Refund of tax paid under mistake of law remains maintainable where the statute gives no effective remedy and limitation runs from discovery.

A civil suit for refund of advance sales tax paid under a mistake of law was held maintainable because sections 20 and 13 of the Bombay Sales Tax Act, 1946 did not expressly or impliedly bar such a claim. Section 20 was inapplicable since no assessment had been made, and section 13 was treated as a post-assessment refund provision, not an effective remedy for challenging a void levy. On limitation, article 96 of the Limitation Act, 1908 applied to money paid under mistake, and time ran from when the mistake became known. The suit was therefore within limitation and the refund claims succeeded.

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Issues: (i) Whether a suit for refund of advance sales tax paid under a mistake of law was barred expressly or impliedly by sections 20 and 13 of the Bombay Sales Tax Act, 1946; (ii) Whether the suit was barred by limitation under article 96 of the Limitation Act, 1908.

Issue (i): Whether a suit for refund of advance sales tax paid under a mistake of law was barred expressly or impliedly by sections 20 and 13 of the Bombay Sales Tax Act, 1946.

Analysis: Section 20 was held not to apply because no assessment had been made and the suit did not seek to challenge any assessment or order under the Act. Section 13 was held to be a refund provision operating after assessment and not a machinery for deciding constitutional objections to the levy. The section did not provide an adequate remedy for payments made under a void provision, and therefore did not create an implied bar to the civil suit.

Conclusion: The suit was not barred either expressly by section 20 or impliedly by section 13, and was maintainable.

Issue (ii): Whether the suit was barred by limitation under article 96 of the Limitation Act, 1908.

Analysis: Article 96 governed suits for money paid under mistake, and the limitation period ran from the date when the mistake became known. The concurrent finding was that the plaintiffs learnt of the mistake on the date of the Governor's Ordinance, and no ground was shown to disturb that finding.

Conclusion: The suit was within limitation.

Final Conclusion: The refund suits were held maintainable and in time, so the appeals failed.

Ratio Decidendi: A civil suit for refund of tax paid under a mistake of law is maintainable where the taxing statute does not provide an effective remedy for such a claim, and limitation runs from the date on which the mistake becomes known to the payer.

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