Refund of gift-tax barred where no mistake of law was shown and statutory remedies were not pursued in time.

Gift-tax paid cannot be recovered as money paid under a mistake of law where the taxpayers had protested the levy from the outset, knew the legal position, and nevertheless did not pursue the available statutory rectification and revision remedies within time. The Gujarat HC held that a later Supreme Court ruling did not retrospectively convert those payments into refundable payments under the general law. It further held that writ jurisdiction should not be used as a substitute for the missed statutory remedies, and that unexplained delay and non-exhaustion of the prescribed machinery were fatal. The petitions were therefore rejected.

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Issues: (i) Whether the petitioners were entitled to refund of gift-tax on the footing that the tax had been paid under a mistake of law after the Supreme Court later declared that the underlying transaction was not a gift; (ii) Whether the High Court should exercise writ jurisdiction to grant relief when the statutory remedies of rectification and revision had become barred by limitation and had not been pursued.

Issue (i): Whether the petitioners were entitled to refund of gift-tax on the footing that the tax had been paid under a mistake of law after the Supreme Court later declared that the underlying transaction was not a gift.

Analysis: The petitioners had raised the legal objection from the outset and had expressly protested that no gift-tax was payable. The Court held that they were not labouring under any mistake of law when the tax was paid, because they knew the legal position and chose not to pursue the available statutory remedies. The later Supreme Court decision did not convert those payments into payments made under a mistake of law for the purpose of a refund claim under the general law.

Conclusion: The claim for refund on the basis of mistake of law failed and was not available to the petitioners.

Issue (ii): Whether the High Court should exercise writ jurisdiction to grant relief when the statutory remedies of rectification and revision had become barred by limitation and had not been pursued.

Analysis: The Gift-tax Act provided specific machinery for rectification and revision, but the petitioners had not kept the matters alive within the prescribed periods. The Court applied the principles that writ relief is discretionary, that unreasonable delay is a strong ground against interference, and that a litigant who omits to use the statutory remedy cannot ordinarily invoke article 226 as a substitute for that remedy. The Court distinguished cases involving void orders or void legislation and held that this was not such a case.

Conclusion: Writ relief was declined because the petitioners had not exhausted the statutory remedies and the delay was fatal.

Final Conclusion: The petitions failed on both the absence of a legally cognisable mistake of law and the availability, but non-use, of the statutory machinery for redress; the Court therefore declined to grant refund or other relief.

Ratio Decidendi: A tax paid under an order that is later found erroneous is not refundable in writ jurisdiction where the payer knew the legal position, did not pursue the statutory remedies within time, and cannot establish payment under a mistake of law.

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