Wealth-tax demand without jurisdiction allows refund in writ jurisdiction, with limitation running from discovery of mistake.

Wealth-tax proceedings against a deceased person's estate were held to be without statutory authority where the Wealth-tax Act did not permit assessment for the relevant year in the hands of the executors, rendering the assessment and appellate orders null and void. The Court also recognised that tax paid under mistake of law can be recovered in writ jurisdiction under article 226 where the foundational demand itself lacks authority of law. Limitation runs from discovery of the mistake, and the refund claim was not barred because the mistake was discovered only after the later decision clarifying the legal position. The tax recovery was therefore set aside and refund directed.

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Issues: (i) Whether the wealth-tax assessment and appellate orders relating to the estate of a deceased person were without authority of law and a nullity for want of jurisdiction under the Wealth-tax Act, 1957. (ii) Whether refund of tax paid under mistake of law could be granted in writ jurisdiction under article 226 and whether the claim was barred by limitation.

Issue (i): Whether the wealth-tax assessment and appellate orders relating to the estate of a deceased person were without authority of law and a nullity for want of jurisdiction under the Wealth-tax Act, 1957.

Analysis: The legal position governing the estate of a deceased person had already been declared in the earlier decision concerning section 19 of the Wealth-tax Act, 1957. That ruling showed that wealth-tax liability against the estate of a deceased person could not be carried beyond the limited statutory period contemplated by that provision. On the admitted facts, the deceased had died long before the assessment year in question, and there was no provision in the Act authorising assessment of the estate in the hands of the executors for that year. The taxing authorities therefore acted without jurisdiction.

Conclusion: The assessment order and the appellate orders were null and void and were rightly treated as orders passed without jurisdiction.

Issue (ii): Whether refund of tax paid under mistake of law could be granted in writ jurisdiction under article 226 and whether the claim was barred by limitation.

Analysis: A claim for refund of money paid under mistake of law is maintainable in writ jurisdiction, and the existence of statutory assessment machinery does not exclude such relief where the foundational demand itself is without authority of law. The governing limitation principle runs from discovery of the mistake. On the facts found, the mistake of law was discovered only after the later decision declaring the governing legal position, and the writ petition was filed within the permissible period thereafter. The claim was therefore not barred.

Conclusion: The petitioners were entitled to refund of the tax paid under mistake of law, and the limitation objection failed.

Final Conclusion: The impugned wealth-tax recovery was set aside in substance, and the petitioners obtained a refund of the amount unlawfully retained.

Ratio Decidendi: Where a taxing authority acts without statutory jurisdiction, the resulting demand is a nullity and tax paid pursuant to it may be recovered in writ jurisdiction as money paid under mistake of law, subject to limitation running from discovery of the mistake.

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