TaxTMI 
TaxTMI 
2018 (11) TMI 1208
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....nother learned Single Judge had held that the payment made by an assessee, on an obviously mistaken understanding of the provisions for levy, under the Finance Act, 1994; the refund for which has to be under the Central Excise Act, 1944, would not be regulated by the limitation as provided under Section 11B. 2. There was a preliminary objection taken by the learned counsel appearing for the petitioners herein that, in fact, there was an appeal filed from the aforesaid judgment, which stood withdrawn by the Revenue, making it obvious that they had accepted the view taken by the learned Single Judge. Hence, it was prayed that the reference be left unanswered for reason of the Department having accepted the view of the learned Single Judge. We are of the opinion that the issue having been referred by a learned Single Judge, even if the Department has accepted the view, this Court has a duty to lay down the correct law. Further, it has also to be noticed the withdrawal of the earlier appeal filed as W. A. No. 2208/2015; wherein the judgment from which the aforesaid reference arises was impugned, was in view of the Litigation Policy on the ground of monetary limit as prescribed in th....
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....sp; xxx xxx Class II: "Illegal levy" - where claims for refund are founded on the ground that there is misinterpretation/misapplication/erroneous interpretation of the Excise Act and the Rules framed thereunder. xxx  ....
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....xtract the finding with respect to sub-section (3) of Section 11B as it now exists: 77. ...It started with a non obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect ofsuch claim. Sub-section (3) of S. 11B, as it now stands, it to the same effect - indeed, more comprehensive and all encompassing. It says, "(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in sub-section". The language could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters, as will be pointed out presently. This is a bar upon a bar - an ....
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....ition No. 3 enunciated in Kamala Mills becomes applicable, viz. , ) where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available - except to the limited extent pointed out in Kamala Mills. Central Excise Act specifically provides for refund. It expressly declares that no refund shall be made except in accordance therewith. The jurisdiction of a civil Court is expressly barred - vide Sub-section (5) of S. 11B, prior to its amendment in 1991, and Sub-section (3) of S. 11B, as amended in 1991. . . . xxx xxx &....
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....; xxx xxx 79. We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quite. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet (Situation would be the same where he fights upto High Court and failing therein, he keeps quiet. ). The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation w....
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....; xxx xxx (79). . . . Once this is so, it is ununderstandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for reopening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of Central Excise Act also constitute "law" within the context of Bombay Sales tax Act and the meaning of Art. 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article. In short, no claim for refund is permissible except under and in accordance with R. 11 and S. 11B. An order or decree of a court does not become ineffective or unenforc....
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....e authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Art. 226 - and of this Court under Art. 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of S. 11B. This is for the reason that the power under Art. 226 has to be exercised to effectuate the rule of law and not for abrogating it. The said enactments including S. 11B of Central Excises and Salt Act and S. 27 of the Customs Act do constitute "law" within the meaning of Art. 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self contained enactments providing for levy, assessment, recover....
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....id enactments and is outside their purview. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to r....
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....hird party and that he has himself borne the burden of the said duty. (vi) S. 72 of the Contract Act is based upon and incorporates a rule of equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision. (vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner - plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State. (viii) The decision of this Court in Income Tax Officer Benaras v. Kanhaiyalal Mukundlal Saraf [1959] SCR 1350 must be held to have been wrongly decided insofar as it lays down or is understood to have laid down propositions contrary to the propositions enunciated in (i) to (vii) above. It must equally be held that the subsequent decisions of this Court following and applying the....
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....rt/Tribunal/Authority or otherwise. It must be held that Union of India v. Jain Spinners, 1992 (4) SCC 389 and Union of India v. I. T. C. , 1993 Suppl. (4) SCC 326 have been correctly decided. It is, of course, obvious that where the refund proceedings have finally terminated - in the sense that the appeal period has also expired - before the commencement of the 1991 (Amendment) Act (September 19, 1991), they cannot be reopened and / or governed by S. 11B(3) (as amended by the 1991 (Amendment) Act). This, however, does not mean that the power of the appellate authorities to condone delay in appropriate cases is affected in any manner by this clarification made by us. (xii) S. 11B does provide for the purchase making the claim for refund provided he is able to establish that he has not passed on the burden to another person. It, therefore, cannot be said that S. 11B is a device to retain the illegally collected taxes by the State. This is equally true of S. 27 of the Customs Act, 1962. 7. K. S. Paripoornan, J. , who delivered a separate judgment, concurred with the majority view that the refund of duty is always not automatic, especially, when the assessee had passed on ....
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....to the assessee to take advantage of the declaration of the law so made, and pray for appropriate relief inclusive of refund on the ground that tax was paid due to mistake of law, provided he initiated action within the period of limitation prescribed under the Limitation Act. Such assessee should prove the necessary ingredients to enable him to claim the benefit under S. 72 of the Contract Act read with S. 17 of the Limitation Act. Dulabhai's case (supra) - para 32 - Clauses (4) and (5). 332. It should be borne in mind, that in all the three categories of cases, the assessee should prove the fundamental factor that he has not "passed on" the tax to the consumer or third party and that he suffered a loss or injury. This aspect should not be lost sight of, in whatever manner, the proceeding is initiated - suit, Art. 226, etc. 8. B. L. Hansaria, J. concurred with K. S. Paripoornan, J. Suhas C. Sen, J. wrote a dissenting judgment, holding the amended provisions to be a mere device and a cloak to confiscate the property of the taxpayer. ; but concurred with K. S. Paripoornan, J. on the question of an action by way of suit or writ petition being maintainable. Ahmadi C. J....
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....emedy under the provisions of the statute and concede to the limitation provided therein. 10. B. P. Jeevan Reddy, J. after elaborate discussion, finds the Excise Act to be a self contained enactment with provisions for collecting taxes which are due according to law and also for refunding the taxes collected contrary to law, which has to be under Section 11A and 11B. Both provisions were found to contain a uniform rule of limitation, namely six months at that time and then one year and now two years. Relying on the decision in AIR 1965 SC 1942 [Kamala Mills Ltd. v. State of Bombay], it was held that where a statute creates "a special right or a liability and also provides the procedure for the determination of the right or liability, by the Tribunals constituted in that behalf and provides further that all questions above the said right and liability shall be determined by the Tribunal so constituted, the resort to Civil Court is not available, except to the limited extent pointed out in Kamala Mills Ltd. (supra). Central Excise Act having provided specifically for refund, which provision also expressly declared that no refund shall be made except in accordance therewith, the ju....