Refund of unlawfully collected tax interest in writ jurisdiction, with delay not defeating relief where the challenge was timely

Interest collected under a Central Sales Tax demand without authority of law was treated as refundable in writ jurisdiction under Article 226, because money exacted unlawfully by the State cannot be retained and the refund claim arose from the same unauthorized demand. The Court rejected the objection that the claim concerned only interest, holding that the inseparability of the levy did not prevent restitution. It also held that the writ petition was not barred by delay or limitation, since the demand was challenged shortly after it was raised and the relevant legal position was clarified later; the ordinary three-year analogy was not applied as an inflexible bar.

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Issues: (i) Whether interest collected in relation to Central Sales Tax, when held impermissible in law, could be directed to be refunded in writ jurisdiction. (ii) Whether the writ claim was barred by delay or limitation.

Issue (i): Whether interest collected in relation to Central Sales Tax, when held impermissible in law, could be directed to be refunded in writ jurisdiction.

Analysis: The levy of interest was treated as inseparable from the tax demand and as lacking authority once the governing law did not permit such collection. The Court relied on the principle that money collected by the State without authority of law cannot be retained, and held that Article 226 could be invoked to secure restitution. The objection that the claim related only to interest and not tax was rejected as immaterial, since both arose from the same unauthorized demand.

Conclusion: The writ court could direct refund of the interest collected under the Central Sales Tax demand, and the claim was maintainable.

Issue (ii): Whether the writ claim was barred by delay or limitation.

Analysis: The challenged demand was raised shortly before the writ petition, while the controlling legal position was clarified only by the later Supreme Court ruling. On that footing, the Court held that the petition had been brought within a reasonable time and that the ordinary three-year analogy for limitation did not operate as an inflexible bar.

Conclusion: The claim was not barred by delay or limitation.

Final Conclusion: The assessment-related interest demand was held unenforceable, and the authority was directed to refund the amount collected.

Ratio Decidendi: Amounts collected by a taxing authority without authority of law may be recovered through writ jurisdiction, and the ordinary limitation analogy will not defeat such relief where the challenge is brought within a reasonable time after the governing legal position is settled.

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