vulnerable to laches and delay. Section 11B was discussed as applying to refund claims in this context.

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Issues: (i) Whether excise duty paid on aerated waters manufactured without blended flavouring concentrates was refundable as duty collected under mistake of law despite the six-month limitation. (ii) Whether refund claims relating to different periods were barred by limitation or by laches.

Issue (i): Whether excise duty paid on aerated waters manufactured without blended flavouring concentrates was refundable as duty collected under mistake of law despite the six-month limitation.

Analysis: The duty was held to have been levied at a rate not warranted by law because the products were not manufactured with blended flavouring concentrates. Payment of tax or duty not legally payable was treated as a payment under mistake of law, and such amount could not be retained consistently with the constitutional bar against collection of tax except by authority of law. Estoppel could not defeat a claim for refund where the payment was made under mistake of law.

Conclusion: The duty was refundable in principle, and the assessee was entitled to refund for the periods where the claim was made within a reasonable time from discovery of the mistake.

Issue (ii): Whether refund claims relating to different periods were barred by limitation or by laches.

Analysis: Section 11B was construed as applying the limitation period in refund matters from the date of knowledge of the mistake in cases of collection as duty where the goods were not excisable or were exempt. Claims made within six months of such knowledge were held maintainable, while delayed claims were defeated by laches. The extraordinary writ jurisdiction did not displace the need to approach the Court within a reasonable time.

Conclusion: The claims for the periods timely pursued were allowed, and the delayed claims were rejected as barred by laches.

Final Conclusion: The petition succeeded only in part, with refund granted for the timely claims and denied for the stale claims.

Ratio Decidendi: Refund of excise duty collected under mistake of law is maintainable when sought within a reasonable time from discovery of the mistake, and in such cases the limitation is reckoned from the date of knowledge rather than mechanically from the date of payment.

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