Refund of duty paid under mistake of law upheld; delay, laches and unjust enrichment did not defeat the claim.

Excise duty collected under a mistake of law was held recoverable under the general law, independent of the statutory refund mechanism, because money retained without authority of law must be returned and the later departmental acceptance of the correct tariff entry confirmed the earlier levy was wrong. The writ petition was not rejected for delay and laches, as the assessee acted on departmental directions, pursued the refund process and the delay was attributable to departmental handling rather than unexplained inaction. Refund was also not denied on unjust enrichment, since the claimant was a public charitable trust and the record did not support any private gain.

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Issues: (i) whether excise duty paid under a mistake of law was refundable to the assessee under the general law; (ii) whether the writ petition was barred by delay and laches in view of the time taken after discovery of the mistake and the intervening departmental proceedings; (iii) whether refund should be denied on the ground of unjust enrichment.

Issue (i): whether excise duty paid under a mistake of law was refundable to the assessee under the general law

Analysis: The payment was made under a mistaken classification, and the later departmental acceptance of the correct tariff entry showed that the earlier levy had been wrongly collected. Money paid under a mistake of law is recoverable under the general law, independently of the refund machinery under the excise statute. The constitutional prohibition against collection of tax without authority of law and the statutory obligation to refund mistaken payments supported the claim.

Conclusion: Refund was legally maintainable in favour of the assessee.

Issue (ii): whether the writ petition was barred by delay and laches in view of the time taken after discovery of the mistake and the intervening departmental proceedings

Analysis: The assessee had acted on the departmental circular, applied for refund within the period treated by the circular as permissible, and pursued the statutory appeal directed by the department. The delay in approaching the High Court was attributable to the departmental handling of the refund claim and appeal, not to any unexplained inaction by the assessee. In these circumstances, the ordinary three-year yardstick for challenging a refund denial did not justify refusal of writ relief.

Conclusion: The writ petition was not defeated by delay or laches.

Issue (iii): whether refund should be denied on the ground of unjust enrichment

Analysis: The petitioner was a public charitable trust carrying on educational and social objects, and the record showed that its surplus was not for private gain. The plea of unjust enrichment could not override the duty of the State not to retain money collected without authority of law, and on the facts there was no basis to refuse refund on that ground.

Conclusion: Refund was not barred by unjust enrichment.

Final Conclusion: The duty collected under mistake was ordered to be repaid with interest and costs, and the departmental objections based on limitation and unjust enrichment failed.

Ratio Decidendi: Tax or duty collected without authority of law and paid under a mistake of law must be refunded, and writ relief will not be denied for laches where the assessee acted bona fide on departmental directions and the delay was caused by the department itself.

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