19 December 1996
Supreme Court


Case number: C.A. No.-003255-003255 / 1984
Diary number: 65753 / 1984
Advocates: Vs T. G. NARAYANAN NAIR






DATE OF JUDGMENT:       19/12/1996




JUDGMENT: (With C.A.  Nos. 3256-3270/84,  660/89, 541/89,  2/91,  2578 80/92, 1794/84,  921/92, 4952/91,  4412/91,  4878/91,  2/86, 6255/90,  289/91,   2966/89,  143/94,   190/95,  5688/89-95, 6094/90, 565/568/86,  4326/95,  77/95,  WP(C)  Nos.  189/93, 520/92, 521/93,  1122/88. SLP(C) Nos. 10667/91, 15832 33/87, 18955/93, 11440/95,  8724/93, 3321/93,  3332/93,  3325/93  & SLP(C) 25078 CC 15651/92)                       J U D G M E N T PARIPOORNAN, J.      Common questions of law arise for consideration in this batch of  cases. Initially  the matter came up before a two- Member Bench.  The said  Bench felt that the decision of the Constitution Bench comprising 5 Judges in Sales Tax Officer, Benaras & Others vs. Kanhaiya Lal Mukundalal Saraf (AIR 1959 SC  135  =  1959  SCR  1350)  requires  reconsideration  and referred the  matter to a larger bench of 7 Judges. When the matter came  up before  a bench  of 7 Judges, it was noticed that Kanhaiya Lal’s case (supra) was expressly approved by a bench of  7 Judges  in the  decision reported  in  State  of Kerala v. Aluminium Industries Ltd. [(1965) 16 STC 689], and so, by  order dated  28.7.1993, the said Bench directed that the matter  may be  placed before  the learned Chief Justice for constituting  a still  larger Bench.  That is  how  this batch of cases came up before a Bench of 9 Judges. We heard, Sri F.S.  Nariman, Sri  Soli Sorabjee  and Sri Harish Salve, Senior Advocates,  who appeared  for the different assessees (claimants) and  Sri K. Parasaran and Sri M. Chandrashekhar, Senior Advocates who appeared for the Union of India. 2.   Stated  briefly,  the  controversy  centres  round  the tenability or  otherwise of  the claim  for  refund  of  the amounts paid by way of excise duty under the Central Excises and Salt  Act, 1944,  now titled as Central Excise Act, 1944 (hereinafter referred  to as  ‘the Excise Act’ on the ground that it  was so  done under  "mistake of  law". it  will  be convenient to  deal with the controversy by adverting to the minimal facts  in the  main appeal argued before us -- Civil Appeal No.3255 of 1984 - Mafatlal Industries Ltd., Ahmedabad v. Union  of India.  The appellant is a textile mill situate at  Ahmedabad.   The  appellant   and  a   few  other  mills manufacture  "blended  yarn".  The  said  blended  yarn  was



captively consumed  by the  various mills for manufacture of fabric, popularly known as "art silk" fabric. For the period prior to  March 16/17,  1972, the  mills paid excise duty on blended yarn  manufactured  for  captive  consumption  under Tariff Item  18 or  18A of  the First Schedule to the Excise Act. In  Special Application No.1058/72 filed by M/s. Calico Mills, who  manufactured fabrics and was captively consuming blended yarn,  produced by it for manufacturing fabric known as "art  silk fabric",  a Division Bench of the Gujarat High Court by judgment dated 15.1.1976, held that the levy of the excise duty  on blended  yarn prior  to March  16/17,  1972, under tariff  Item 18  or 18A  was clearly  ultra vires. The High Court  directed refund  of the excise duty levied for 3 years prior  to  institution  of  the  petition,  which  was instituted on  6.5.1972. The appellant and other mill-owners stated that  as a  result of  the declaration  of the law as aforesaid by  the Court,  they were not liable to pay excise duty on  blended yarn  up to March 16/17, 1972 and that they had paid  the excise  duty on  the same upto that date under mistake of law. They requested for refund of the excise duty so paid  till March  16/17, 1972, stating that such duty was illegally recovered from hem. The Revenue did not refund the excise duty  as claimed.  So, the appellant and others filed suits  within   thee  years   of  the   aforesaid   judgment (15.1.1976) for  refund of  excise duty  illegally recovered from them, with interest. The trial court decreed the suits. In the  appeals filed  by the  Union of  India  against  the aforesaid decrees  passed by the trial court, the High Court of Gujarat  allowed the  appeals and  set aside  the decrees passed by  the trial  courts, by judgment dated 6.4.1984. It was held  that in order to successfully sustain the claim of restitution based  on Section  72 of  the Contract  Act, the person claiming restitution should prove "loss or injury" to him, an  in the  cases before  them, the excise duty paid on blended yarn  was ultimately  passed on  to the buyer of the fabric, and  so the  claim for  restitution will not lie. In other words,  in cases where an assessee has "passed on" the duty paid  by or  realised from him, he has suffered no loss or injury,  and the action for restitution is unsustainable. The aforesaid  statement of the law is seriously disputed by the appellants in Civil Appeal No.3255/84 and others. 3.   In the  ultimate analysis, the main question that falls for consideration  in this  batch of cases is, whether in an action claiming  refund of  excise  duty  (tax)  paid  under mistake of law, is it essential for the person claiming such refund, to  establish "loss  or injury"  to  him?  In  other words, in  cases where  the person from whom the excise duty (tax) is  collected, has "passed on" the liability or deemed to have  passed on the liability, is it open to him to claim refund of  the duty paid by him, placing reliance on Section 72 of  the Indian  Contract Act?  The further question as to whether an  action by  way of  civil suit or a writ petition under Article 226 of the Constitution will lie, in the light of various  amendments to  the  Act,  claiming  "refund"  or "restitution", also arises for consideration. 4.   I perused  the draft  judgment prepared  by my  learned brother Jeevan  Reddy, J.,  wherein on the main question, he has held  that if  the person claiming the refund has passed on the burden of duty to another and has not really suffered any loss  or prejudice,  there is no question of reimbursing him  and  he  cannot  successfully  sustain  an  action  for restitution, based on Section 72 of the Indian Contract Act. With great  respect,  I  fully  concur  with  the  aforesaid conclusion of  my learned  brother.  But,  in  view  of  the importance of the question raised, I would like to record my



own reasons for the aforesaid conclusion. I shall separately deal with the maintainability of the action either by way of suit or  petition under  Article 226  of the Constitution -- the extent  to which  there is  ouster  of  jurisdiction  of Courts. 5.   In  this  batch  of  cases,  the  claims  by  different assessees for  refund of  excise duty  paid  by  them  under mistake of  law arise over a period of years, and the claims were  made   in  different   proceedings   --   before   the departmental authorities,  by way  of civil  suits and  writ petitions under  Article 226  of the Constitution, which are in appeal before us.      Broadly, the basis for the various refund claims can be classified into 3 groups or categories :- (I)       The levy is unconstitutional -- outside the           provisions of the Act or not contemplated by the           Act. (II)      The levy  is based  on misconstruction or wrong or           erroneous   interpretation    of   the    relevant           provisions of  the Act, Rules or Notifications: or           by failure  to follow  the  vital  or  fundamental           provisions of the Act or by acting in violation of           the fundamental principles of judicial procedure. (III)       Mistake  of law  -- the  levy or  imposition was           unconstitutional or illegal or not eligible in law           (without  jurisdiction)   and,  so   found  in   a           proceeding  initiated   not  by   the   particular           assessee, but  in a  proceeding initiated  by some           other assessee  either by  the High  Court or  the           Supreme Court, and as soon as the assessee came to           know of the judgment (within the period of   limit           ation), e  initiated action  for refund of the tax           paid by him, due to mistake of law. For the  periods during which the refund were claimed, there were  different  statutory  provisions  which  governed  the subject. They are -- (a)       Period up  to 7.8.1977  -- Rule  11 of the Central           Excise Rules, before amendment; (b)       Period from 7.8.1977 to 16.11.80 -- Rule 11 of the           Central Excise Rules, as amended. (c)       Period from 16.11.1980 to 19.9.1991 -- Section 11A           and Section 11B of the then Central Excises & Salt           Act; (d)       Period after  19.9.1991 --  Section 11A read along           with Section  11B of the Act, as amended by Act 40           of 1991.      The circumstances and grounds on the basis of which the refund can  be claimed, the period within which it should be so  done,  the  forum  before  which  the  claim  should  be preferred and whether the decision thereon is subject to the jurisdiction of ordinary courts, vary from period to period. We shall  advert to  such provisions  and  their  impact  on various aspects  regarding the  claim for  refund  a  little later.      Rule 11  of the  Central Excise  Rules which dealt with claims for  refund of  duty as  it was  in  force  prior  to 7.8.1977, is to the following effect:      "Rule 11.  No refund  of duties  or      charges  erroneously  paid,  unless      claimed within  three months.--  No      duties or  charges which  have been      paid or  have been  adjusted in  an      account current maintained with the      Collector  under  Rule  9,  and  of      which repayment  wholly or  in part



    is claimed  in consequence  of  the      same  having   been  paid   through      inadvertence,       error        or      misconstruction, shall  be refunded      unless  the   claimant   makes   an      application for  such refund  under      his signature  and lodges  it  with      the  proper  officer  within  three      months  from   the  date   of  such      payment or  adjustment, as the case      may be."      It should  be noted  that Rule  11 before amendment did not provide  for any  ouster of  jurisdiction of  courts. We shall deal  with Rule 11-A as amended and Sections 11A and B of the Excise Act a little later. The Revenue states that in view  of   these  later   provisions,  there  is  ouster  of jurisdiction of courts, relating to claims for refund. 6.   The claims  by different assessees for refund arose and are/were preferred  during different  periods. After Rule 11 was amended  and Section 11A and B were inserted in the Act, the statute  contained provisions  making them exclusive for claiming refund.  Be that  as it may, it is only relevant to state at  this juncture  that in  all cases, irrespective of the relevant  statutory provisions  in the Excise Act and/or the Rules,  the claims  for refund  were made  in  different proceedings  mainly  based  on  section  72  of  the  Indian Contract Act.  So the  main issue,  in all  the cases,  that arises for  consideration is,  whatever be the nature of the attack regarding  the levy,  or the  basis put  forward  for claiming refund, r the period for which refund is claimed or the character of the proceedings in which it was so done, or the  different   nature  or   character  of   the  statutory provisions either  providing or  not providing as to how and in what  manner the  claim should  be made,  -- whether  the claim for  refund is  tenable in any of the proceedings, for any period,  based on Section 72 of the Contract Act, if the assessee has  "passed on"  the liability  to the consumer or third party? 7.   The levy  under the  Excise  Act  is  an  indirect  tax (duty). A  duty of  excise is  levied on  the manufacture or production  of  goods.  Ordinarily,  it  is  levied  on  the manufacturer or  producer of  goods. (Since  the levy  is in relation  to  or  in  connection  with  the  manufacture  or production of  goods, it may be levied even at a point later than manufacture  or production  of  the  goods.)  The  duty levied will  form part of the total cost of the manufacturer or producer.  The levy  being a  component of  the price for which the  goods are  sold,  is  ordinarily  passed  on  the customer. It  is a  matter of  common knowledge  that  every prudent businessman  will adjust  his affairs  in  his  best interests and  pass on  the duty  levied or  leviable on the commodity to the consumer. That is the presumption in law. 8.   The claim  for refund  in these cases is based upon the plea that  excise duty was paid when it was not eligible. It was so  done under  mistake of law. Refund is claimed basing the action under Section 72 of the Contract Act, which is to the following effect:      "Liability of person to whom       72. A person to whom      money is paid or thing             money has been paid,      delivered, by mistake              or anything      or under coercion.                 delivered, by                                         mistake or under                                         coercion, must repay                                         or return it.              Illustrations



    (a) A  and B jointly owe 100 rupees      to C. A alone pays the amount to C,      and B,  not knowing this fact, pays      100 rupees  over again  to C.  C is      bound to repay the amount to B.      (b) A  railway company  refuses  to      deliver up  certain  goods  to  the      consignee, except  upon the payment      of an  illegal charge for carriage.      The consignee  pays the sum charged      in order to obtain the goods. He is      entitled to  recover so much of the      charge as was illegally excessive."      Chapter V  of the  Indian Contract Act is styled thus:- "Of Certain Relations Resembling Those Created By Contract". The Chapter contains five sections -- Sections 68 to 72. The rights and  liabilities dealt  with in those Sections accrue from relations  resembling those  created by contract. It is not a   real  contract, but  one implied  in law or a quasi- contract.      Law is  fairly settled that "Money paid under a mistake or on  a consideration  which has  wholly  failed  or  under duress falls  under the  general  head  of  money  "had  and received." An  action for  money "had  and received"  is  an action "founded  on simple  contract" which  has been called quasi contract  or restitution."  (See  Pollock  &  Mulla  - Indian Contract  And Specific  Relief Acts  (10 the Edition) page 598). 9.   The Law of Restitution is founded upon the principle of "unjust enrichment".  As stated by the learned authors, Lord Goff of  Chieveley and  Gareth Jones in the book "The Law of Restitution" (3rd  Edn.) 1986, "It presupposes three things: first, that  the defendant  has been enriched by the receipt of a  benefit; secondly  that he has been so enriched at the plaintiff’s expense; and thirdly, that it would be unjust to allow him  to retain  the benefit.  These three  subordinate principles are closely interrelated." (page 16). [See also  Cheshire Fifoot  & Furmston’s  "Law of  Contract" (12th Edn.) 1991, page 649.] 10.  The second aspect aforesaid, namely, that the defendant has been  enriched "at  the plaintiff’s  expense", has  been considered  by   Peter  Birks   (Professor  of   Civil  Law, University of  Edinburgh) in  his book  "Introduction to the Law  of   Restitution"  rater  elaborately.  The  principles discernible from  the above  discussion has  been succinctly stated  by  Endrew  Burrows  in  his  book  --  The  Law  of Restitution (1933), at page 16, thus:      "It is  the major  theme of  Birks’      work that  this phrase  ambiguously      conceals two different ideas in the      law of  restitution. The first, and      most natural  meaning, is  that the      defendant’s gain  represents a loss      to   the   plaintiff:   in   Birks’      terminology  a  ‘subtraction  from’      the plaintiff. The second, and less      obvious  meaning,   is   that   the      defendant’s gain  has been acquired      by committing  a wrong  against the      plaintiff."           (Emphasis supplied)      The person  claiming restitution should have suffered a "loss or injury". In my opinion, in cases where the assessee or the person claiming refund has passed on the incidence of tax to  a third  person, how  can it  be said  that  he  has



suffered a loss or injury? How is it possible to say that he has got  ownership or  title to the amount claimed, which he has already  recouped from a third party? So, the very basic requirement for  a claim  of restitution under Section 72 of the Contract  Act is  that the  person claiming  restitution should plead  and prove  a loss  or injury  to him; in other words, he  has not  passed on the liability. If it is not so done, the action for restitution or refund, should fail. 11.  In this  connection, the  decision  of  a  three-member Bench of this Court in Mulamchand v. State of Madhya Pradesh (AIR 1968  S.C. 1218),  affords some guidance. The appellant in that case, purchase da right to pluck, collect and remove the forest  produce from  the  proprietors.  The  right  was acquired before  the propriety rights vested in the State of Madly Pradesh  by Act  No. 1 of 1951 -- called the Abolition Act. Acting  under  the  Act,  in  April,  1951  the  Deputy Commissioner  auctioned   the  forest  produce  of  villages covered by  the purchases  of the appellant. Amongst others, the appellant had deposited a sum of Rs.10,000/- towards the right to collect lac from the forest. It turned out that the provisions of  Article 299  of  the  Constitution  were  not complied with and the contract entered into by the appellant therein with  the State  of  Madly  Pradesh  was  void.  The appellant claimed refund on the basis that thee was no valid contract. The  trial court  as well  as the  appellate court held that  the appellant  having worked  out the contract by collecting the  lac from  the jungles  in pursuance  of  the agreement, was  no entitled  to  refund  of  the  amount  of deposit. In  the appeal  filed by  the appellant, this Court held that  if the  money is  deposited  and  the  goods  are supplied or  services rendered in terms of the contract, the provisions  of  Section  70  of  the  Contract  Act  may  be applicable and, can be invoked by the aggrieved party to the void contract.  This Court  further held  at pages  1222-23, thus:      "The   juristic    basis   of   the      obligation in  such a  case is  not      founded upon  any contract  or tort      but upon  a third  category of law,      namely,      quasi-contract      or      restitution.    In    Fibrosa    v.      Fairbairn, 1943  AC 32  Lord Wright      has stated  the legal  position  as      follows:      "..........any civilised  system of      law is  bound to  provide  remedies      for cases  of what  has been called      unjust   enrichment    or    unjust      benefit, that  is, to prevent a man      from retaining  the  money  of,  or      some benefit  derived from, another      which it is against conscience that      he should  keep. Such  remedies  in      English   Law    are    generically      different from remedies in contract      or in  tort, and are now recognised      to fall  within a third category of      the  common   law  which  has  been      called      quasi-contract       or      restitution." (7) In  Nelson v.  Larholt, (1948) 1 KB 339 Lord Denning has observed as follows:      " It  is no  longer appropriate  to      draw a  distinction between law and      equity. Principles  have now  to be



    stated  in   the  light   of  their      combined   effect.    Nor   is   it      necessary to  canvass the  niceties      of  the   old  forms   of   action.      Remedies   now    depend   on   the      substance  of  the  right,  not  on      whether they  can be  fitted into a      particular  framework.   The  right      here is  not peculiar  to equity or      contract   or   tort,   but   falls      naturally  within   the   important      category of  cases where  the court      orders restitution  if the  justice      of the case so requires"           (Emphasis supplied)      This court further stated the law thus:      ".......  It  is  well  established      that a person who seeks restitution      has  a   duty  to  account  to  the      defendant for  what he has received      in the  transaction from  which his      right  to  restitution  arises.  In      other words,  an accounting  by the      plaintiff   is   a   condition   of      restitution from the defendant (See      ‘Restatement   of    the   Law   of      Restitution’,     American      Law      Institute, 1937 Edn., p. 634)."           (Emphasis supplied)      The observations extracted above indisputable point out that a  person who seeks restitution, has a duty to disclose or account  for what  he has received in the transaction. An accounting  is  a  condition  precedent  in  an  action  for restitution. By  way of  analogy, it  can be  stated that in cases where  restitution is  claimed under Section 72 of the Contract Act,  on the  ground of  payment due  to mistake of law, the person claiming restitution, should plead and prove that "he  has not  passed on" the liability to another. That is the nature of "accounting" in cases falling under Section 72 of  the Contract  Act. IN  my opinion, the High Court was justified in  law in holding that since the excise duty paid by the  appellant was  ultimately passed on to the buyers of the fabric,  and that  the appellant has suffered no loss or injury, the  action for  restitution based  on Section 72 of the Contract  Act, was  unsustainable. (This  is  the  legal position  even  under  general  law,  without  reference  to Section 11B  of Central Excises & Salt Act as amended by Act 40/1991). 12.  Mr. F.S.  Nariman, Senior  Counsel for  the appellants, contended that in an action for restitution under section 72 of the  Contract Act, the question as to where the incidence of duty  or  tax  has  been  passed  on,  is  an  irrelevant factor.There is  no such  requirement in  the  Statute.  The sheet-anchor of  the appellant’s  case  is  founded  on  the decision of  the Constitution  Bench in  Kanhaiya Lal’s case (supra), which  was followed  by a  Bench  of  7  Judges  in Aluminium Industries’  case [(1965)  16  STC  689].  It  was argued that the decision in Kanhaiya Lal’s case was followed subsequently in Tilokchand Motichand & Ors. v. H.B. Munshi & Anr. (1969  (2) SCR 824), D. Cawasji & Co., etc. etc. v. The State of  Mysore &  Anr. (1975  (2) SCR  511), Dhanyalakshmi Rice Mills  Etc. v.  The Commissioner  of Civil Supplies and Another, (1976  (3) SCR  387) etc. The plea was that the law laid down  in Kanhaiya Lal’s case has stood the test of time for nearly  four decades  and there is no requirement either



in Section  72 of  the Indian  Contract Act or in any of the above decisions,  holding that  in order  to claim refund or restitution based  on Section  72 of  the Contract  Act, the liability  (duty)  should  not  have  been  passed  on.  Our attention was also invited to the decision of House of Lords in Woolwich Building Society v. Inland Revenue Commissioners (No 2)  [(1992) 3  All ER 737], of the Canadian Court in Air Canada case,  (59 D.L.R.  (4th series)  161), (in particular dissenting judgment  of Wilson,  J.), of the decision of the Australian Court  in Commissioner  of State Revenue v. Royal Insurance Australia  Ltd. [(1994)  69  A.L.J.  51],  of  the European Economic Committee in San Giorgio S.P.A. Case (1985 (2) C.M.L.R.  658), and  the decision  of the  United States Supreme  Court   in  United  States  v.  Jefferson  Electric Manufacturing Co.,  (78 Lawyers’ Edition 859). It was argued that  the   preponderance  of   judicial  opinion  in  other jurisdictions also  is in  favour of the view, that  passing on"  of   the  liability,   is  an   irrelevant  factor  for consideration in an action for restitution, and at any rate, it cannot form the basis of a valid defence in an action for "restitution". Mr.  Parasaran, Senior  Counsel for the Union of India  contended that the question of "passing on" of the liability never  arose for  consideration in  Kanhaiya Lal’s case nor  was it  decided. The  said decision  cannot be  an authority for  the proposition that a person claiming refund of tax  on the  ground of  mistake of  law is not obliged to allege and  prove that  it has  not been  passed on;  on the other hand,  it is mandatory for a claimant in such cases to allege and  prove that he suffered a loss or detriment. Then and then alone, the Court can grant the equitable  relief of restitution. Counsel  also contended  that the  principle in Kanhaiya  Lal’s   case  (supra)  has  not  been  uniformally followed  by   this   Court   subsequently.   Counsel   also distinguished  the   various  foreign  decisions  that  were brought to  our notice  and highlighted  the fact that those decisions were  rendered on their own facts. Counsel further contended that  in cases  on indirect  levy of  tax (cess or fee) which was passed on, this Court has negatived the claim for refund  in a few cases. Our attention was invited to the following decisions :      Shiv Shanker  Dal Mills etc. etc. v. State of Haryana & Ors. etc.  [1980 (1)  SCR  1170  (1173)],  State  of  Madhya Pradesh v.  Vyankatlal & Anr. [1985 (3) SCR 561 (566, 568)], M/s. Amar  Nath Om  Parkash and Ors. etc. v. State of Punjab and Ors.  etc. [1985  (2) SCR  72 (at  pp. 96-100)],  Indian Aluminium Company  Limited v.  Thane  Municipal  Corporation [1992 Supp.  (1) SCC 480 (488-489)] and State of Rajasthan & Others v. Novelty Stores etc. (AIR 1995 SC 1132). 13.  The main  case relied  on, Kanhaiya  Lal’s case (supra) requires a  little  detailed  examination.  The  respondent, Kanhaiya Lal  was a  firm. For the assessment years 1948-49, 1949-50 and  1950-51, its  forward transactions were brought to tax  by the Assessing Authority -- the Sales Tax officer, as per  Assessment orders  dated, 30.10.1950 and 22.8.1951. On  27.2.1952, the Allahabad High Court in Messrs Budh Prakash  Jai Prakash  v. Sales  Tax Officer,  Kanpur  & Ors., (1952  A.L.J. 332)  held that  the provisions  of  the Uttar Pradesh  Sales Tax  Act, taxing forward contracts were ultra vires  the U.P.  Legislature. The  said  judgment  was affirmed by  this Court  on 3.5.1954.  The attempts  of  the assessee to  obtain refund  of tax  basing its claim on Budh Prakash Jai  Prakash case  before the  statutory authorities were futile.  Thereafter, the  assessee-firm  filed  a  writ petition in  the High Court, praying in quash the assessment orders, and  for  direction  for  refund  of  tax  illegally



collected. By  judgment dated  30.11.1956, a  learned single Judge of  the High  Court, allowed the writ petition. In the appeal, the  Revenue contended  that since  the tax was paid under mistake  of law,  it was  not  recoverable.  Even  so, relying on  Section 72  of the  Contract Act,  the  Division Bench affirmed the decision of the single Judge. The Revenue took up the matter in appeal before this Court. The pleas of the  appellant-Revenue,   that  the   assessee  should  have followed the  procedure prescribed by the U.P. Sales Tax Act and, that  the writ petition filed for refund of money would not lie, were not allowed to be urged by this Court. Mainly, two questions arose before this Court for consideration -- (i)  Whether the  term "mistake"  occurring in section 72 of      the Contract  Act took within its fold "mistake of law"      as well as "mistake of fact"? (ii) Whether  the tax  paid under  mistake  of  law  can  be      recovered under Section 72 of the Indian Contract Act?      This Court  held that  the word  "mistake" occurring in Section 72  of the  Contract Act  has been  used without any qualification or  limitation and,  so, it  takes within  its fold "mistake  of law"  as well as "mistake of fact". On the second question, this Court held that once it is established that the  payment, even though it be a tax, has been made by the party  under a  mistake of law, the party is entitled to recover the  same and  a party who received the tax is bound to repay  or return it. This Court held that there can be no distinction in  a tax liability and any other liability on a plain reading  of Section  72 and  the plea that tax paid by mistake of  law cannot  be recovered  under Section 72, will not be  a proper  interpretation of the relevant provisions, but to  make a  law, adding such words as "otherwise than by way of taxes" after the word "paid". The scope of Section 72 was considered  only within  a limited  sphere. It should be noticed that  no question  was raised before this Court that in order  to claim refund (restitution) of sales tax paid, - (an indirect  levy) -  under Section 72, the claimant should necessarily prove  that he has sustained "a loss or injury". In other words, the tax collected by him has not been passed on to a third party. Dealing with the plea that the position in law  obtaining in  England, America  and  Australia  that money paid  under mistake of law could not be recovered, and that similar  considerations should  weigh  in  interpreting Section 72,  the Court held that the true meaning and intent of Section  72 should  be  interpreted  on  its  own  terms, divorced from  all considerations,  as to what was the state of previous  law or  the law  in England  or elsewhere. This Court made further observations to the following effect:      ‘If it is once established that the      payment, even  though it  be  of  a      tax, has  been made  by  the  party      labouring under  a mistake  of  law      the party  is entitled  to  recover      the same  and the  party  receiving      the  same  is  bound  to  repay  or      return  it.   No  distinction  can,      therefore, be  made in respect of a      tax   liability   and   any   other      liability on a plain reading of the      terms  of   s.  72  of  the  Indian      Contract Act,  even though  such  a      distinction  has   been   made   in      America  vide   the  passage   from      willoughby on  the Constitution  of      the United States, Vol. 1, p. 12 op      cit.  To  hold  that  tax  paid  by



    mistake of  law cannot be recovered      under  s.   72  will   be  not   to      interpret the law but to make a law      by  adding   some  such   words  as      "otherwise than  by way  of  taxes"      after the word "paid."                               (p. 1363)      "Voluntary  payment   of  such  tax      liability was  not by itself enough      to  preclude  the  respondent  from      recovering the  said amounts,  once      it   was   established   that   the      payments were  made under a mistake      of law. On a true interpretation of      s. 72  of the  Indian Contract  Act      the only  two  circumstances  there      indicated as entitling the party to      recover the money back are that the      monies  must   have  been  paid  by      mistake  or   under  coercion.   If      mistake either of law or of fact is      established,  he   is  entitled  to      recover the  monies and  the  party      receiving  the  same  is  bound  to      repay or  return them  irrespective      of any  consideration  whether  the      monies had  been paid  voluntarily,      subject  however  to  questions  of      estoppel, waiver, limitation or the      like. If, once that circumstance is      established the  party is  entitled      to the relief claimed."                               (p. 1364)      "No question  of estoppel  can ever      arise where both the parties, as in      the  present  case,  are  labouring      under the  mistake of  law and  one      party is not more to blame than the      other."                               (p. 1365)      "The other  circumstances would  be      such as  would entitle  a court  of      equity to refuse the relief claimed      by the  plaintiff  because  on  the      facts and circumstances of the case      it would  be  inequitable  for  the      court to  award the  relief to  the      plaintiff.  These   are,   however,      equitable considerations  and could      scarcely be imported when thee is a      clear and  unambiguous provision of      law which entitles the plaintiff to      the relief  claimed  by  him."  (p.      1366)      "Merely because  the State  of U.P.      had not retained the monies paid by      the respondent  but had  spent them      away in  the ordinary course of the      business of  the  State  would  not      make any difference to the position      and under  the plain terms of s. 72      of  the  Indian  Contract  Act  the      respondent  would  be  entitled  to      recover back  the monies paid by it      to the  State of U.P. under mistake



    of law." (p. 1367)           (Emphasis supplied) 14.  It is apparent that in Kanhaiya Lal’s case there was no plea by  the Revenue  that since  the assessee has passed on the tax,  the claim  for refund  is  unsustainable.  Such  a question was  not posed before this Court for consideration. one of  the main  aspects  to  be  proved  in  a  claim  for restitution, that  the person  claiming  restitution  should have suffered  a loss  or injury  in  order  to  sustain  an action, was  not urged  and was  not considered.  In such  a situation the  following observations  of Lord  Halsbury  in Quinn v.  Leathem (1901  A.C. 495  at p.  506)  quoted  with approval by  a Constitution  Bench of this Court in State of Orissa v.  Sudhansu Sekhar  Misra (1968  (2) SCR 154 at page 162) and  again in  Orient  Paper  an  Industries  Ltd.  and Another v.  State of Orissa & Others (1991 Supp. (1) SCC 81, at page 96), should govern the matter.      ".....there are two observations of      a general  character which  I which      to make,  and one is to repeat what      I have very often said before, that      ever  judgment   must  be  read  as      applicable to  the particular facts      proved, or  assumed to  be  proved,      since   the   generality   of   the      expressions  which   may  be  found      there  are   not  intended   to  be      expositions of  the whole  law, but      governed  and   qualified  by   the      particular facts  of  the  case  in      which such  expressions are  to  be      found. The  other is that a case is      only  an   authority  for  what  it      actually decides.  I entirely  deny      that  it   can  be   quoted  for  a      proposition that may seem to follow      logically from  it. Such  a mode of      reasoning assumes  that the  law is      necessarily a logical code, whereas      every lawyer  must acknowledge that      the law  is not  always logical  at      all"           (Emphasis supplied)      The above  observations should  be  borne  in  mind  in understanding the  scope of  the decision  in Kanhaiya Lal’s case, and  the cases  following  the  said  case.  The  said decisions cannot  be understood  as laying down the law that even in  cases the  liability  has  been  "passed  on",  the assessee can maintain an action for restitution.      It also appears that there is some inconsistency in the Kanhaiya Lal’s  case. The basis in an action for restitution under Section  72  of  the  Contract  Act,  rests  upon  the equitable doctrine  of unjust enrichment. The Court observed on page  1364 that  the recovery  of the  money  paid  under mistake of  law or fact can be recovered "subject however to questions of estoppel, waiver, limitation or the like". Even so,  at   page  1366,  the  Court  has  observed  "equitable considerations could  scarcely be  imported when  there is a clear and  unambiguous provision  of law  which entitled the plaintiff to  the relief  claimed by him." The very basis of the claim,  though statutorily incorporated in Section 72 of the Contract  Act, is equitable in nature and if so, how can it be  said that  equitable  considerations  should  not  be applied in  adjudicating the claim for restitution (refund)? If an  assessee has  passed on  the tax to the consumer or a



third party and sustained no loss or injury, grant of refund to him  will result in a windfall to him. Such a person will be unjustly  enriched. This  will result  in the assessee or the claimant  obtaining a  benefit, which is neither legally nor equitably  due to  him. In other words, such a person is enabled to  obtain  "an  unjust  benefit"  at  the  cost  to innumerable persons  to whom  the liability  (tax) has  been passed on  and to  whom really  the refund or restitution is due. The  above factors  certainly disentitle  such a person from claiming restitution. If the decision in Kanhaiya Lal’s case (supra)  and the  cases following  the  said  decision, enables such  a person  to claim  refund (restitution), with great respect  to the learned Judges, who rendered the above decisions, I express my dissent thereto. 15.  Shri Nariman  and Shri  Sorabjee also contended that if the relief  of refund  is withheld  or denied  on the ground that the  assessee has  passed on the tax (liability) to the consumer or  third party, it will result in a position where the State  is enabled to retain and appropriate the unlawful collection to  itself. The  plea was that Article 265 of the Constitution of  India contains a mandate to the effect that "no tax  shall be levied or collected except by authority of law". It  was argued  that this  is a  basic feature  of the Constitution and  cannot  be  ignored.  If  no  tax  can  be collected except  by authority  of law, the same logic would prevail for  retention  of  amounts  collected  without  the authority of  law. Reference  was made in this connection to the  decision  of  the  Madras  High  Court  in  Rayalaseema Constructions v.  Dy. Commercial  Tax Officer  [10  STC  345 (355-356)] and  affirmed by this Court in Dy. Commercial Tax Officer, Madras  v. Rayalaseema  Constructions (17 STC 505). The plea  urged was  that, if  the assessee,  is denied  the refund,  the   State  Government  could  retain  the  amount illegally collected, and it would amount to violation of the constitutional mandate  enshrined  in  Article  265  of  the Constitution. An  equitable principle  will  not  hold  good against a constitutional mandate. On the other hand, Counsel for the  Union of  India, Sri  K. Parasaran,  brought to our notice the  following portion of the Preamble and Article 39 (b) and  (c) of the Constitution to contend that Article 265 of the  Constitution cannot be construed in the light of the basic  principles   contained  in   other   parts   of   the Constitution  -  viz.  -  the  Preamble  and  the  Directive Principles of State Policy :-                "Preamble      WE, THE  PEOPLE  OF  INDIA,  having      solemnly  resolved   to  constitute      India into  a  SOVEREIGN  SOCIALIST      SECULAR DEMOCRATIC  REPUBLIC and to      secure to all its citizens:      JUSTICE,   social,   economic   and      political;      xxxxx          xxxxxx         xxxxx      Article 39 (b)-(c):      "(b) that the ownership and control      of the  material resources  of  the      community  are  so  distributed  as      best to subserve the common good;      (c)  that   the  operation  of  the      economic system  does not result in      the  concentration  of  wealth  and      means of  production to  the common      detriment;"           (Emphasis supplied)      Mr. Parasaran  also urged  that it  should be  borne in



mind that excise duty is an indirect levy or tax which could be passed  on. Innumerable persons bear the brunt. And it is passed on,  ordinarily by prudent businessmen. The decisions in R.C.  Jall v.  Union of India [1962 suppl. (3) SCR 436 at 451] and  The Province  of Madras v. M/s. Boddu Paidanna and Sons [1942  F.C.R.90], were  referred to. Reference also was made to  Section 64A  of Sale  of Goods  Act, 1930 which was substituted later  by Act  33 of  1963 to show that the levy could be  passed on and so recognised by statute, and in the above background.  there is  a presumption  that excise duty has been  passed on.  The scope  of  Article  39(b)  of  the Constitution, as  laid  down  by  this  Court  in  State  on Karnataka and Anr. etc. v. Shri Ranganatha Reddy & Anr. etc. [1978 (1)  SCR 641  (689)], Sanjeev  Coke Mfg. Co. v. Bharat Coking Coal  Ltd. &  Anr. [1983  (1)  SCR  1000  (1023-24  & 1026)], State  of Tamil Nadu etc. etc. v. L. Abu Kavur Bai & Ors. [AIR  1984 SC  326 (343) = 1984 (1) SCR 725 (759, 761)] was highlighted.  Reliance was  placed on  M/s. Amar Nath Om Parkash and Ors. etc. v. State of Punjab and Ors. etc. [1985 (2) SCR  72, at  pp.96, 97, 99, 100)] Shiv Shanker Dal Mills etc. etc. v. State of Haryana & Ors. etc. [1980 (1) SCR 1170 (1173)], and Walaiti Ram Mahabir Prasad v. State of Punjab & Ors. [AIR  1984 (P&H)  120, at  p. 124], to stress the point that the  persons claiming  refund who were only middle-men, should not  be unjustly  enriched  and  allowed  to  make  a "fortune"  as   it  were,  at  the  expense  of  innumerable unidentifiable innocent consumers and that "public interest" requires that  such persons  claiming refund  should not  be unduly or unjustly benefited; and, public interest is better served, if  the State is allowed to retain the collection of tax, which  could be  made/spent, for  the  benefit  of  the "public". 16.  On an  evaluation of  the  rival  pleas  urged  in  the matter, I  am of the view that the plea of Counsel for Union of India should prevail.      Following the  decision in  the Province of Madras case (Supra) and  other cases, a Constitution Bench of this Court in R.C.  Jall v.  Union of  India (supra) at page 451 stated the nature and character of excise duty, thus:      "Excise duty is primarily a duty on      the production  or  manufacture  of      goods  produced   or   manufactured      within  the   country.  It   in  an      indirect     duty     which     the      manufacturer or  producer passes on      to the  ultimate consumer, that is,      its ultimate  incidence will always      be on the consumer.           (Emphasis supplied)      Section  64A  of  the  Sale  of  Goods  Act  after  its amendment by  Act 33  of 1963, in providing that in contract of sale amount of increased or decreased taxes, may be added or deducted  by the  seller or  by the  buyer,  in  case  of increase or  decrease or  remitted, after  the making of the contract for  the sale  or purchase  of such  goods, without stipulation as  to the  payment of  tax where  a tax was not chargeable at  the time  of making  the contract,  expressly states that  the pr  visions shall  apply  to  any  duty  of customs or  excise and  any tax  on the  sale or purchase of goods. the  scope of Article 39(b) of the Constitution which has as  its basis  the concept of "distributive justice", as explained  in  three  cases  referred  to  in  the  previous paragraph; Shri  Ranganatha Reddy (1978(1) SCR 641), Sanjeev Coke v.  Bharat [1983(1)  SCR 1000]  and L. Abu [AIR 1984 SC 326]  go   to  show  that  the  words  "material  resources"



occurring in  Article 39 clause (b) will take in, natural or physical resources  and also  movable or  immovable property and it  would include  all private  and  public  sources  of meeting material  needs, and  not merely  confined to public possessions. So  also, the  three cases,  Shiv  Shanker  Dal Mills’ case [1980 (1) SCR 1170], Amar Nath Om Parkash’s case [1985 (2)  SCR 72]  and Walaiti Ram Mahabir Prasad [AIR 1984 (P&H) 120], emphasis the principle that the persons who have passed on  the burden of the levy -- middlemen -- should not be allowed  to profiteer  by illogtten  gains  and  unjustly enriched. An  analysis of the above decisions in detail will point out  that  if  Article  265  of  the  Constitution  is literally interpreted  and in isolation, and refund ordered, in cases  where excise  duty has  been passed  on,  it  will result in  a mockery,  totally ignoring  the  other  salient features of  the Constitution  and the  ground realities. As the Preamble  states, the  Constitution was  enacted by  the people, to  secure to  all the citizens, justice, political, social and  economic. It  is fairly settled by the decisions of this  Court, that  the directive  principles contained in Part  IV   of  the   Constitution  are  fundamental  in  the governance of  this country  and all  organs  of  the  State including  the   judiciary  are   bound  to   enforce  those directives. In  interpreting the  various provisions  of the Constitution, the  courts have to be realistic and should be alive to  the needs  of  the  times.  There  courts  have  a responsibility   to    ensure    proper    and    meaningful interpretation of  the directive principles and to adjust or harmonise  the  objectives  enshrined  in  the  Preamble  -- justice, political,  social and  economic and  the directive principles contained in Part IV, with the individual rights. In the  process, it  is permissible  to  restrict,  abridge, curtail and  in extreme  cases, abrogate other rights in the Constitution,  if   found  necessary   and   expedient,   in particular situations.  In the  light of  the above,  I hold that Article  265 should be read along with the Preamble and Article 39(b)  and (c) of the Constitution, and so construed in cases  where the  assessee has passed on the liability to the consumer or third party, he is not entitled to the claim of restitution  or refund. The fact that the levy is invalid need not  automatically result  in a direction for refund of all collections  made in  pursuance thereto. The observation of a  three-Member Bench of this Court in Orissa Cement Ltd. v. State  of Orissa  [1991 Supp. (1) SCC 430 (498 para 69)], is apposits in this context.      "We are inclined to accept the view      urged on behalf of the State that a      finding regarding the invalidity of      a  levy   need  not   automatically      result in  a direction for a refund      of  all  collections  thereof  made      earlier. The  declaration regarding      the invalidity  of a  provision and      the  determination  of  the  relief      that   should    be   granted    in      consequence   thereof    are    two      different things and, in the latter      sphere, the  court has, and must be      held to  have, a  certain amount of      discretion. It  is a  well  settled      proposition that  it is open to the      court to  grant, mould  or restrict      the  relief   in  a   manner   most      appropriate to the situation before      it in  such a way as to advance the



    interests of justice." 17.  It is open to the Court to deny the equitable remedy of refund (restitution)  in such  cases. The attempt of persons who have  passed on the liability in claiming refund is only to strike  at a  bargain -- to make a fortune at the expense of innumerable  unidentifiable consumers.  Such persons have suffered no loss. On the other hand, if the State is allowed to retain  the amount, it will be available to the community at large  and could  be made  use of for public purposes. On this basis  as well,  the denial of refund or restitution is valid. There  is nothing  abhorrent or against public policy if refund or restitution is withheld in such a situation. It should also  be stated that in cases of indirect levy of tax which was  passed on, this Court has negatived the claim for refund in a few cases, mentioned in paragraph 12 (supra); -- Shiv Shanker  Dal Mills  v. State  of Haryana  [1980 (1) SCR 1170 (1173)],  State of  Madhya Pradesh v. Vyankatlal & Anr. [1985 (3) SCR 561 (566, 568)], M/s. Amar Nath Om Parkash and Ors. v. State of Punjab and Ors. [1985 (2) SCR 72 (96-100)], Indian  Aluminium   Company  Limited   v.  Thane   Municipal Corporation [1992  Supp. (1) SCC 480 (488-489)] and State of Rajasthan & Ors. v. Novelty Stores etc. [AIR 1995 SC 1132]. 18.  It  now  remains  to  consider  the  foreign  decisions brought to  our notice.  The various  decisions  of  foreign courts  and   their  scope   have  been   very  exhaustively considered by  Jeevan Reddy,  J. in  this judgment under the heading "Decisions  of foreign  courts on the subject". I am in broad agreement with my learned brother Jeevan Reddy, J., in the  analysis of  the various  decisions aforesaid. It is unnecessary to cover that ground over again. 19.  In this  context, it  will not  be out of place to note that academicians have bestowed great thought and in various articles  dealt   with  the  matter  in  sufficient  detail, particularly with reference to the foreign decisions brought to our notice. To mention a few, they are -- (1)  "When Money  is paid  in Pursuance  of a void authority      ...." --  A duty  to repay? by Peter Birks; [Public Law      (1992) page 580] (2)  "Restitution   of  taxes,  levies  and  other  imposts:      Defining the  extent of the Woolwich Principle" - by J.      Beatson. [Law  Quarterly Review  Vol. 109  (1993)  page      401] (3)  "Restitution of  Overpaid Tax,  Discretion and Passing-      on" --  by J.  Beatson. [Law  Quarterly Review Vol. 111      (1995) page 375 Notes] (4)  "Unjust Enrichment"  - by  Steve Hedley. [Cambridge Law      Journal 1995 (578-599)] -- (5)  "Unjust Enrichment Claims: A Comparative Overview" - by      Brice Dickson [Cambridge Law Journal (1995) (100-126)] (6)  "The Law of Taxation is not an Island -- Overpaid Taxes      and the Law of Restitution" - by Graham Virgo; [British      Tax Review (1993) (442-467)] (7)  "Payments of  Money under Mistake of Law: A Comparative      View" -  by Gareth  Jones [Cambridge Law Journal (1993)      Comment (225)] (8)  "Restitution, Misdirected Funds and Change of Position"      - by  Ewan McKendrick, [Modern Law Review (1992) Vol.55      (377-385)]      In some  of the  articles, the  defences to a claim for restitution of  overpaid  taxes,  has  been  dealt  with  in detail. One of them is the article by Graham Virgo appearing in British  Tax Review  (1993) (pp. 442-467) titled "The Law of Taxation  is not  an Island -- Overpaid Taxes and the Law of Restitution".  At pages 462 and 463 under the sub-heading "Passing on",  the learned  author has  made  the  following



comment :      "(vii) Passing on 48      Since restitution  at common law is      based   upon   the   principle   of      reversing an  unjust enrichment, it      is important  to determine  whether      the defendant  as actually enriched      at the  plaintiff’s  expense.  This      raises a  difficult  problem  where      the Revenue  was initially enriched      at  the   taxpayer’s  expense,   by      virtue of  the receipt  of overpaid      tax,  but   the  taxpayer  did  not      ultimately suffer  a  loss  because      the  burden   of  the  payment  was      passed on  to somebody  else.  This      could arise  if the  taxpayer  pays      excessive VAT and passes the amount      overpaid on  to customers  49. As a      matter of  principle  it  could  be      argued that,  in such  a case,  the      taxpayer should  not be  allowed to      recover the  amount  overpaid  from      the Revenue, because recovery would      mean that the taxpayer was unjustly      enriched at the      -----------------------------------      48. This  defence differs from that      of change  of position because with      the latter the issue relates to the      conduct  of  the  payee.  With  the      defence of  passing  on  the  issue      relates  to   the  conduct  of  the      payer.      49. This specifically dealt with by      F.A. 1989, s.24(5) discussed infra,      which denies  the repayment  of VAT      if it  would  unjustly  enrich  the      recipient of the payment.      expense  of  those  who  ultimately      bore the  burden of  the tax.50.  A      possible solution  to  this  is  to      allow those  who  effectively  paid      the tax  to recover  from  the  tax      payer, who  in turn  should recover      from    the    Revenue.    However,      typically in  cases of  passing  on      there   are    many   people    who      effectively bear  the burden of the      tax and  to  encourage  actions  by      them  would   be  impractical   and      unrealistic. Thus,  in  such  cases      the best  approach is  to allow the      Revenue a defence of passing on and      enable it to retain the tax and use      it for the public benefit.      However, it  remains  uncertain  to      what extent a defence of passing on      exists in  English  law.51  Such  a      defence is  recognised by  European      Community law.  In  Amministrazione      delle Finanze  dello Stato  v.  SpA      San  Giorgio   it  was   held  that      Community  law   does  not  prevent      Member  States   from  "disallowing



    repayment  of  charges  which  have      been unduly  levied where  to do so      would entail  unjust enrichment  of      the recipients,"  for example where      the unduly levied charges have been      -----------------------------------      50. In  Moses v. Macferlan (1760) 2      Burr. 1005 at p.1020 Lord Mansfield      said that  the  payee  "may  defend      himself by  everything which  shews      that the  plaintiff,  ex  aequo  et      bono, is  not entitled to the whole      of his  demand, or  to any  part of      it." This principle suggests that a      defence of passing on should exist,      for simple reasons of justice.      51. In  Woolwich, supra,  Lord Goff      deferred the issue of the existence      of a passing on defence, suggesting      (at p.178) that the availability of      such a  defence may  depend on  the      nature of  the tax. It is submitted      that the only real relevance of the      nature of  the tax  relates to  the      case  of  determining  whether  the      burden of the tax really was passed      on.      incorporated in  the price of goods      and  passed   on   to   purchasers.      Although this  decision is confined      to charges  levied contrary  to the      rules of  Community law,  the  very      fact that Community law accepts the      validity of a defence of passing on      and accepts  that the  rationale of      it   is   to   avoid   the   unjust      enrichment of the initial taxpayer,      is a good reason for the defence to      be  adopted  generally  in  English      law. It  would be odd if there were      a divergence  of  approach  between      English and  Community law  on this      matter.      However,  it  must  be  noted  that      Community law  "does  not  prevent"      Member  States   from  adopting   a      defence  of  passing  on.  The  San      Giorgio case  is not  authority for      the proposition  that Member States      must adopt  such a  defence.  There      has been some disquiet expressed as      to the  need for  such a defence in      theory and  how it  would  work  in      practice. The  defence was rejected      in Mason  v. New  South Wales.  The      operation of the defence is fraught      with difficulties because it is not      easy to  show that  the charge  was      passed on in the price of gods. For      the price  of goods  is affected by      many factors,  conditional upon the      state  of   the  market.   Advocate      General Mancini  in the San Giorgio      case said  that the  "passing on of      charges is  not generally  relevant



    because    of    the    innumerable      variables   which    affect   price      formation  in  a  free  market  and      because    of     the    consequent      impossibility    of    definitively      relating  any  part  of  the  price      exclusively  to  a  certain  cost."      Thus, may be the price of goods was      increased in  an attempt  to recoup      the tax  paid to  the Revenue  from      the purchasers  of goods,  but this      in turn  may have  had an impact on      sales  volume   resulting   in   an      overall loss.  The  burden  of  the      enrichment cannot really be said to      have  been   passed  on   when  the      initial  taxpayer   suffers  a  net      loss.      It is submitted that in principle a      defence of passing on should exist,      with a burden of proving this being      on  the   Revenue:  it   unlawfully      demanded the taxes and so it should      show that  repayment would unjustly      enrich the taxpayer. It is unlikely      that such  a defence  would operate      successfully in  practice  in  many      cases because  of the difficulty of      proving that  the tax  was actually      passed on."           (Emphasis supplied)      Similarly, in  the article  by J.  Beatson [(1993)  109 L.Q.R.  401   (427-428)],  the  learned  author  has  stated regarding passing on, thus:      " "Passing  on." The Law Commission      raised the  question of  whether  a      payer who has "passed on" to others      for instance  by  price  increases,      the  higher   cost  he   has  borne      because of  the overpayment  should      be precluded  from recovering. This      defence is  permitted  by  European      Community Law  so long  as it  does      not have  the effect  of making the      right  to   recover  impossible  in      practice or  excessively  difficult      to exercise.  However, it  has been      criticised,  technically   because,      inter alia,  price increases should      mean that  less will  be sold,  and      also  because  of  difficulties  of      proof.  These   difficulties   were      noted by  Lord Goff,  and arguments      for  a   similar  limit   were  not      accepted  by   the  High  Court  of      Australia in  Mason  v.  New  South      Wales.  However,   the   underlying      rationale of a "passing on" defence      might be  achieved by providing, as      in  the  statutes  on  recovery  of      Value Added  Tax and  car tax, that      recovery should  not be  allowed if      the payee  can show  that the payer      would be  unjustly enriched  if  he      recovered the  payment. This  would



    be  consistent   with   the   basic      equitable   features    that   have      influenced the  development of  the      action for  money had and received.      It is  also possible  that  such  a      limit would achieve the same policy      ends as  the "reasonable  and just"      limit in provisions such as section      33 of the Taxes Management Act 1970      and, if  so,  it  might  provide  a      useful  method   of   achieving   a      measure    of     rationalisation."      (pp.427-428) 20.  Mention may  also be  made about  the Law  Commission’s Report   in   England,   Law   Consultation   Paper   No.120 "Restitution of  Payments made  under a  mistake of  law" -- wherein, after discussing the entire case law of England and other jurisdictions, an observation is made thus:      "3.85  In   principle  there  would      appear to  be no  reason why such a      defence should  not apply  to cases      where the  authority can  prove  on      the balance  of probabilities  that      the   payer   would   be   unjustly      enriched  because  the  charge  has      been  passed   on.  The   views  of      consultees on  the general issue of      a   "passing    on"   defence   are      invited."      In Kanhaiya  Lal’s case  (1959 SCR  1350 at page 1367), this Court  was not  inclined  to  accept  that  defence  in mitigation that  the State  has not retained the amount, but has spent  them away  in the ordinary course of governmental activities. This  plea in  defence based  on the  theory  of "Change of  Position" has been dealt with by Graham Virgo in his article  in British  Tax Review (1993) at pages 458-459. See also  the views expressed in this behalf by a two-Member Bench of  this Court  in D. Cawasji & Co. v. State of Mysore [1975 (2) SCR 511]. 21.  I am  of the  view that  the above academic opinion has got much force. However, it is subject to one aspect, stated hereunder.  As   held  by   me  earlier,   ordinarily,   the presumption is that the taxpayer has passed on the liability to the consumer (or third party). It is open to him to rebut the  presumption.  The  matter  is  exclusively  within  the knowledge of  the taxpayer,  whether the  price of the goods included the  ‘duty’ element  also and/or also as to whether he has  passe don the liability since he is in possession of all relevant  details. Revenue  will not be in a position to have an  in depth  analysis  in  the  innumerable  cases  to ascertain and  find out  whether the  taxpayer has passed on the  liability.   The  matter  being  within  the  exclusive knowledge of  the taxpayer,  the burden  of proving that the liability has  not been  passed on  should lie on him. It is held accordingly. 22.  The next important question that falls to be considered is, as  to what  extent the  jurisdiction  of  the  ordinary courts  is  ousted,  regarding  claims  for  refund  of  tax illegally levied or collected?      According  to   the  Revenue,  the  Act  is  a  special enactment creating  new rights  and liabilities and has also made exhaustive  provisions,  to  ventilate  the  grievances against all  illegal and  improper  assessments  by  way  of appeals, revisions  etc.  and  also  to  obtain  refunds  in appropriate  cases   by  following  certain  procedures  and



fulfilling some  conditions. A  hierarchy  of  tribunals  is provided  to  afford  relief  to  the  assessees.  Elaborate alternate remedies provided by the Act, taken along with the specific bar  of the jurisdiction of courts provided in Rule 11 (as  amended) and  Section  11(B)  of  the  Act,  and  in particular  specifying  the  conditions  and  procedure  for entertaining claims  for refund, period of limitation within which the  claim should be preferred, etc. will oust/bar the jurisdiction of  ordinary courts  in that regard. (Attention was also drawn to Sections 11C, 11D and also to Sections 12A to D  of the  Act, to  stress the scheme of the Act.) On the other hand,  counsel for  the assessees-claimants urged that the provisions  in  the  Act  dealing  with  refund  of  tax "unconstitutionally"  or   "illegally"  or  "unauthorisedly" collected are  not exhaustive.  Even so,  in cases where the levy is unconstitutional or illegal or without jurisdiction, the jurisdiction of the Civil Courts is not barred to annual the levy and/or order refund. 23.  As  stated  by  me  earlier  in  paragraph  5  of  this judgment, the  claims for  refund can  be classified broadly into 3 groups. They are -- (I)  the levy  is unconstitutional  - outside the provisions      of the Act or not contemplated by the Act. (II) the  levy is  based  on  misconstruction  or  wrong  or      erroneous interpretation  of the relevant provisions of      the Act,  Rules or  Notifications;  or  by  failure  to      follow the  vital or  fundamental provisions of the Act      or by acting in violation of the Fundamental Principles      of judicial procedure. (III)  mistake   of  law  --  the  levy  or  imposition  was      unconstitutional or  illegal or  not  eligible  in  law      (without jurisdiction)  and, so  found in  a proceeding      initiated not  by the  particular assessee,  but  in  a      proceeding initiated  by some  other assessee either by      the High Court or the Supreme Court, and as soon as the      assessee came  to know  of the  judgment,  (within  the      period of limitation) he initiated action for refund of      the tax paid by him, due to mistake of law. 24.  The relevant  provisions of  law  that  existed  during different periods  dealing  wit  the  claim  for  refund  ar different in content and scope. They are as follows: (a)  Period up  to 7.8.1977 -- Rule 11 of the Central Excise      Rules, before amendment; (b)  Period from  7.8.1977 to  16.11.80 --   Rule  11 of the      Central Excise Rules, as amended; (c)  Period from  16.11.1980 to 19.9.1991 -- Section 11A and      Section 11B of the Central Excises & Salt Act; and (d)  Period after  19.9.1991 --  Section 11A read along with      Section 11B of the Act, as amended by Act 40 of 1991.      Rule 11  of the Central Excise Rules which was in force prior to  7.8.1977, has  been quoted  in paragraph 5 of this judgment. It  contains no  specific  provision  relating  to outster of jurisdiction of the courts. 25.  Rule 11 of the Central Excise Rules as amended, Section 11A and  Section 11B  before Amendment  Act 40  of 1991  and Section 11B,  as amended  by Act  40 of  1991, will  be more important to consider the question of ouster of jurisdiction of courts.  Sections 11C,  11D as  also Sections 12A to D of the Act,  will throw  light on  the scheme  of  the  Act  as amended. They  are as  follows (insofar as they are relevant in the instant cases):-              Rule 11 as amended      "Rule  11.   Claim  for  refund  of      duty.--      (1)  Any person  claiming refund of



    any duty  paid by  him may  make an      application for refund of such duty      to  the   Assistant  Collector   of      Central Excise before the expiry of      six months from the date of payment      of duty.           Provided that  the  limitation      of six months shall not apply where      any  duty   has  been   paid  under      protest.           Explanation.-- Where  any duty      is paid  provisionally under  these      rules on  the basis of the value or      the rate of duty, the period of six      months shall  e computed  from  the      date on  which the duty is adjusted      after final  determination  of  the      value or  the rate  of duty, as the      case may be.           (2) If  on receipt of any such      application the Assistant Collector      of Central Excise is satisfied that      the whole  or any  part of the duty      paid by  the  applicant  should  be      refunded to  him, he  may  make  an      order accordingly.           (3)  Where as  a result of any      order passed  in appeal or revision      under the  Act, refund  of any duty      becomes  due  to  any  person,  the      proper  officer   may  refund   the      amount to  such person  without his      having to  make any  claim in  that      behalf.           (4)  Save   as       otherwise      provided by or under these rules no      claim for refund of any duty shall      be entertained.           Explanation.   --    For   the      purposes  of  this  rule,  ‘refund’      includes  rebate   referred  to  in      Rules 12 and 12A."                 SECTION 11-A      "11A.     Recovery  of  duties  not      levied or  not paid or short-levied      or   short-paid    or   erroneously      refunded. --(1)  When any  duty  of      excise has  not been levied or paid      or has  been short-levied  or short      paid  or  erroneously  refunded,  a      Central Excise  Officer may, within      six months  from the relevant date,      serve   notice    on   the   person      chargeable with  the duty which has      not been  levied or  paid or  which      has been short-levied or short-paid      or   to   whom   the   refund   has      erroneously  been  made,  requiring      him to show cause why he should not      pay the  amount  specified  in  the      notice:           Provided that  where any  duty      of excise  has not  been levied  or      paid or  has been  short-levied  or      short-paid or  erroneously refunded



    by reason  of fraud,  collusion  or      any   wilful    mis-statement    or      suppression    of     facts,     or      contravention   of   any   of   the      provisions of  this Act  or of  the      rules made  thereunder with  intent      to evade  payment of  duty, by such      person or his agent, the provisions      of  this   sub-section  shall  have      effect, as  if, for  the words ‘six      months’,  the  words  ‘five  years’      were substituted.      Explanation.-- .........      (ii) ‘relevant date’ means, --      (a)  in the case of excisable goods      on which  duty of  excise  has  not      been levied  or paid  or  has  been      short-levied     or      short-paid      .........      (c) in  any other case, the date on      which the  duty is to be paid under      this  Act   or   the   rules   made      thereunder;"      SECTION 11-B  BEFORE  AMENDMENT  BY      ACT 40/1991      "11B. Claim  for refund  of duty.--      (1) Any  person claiming  refund of      any duty  of  excise  may  make  an      application for refund of such duty      to  the   Assistant  Collector   of      Central Excise before the expiry of      six months from the relevant date:           Provided that  the  limitation      of six months shall not apply where      any  duty   has  been   paid  under      protest.      (2)  If  on  receipt  of  any  such      application,     the      Assistant      Collector  of   Central  Excise  is      satisfied that  the  whole  or  any      part of  the duty of excise paid by      the applicant should be refunded to      him,   he   may   make   an   order      accordingly.      (3)  Whereas a  result of any order      passed in  appeal or revision under      this Act  refund  of  any  duty  of      excise becomes  due to  any person,      the Assistant  Collector of Central      Excise may  refund  the  amount  to      such person  without his  having to      make any claim in that behalf.      (4)  Save as  otherwise provided by      or under  this Act,  no  claim  for      refund of  any duty of excise shall      be entertained.      (5)  Notwithstanding       anything      contained in  any  other  law,  the      provisions of  this  section  shall      also apply to a claim for refund of      any amount  collected  as  duty  of      excise made  on the ground that the      goods  in  respect  of  which  such      amount  was   collected  were   not      excisable  or   were  entitled   to



    exemption from  duty and  no  court      shall  have   any  jurisdiction  in      respect of such claim.      Explanation. --  For the purpose of      this section ...............      (B) ’relevant date’ means--      (f) in  any other case, the date of      payment of duty."      SECTIONS 11B,  11D AND 12A TO D, AS      AMENDED BY ACT 40/1991      "11B. Claim  for refund  of duty.--      (1) Any  person claiming  refund of      any duty  of  excise  may  make  an      application for refund of such duty      to the  Assistant  Commissioner  of      Central Excise before the expiry of      six months  from the  relevant date      in such  form and  manner as may be      prescribed  and   the   application      shall  be   accompanied   by   such      documentary   or   other   evidence      including the documents referred to      in section 12A as the applicant may      furnish  to   establish  that   the      amount  of   duty  of   excise   in      relation to  which such  refund  is      claimed was collected from, or paid      by, him  and the  incidence of such      duty had  not been passed on by him      to any other person:           Provided   that    where    an      application  for  refund  has  been      made before the commencement of the      Central Excises  and  Customs  Laws      (Amendment)   Act,    1991,    such      application shall be deemed to have      been made under this sub-section as      amended by  the said  Act  and  the      same  shall   be  dealt   with   in      accordance with  the provisions  of      sub-section (2) substituted by that      Act:           Provided  further   that   the      limitation of  six months shall not      apply where  any duty has been paid      under protest.      (2)  If, on  receipt  of  any  such      application,     the      Assistant      Commissioner of  Central Excise  is      satisfied that  the  whole  or  any      part of  the duty of excise paid by      the applicant is refundable, he may      make an  order accordingly  and the      amount  so   determined  shall   be      credited to the Fund:           Provided that  the  amount  of      duty of excise as determined by the      Assistant Commissioner  of  Central      Excise    under    the    foregoing      provisions  of   this   sub-section      shall, instead of being credited to      the Fund, be paid to the applicant,      if such amount is relatable to--      (a)  rebate of  duty of  excise  on      excisable  goods  experted  out  of



    India or on excisable material used      in the  manufacture of  goods which      are exported out of India;      (b)  unspent advance deposits lying      in  balance   in  the   applicant’s      account current maintained with the      Commissioner of Central excise;      (c)  refund of  credit of duty paid      on excisable  goods used  as inputs      in accordance  with the rules made,      or any  notification issued,  under      this Act;      (d)  duty of  excise  paid  by  the      manufacturer, if  he had not passed      on the  incidence of  such duty  to      any other person;      (e)  the duty  of excise  borne  by      the buyer,  if he had not passed on      the incidence  of such  duty to any      other person;      (f)  the duty  of excise  borne  by      any other  such class of applicants      as the  Central Government  may, by      notification   in    the   Official      Gazette, specify:           Provided   further   that   no      notification under  clause  (f)  of      the first  proviso shall  be issued      unless  in   the  opinion   of  the      Central Government the incidence of      duty has  not been passed on by the      persons  concerned   to  any  other      person.      (3)  Notwithstanding  anything   to      the  contrary   contained  in   any      judgment,    decree,    order    of      direction of the Appellate Tribunal      or  any   Court  or  in  any  other      provision of  this Act or the rules      made thereunder  or any  other  law      for the  time being  in  force,  no      refund  shall  be  made  except  as      provided in sub-section (2).      Explanation.-- For  the purposes of      this section, .........      (B) ‘relevant date’ means --      (f)  in any other case, the date of      payment of duty."           (Emphasis supplied)      Section 11C  deals with the power of Central Government to  dispense   with  recovery  of  excise  duty  in  certain specified cases,  which is not necessary for our discussion. Section 11D and Section 12A to D highlight the new scheme of the Act, relating to refund and they are as follows:- 11D. Duties  of  excise  collected  from  the  buyer  to  be      deposited with the Central Government      (1) Notwithstanding  anything to the contrary contained in any  order or  direction of the Appellate Tribunal or any court or  in any  other provision  of this  Act or the rules made thereunder,  every person  who has collected any amount from the  buyer of  any goods  in any manner as representing duty of  excise, shall forthwith day the amount so collected to the credit of the Central Government.      (2) The  amount paid  to  the  credit  of  the  Central Government under  sub-section (1)  shall be adjusted against



duty of  excise payable by the person on the finalisation of assessment  and   where  any  surplus  is  left  after  such adjustment, the  amount of  such  surplus  shall  either  be credited to the Fund or, as the case may be, refunded to the person who  has borne  the  incidence  of  such  amount,  in accordance with  the  provisions  of  section  11B  and  the relevant date  for making  an application under that section in such  cases shall  be the date of the public notice to be issued by the Assistant Commissioner of Central Excise." "12A Price  of goods  to indicate  the amount  of duty  paid      thereon      Notwithstanding anything  contained in  this Act or any other law  for the  time being  in force,  every person  who liable to pay duty of excise on any goods shall, at the time of clearance  of the  goods, prominently indicate in all the documents relating  to assessment,  sale invoice  and  other like documents, the amount of such duty which will form part of the price at which such goods are to be sold. 12B. Presumption  that incidence  of duty has been passed on      to the buyer      Every person  who has  paid the  duty of  excise on any goods under this Act shall, unless the contrary is proved by him, be  deemed to have passed on the full incidence of such duty to the buyer of such goods. 12C. Consumer welfare fund (1)  There shall  be established by the Central Government a fund, to be called the Consumer Welfare Fund. (2)  Thee shall  be credited  to the Fund, in such manner as may be prescribed, -- (a)  the amount of duty of excise referred to in sub-section      (2) of section 11B or sub-section (2) of section 11C or      sub-section (2) of section 11D; (b)  the amount  of duty  of customs  referred  to  in  sub-      section (2) of section 27 or sub-section (2) of section      28A, or  sub-section 92)  of section 28B of the Customs      Act, 1962 (52 of 1962); (c)  any income  from investment  of the  amount credited to      the Fund  any other  monies  received  by  the  Central      Government for the purposes of this Fund. 12D. Utilisation of the Fund (1)  Any money credited to the Fund shall be utilised by the Central Government  for the  welfare  of  the  consumers  in accordance with  such rules  as that  Government may make in this behalf. (2)  The Central  Government shall maintain or, if it thinks fits, specify the authority which shall maintain, proper and separate account  and other  relevant records in relation to the Fund  in such  form as may be prescribed in consultation with the Comptroller and Auditor-General of India."      It is  evident that Rule 11, before amendment, provided a time  limit to  apply for  refund. Rule  11(4) as amended, Section 11B clauses (4) and (5) before amendment and Section 11B  clause  (3)  after  amendment,  specifically  oust  the jurisdiction of the ordinary courts. Detailed provisions are also provided  to ventilate  the grievances  and making such provisions  exclusive.   Other   ancillary   or   incidental provisions are  specified in  Sections 11D  and 12A  to D -- Section 11D  provides that every person, who collects excise duty from  the buyer,  should  deposit  the  same  with  the Central Government.  It will be adjusted against the duty of excise payable  by the  person concerned  on finalisation of the assessment.  Section 11D  requires clarification. Excise duty is, ordinarily paid or payable at the time of clearance of the  goods. The  sale of  the goods  may be later. So, if excise duty  due is  already paid  by the  manufacturer, and



later collected  by  him  when  the  goods  are  sold,  such collection, need  not be paid to the government. Only if the duty has not been paid already or if any excess is collected over and  above the duty already paid, then only an occasion arises for payment of the duty collected or excess collected -- and  this is the purport of Section 11D. The said section (Section 11D)  should be  understood in  the above practical and business  sense. Section  12A provides that the price of the goods  sold should  indicate the  amount of  duty, which will form  part of  the price.  Section 12B  states that the person, who  has paid  the duty of excise on any goods under the Act,  shall be deemed to have passed on the incidence of such duty  to the  buyer of  such goods.  It is a rebuttable presumption.  Section  12C  creates  the  "Consumer  Welfare Fund". The  amount of  duty referred  to in Sections 11B(2), 11C(2) and  11D(2) shall  be  credited  in  the  said  Fund. Section 12D provides that the Fund shall be utilised for the welfare of the consumers. 26.  The question  that falls  to be considered is as to how far or  to what  extent the  jurisdiction  of  the  ordinary courts is barred, in view of the alternate remedies provided by the  Act by  way of appeals, revisions, claims for refund and the  period of  limitation provided  therefor, etc.  and specifically excluding  the jurisdiction of the civil courts for claiming  refund? In  discussing this aspect, one has to bear in  mind the content of Article 265 also. It will apply where the  statute is  unconstitutional or  invalid and also where the collection is unauthorised/illegal, i.e.., without "authority of law". 27.  It is settled law that exclusion of the jurisdiction of the civil  courts is  not to  be readily  inferred, but that such  exclusion  must  either  be  explicitly  expressed  or clearly implied.  There are  a  few  decisions  of  Judicial Committee of  the Privy Council and innumerable decisions of this Court  which have  dealt with  the matter  in detail. I propose to  deal, only  with the  landmark decisions  on the subject. In  Secretary of State v. Mask & Co. (AIR 1940 P.C. 105 at  page 110),  the Judicial Committee laid down the law thus:      "...........It is  settled law that      the exclusion  of the  jurisdiction      of the  Civil Courts  is not  to be      readily  inferred,  but  that  such      exclusion must either be explicitly      expressed or clearly implied. It is      also  well  settled  that  even  if      jurisdiction is  so  excluded,  the      Civil Courts  have jurisdiction  to      examine  into   cases   where   the      provisions of the Act have not been      complied  with,  or  the  statutory      tribunal   has    not   acted    in      conformity  with   the  fundamental      principles of judicial procedure."           (Emphasis supplied)      The scope  of the  above observation has been explained by &  Constitution Bench  of this  Court, in  Firm of Illuri Subbayya Chetty and Sons v. State o Andhra Pradesh (AIR 1964 SC. 322). The minimal facts in this case will be relevant to understand the  scope of  the decision. The case arose under the Madras  General Sales  Tax Act, 1939. Section 18A of the Act provided  that no  suit or other proceeding shall except expressly provided in the Act, be instituted in any court to set aside  or modify  any assessment made under the Act. The Act also  contained provisions  by way of appeals, revisions



and further  revision to  the High Court. The levy under the Act was  only on  "purchase" of ‘ground-nuts’, but the sales Tax authorities  brought to  tax the  "sales"  turnover  and collected tax.  The assessee  contended that  levy of tax on the  sales  turnover  as  distinguished  from  the  purchase turnover is  illegal, and  filed a  suit for recovery of the amount so  collected. It should be noticed that the assessee himself voluntarily  made a return and paid the tax. In such circumstances, the question arose, whether the suit so filed is maintainable  in view  of the adequate alternate remedies provided by  the Act  and the  ouster of jurisdiction of the courts expressly contained in Section 18A of the Act? On the facts of  the case, it was held that the suit was barred. In considering the question of exclusion of jurisdiction of the civil  courts  to  entertain  civil  actions  by  virtue  of specific  provisions   contained  in  the  special  statute, reference was made to the decision of the judicial Committee in Secretary of State v. Mask & Co. (supra). After referring to  the   observations  of  the  judicial  Committee  quoted hereinabove, this  Court in  Firm of  Illuri Subbayya Chetty and sons  v. State  of Andhra  Pradesh (AIR  1964 SC  322 at pages 325 and 326) explained the said observation thus:      "...............It is  necessary to      add that  these observation, though      made in somewhat wide terms, do not      justify the  assumption that  if  a      decision has  been made by a taxing      authority under  the provisions  of      the relevant  taxing  statute,  its      validity can  be  challenged  by  a      suit  on  the  ground  that  it  is      incorrect  on  the  merits  and  as      such, it  can be  claimed that  the      provisions of the said statute have      not  been   complied   with.   Non-      compliance with  the provisions  of      the statute  to which  reference is      made by  the Privy Council must, we      think, be  non-compliance with such      fundamental   provisions   of   the      statute as  would make  the  entire      proceedings before  the appropriate      authority   illegal   and   without      jurisdiction.  Similarly,   if   an      appropriate authority  has acted in      violation   of    the   fundamental      principles of  judicial  procedure,      that may  also  tend  to  make  the      proceedings illegal  and  void  and      this  infirmity   may  affect   the      validity of the order passed by the      authority in  question. It is cases      of this  character where the defect      or the  infirmity in the order goes      to the  root of the order and makes      it in  law invalid  and  void  that      these observations  may perhaps  by      invoked in support of the plea that      the   civil    can   exercise   its      jurisdiction   notwithstanding    a      provision to the contrary contained      in the  relevant statute.  In  what      cases such  a plea would succeed it      is unnecessary  for us to decide in      the present  appeal because we have



    no doubt that the contention of the      appellant that  on the  merits, the      decision of the assessing authority      was wrong,  cannot be  the subject-      matter of  a  suit  because  S.18-A      clearly bars  such a  claim in  the      civil courts.           (Emphasis supplied)      In this  case, the  relevant Act contained detailed and specific provisions  by way  of  appeal,  revision  etc.  to ventilate the  grievances  of  the  assessees.  In  addition thereto,  there   was   specific   provision   ousting   the jurisdiction of  the courts. Even so, the court did not hold that the  principles laid  down  in  Mask  &  Co.  case  are inapplicable.  The  principles  in  Mask  &  Co.  case  were affirmed and explained. 28.  The decision  of the  Privy Council  in Mask & Co. case (supra), and  other decisions  of the  Privy Council  and of this Court,  were surveyed in detail by a Constitution Bench of this  court in Dulabhai etc. v. State of Madhya Pradesh & Anr. (AIR  1969 SC  78). In that case, the assessees filed a suit for  refund of  the tax  on  the  ground  that  it  was illegally   collected    from   them   being   against   the constitutional prohibition  contained in  Article 301 of the Constitution of  India and  not saved in Article 304 (a) the Constitution. Section  17 of the relevant Act was pleaded in defence as a bar to the maintainability of the suit. Section 17 provided  that no  assessment made  and no  order  passed under  the  Act  or  the  Rules  by  any  of  the  statutory authorities, shall  be called  in question  in any case. The court held  that notwithstanding,  the alternate remedies by way of  appeal, revision, rectification and reference to the High Court,  the tax  therein was levied  without a complete charging section  and this  affected the jurisdiction of the tax authorities,  and so,  the suit  was  maintainable,  and decreed the  suit. After referring to the relevant decisions and in  particular, Secretary  of State  v. Mask  & Co. (AIR 1940 P.C.  105), Firm  of Illuri Subbayya Chetty and sons v. State of  Andhra Pradesh (AIR 1964 SC. 322), this Court held in paragraph 28 of the judgment, thus:      "The  Constitution  Bench,  however      went on  to examine  the rulings of      the Judicial  Committee in Mask and      Co.’s and  Raleigh Investment Co.’s      cases, 67  Ind App  222 = (AIR 1940      PC 105)  and 74  Ind App  50 = (AIR      1947  PC   78).  Dealing  with  the      former case, this Court pointed out      that   non-compliance    with   the      provisions  of  the  statute  meant      non-compliance      with       such      fundamental   provisions   of   the      statute as  would make  the  entire      proceedings before  the appropriate      authority   illegal   and   without      jurisdiction.....            Emphasis supplied)      Referring to  the facts  of  Firm  of  Illuri  Subbayya Chetty and  Sons v.  State of  Andhra Pradesh  (AIR 1964 SC. 322), it was further observed:-      "The  case   of  Firm   of   Illuri      Subayya, 1961-1 SCR 752 = (AIR 1964      SC 322)  may be  said to be decided      on special  facts  with  additional      reference  to   the   addition   of



    Section    18-A    excluding    the      jurisdiction of civil court and the      special   remedies    provided   in      Section 12-A  to 12-D  by which the      matter  could   be  taken   to  the      highest civil court in the State.           (Emphasis supplied)      This Court  also considered  the facts  and the  actual decision of  the Special  Bench of  7-Judges in Kamala Mills Ltd. vs.  State of Bombay (AIR 1965 SC 1942) in detail, with reference to  Section 20  of the Bombay Sales Tax Act, 1946, and observed thus:      "The Special  Bench refrained  from      either accepting the dictum of Mask      Co.’s case,  67 Ind  App 222 = (AIR      1940 PC  105) or  rejecting it,  to      the    effect    that    even    if      jurisdiction is  it, to  the effect      that  even   if   jurisdiction   is      excluded by  a provision making the      decision of  the authorities final,      the civil  courts have jurisdiction      to examine  into  cases  where  the      provisions   of the  particular Act      are not complied with.      It is  evident from  the above, that the Principle laid down  in   Mask  &  Co.  case,  though  explained,  was  not questioned, or  departed from,  either  in  Illuri  Subbayya Chetty’s case or Kamala Mills case. In a subsequent decision -  Ram   Swarup  v.  Shikar  Chand  (AIR  1996  SC  893),  a Constitution Bench  of this Court again considered the scope of the  decisions in  Mask &  Co.’s case  (supra) and Kamala Mills’ case  (supra). Ram Swarup’s case arose under the U.P. (Temporary) Control  of Rent  and Eviction Act. Section 3(4) of the  Act provided that the order passed by the designated authority shall  be final  and Section  16  thereof  further provided that  the order  passed by  the State Government or the District  Magistrate, shall not be called in question in any court.  In other words, the jurisdiction of civil courts was excluded  in relation  to the  matters covered by orders included within  the provisions  of Sections  3(4) and 16 of the said  Act. The  Constitution Bench approached the matter thus:-      "One of  the points  which is often      treated as relevant in dealing with      the question about the exclusion of      civil  Courts’   jurisdiction,   is      whether the  special statute which,      it   is    urged,   excludes   such      jurisdiction, has  used  clear  and      unambiguous words  indicating  that      intention. Another  test  which  is      applied is:  does the  said statute      provide   for   an   adequate   and      satisfactory alternative  remedy to      a party  that may  be aggrieved  by      the  relevant   order   under   its      material provisions? Applying these      two tests,  it does appear that the      words used  in S.3(4) and S. 16 are      clear. Section 16 in terms provides      that the  order made under this Act      to which  the said  section applies      shall not  be called in question in      any  Court.   This  is  an  express



    provision   excluding   the   civil      courts’ jurisdiction.  Section 3(4)      does  not   expressly  exclude  the      jurisdiction of  the civil  Courts,      but, in  the context, the inference      that the  civil Courts jurisdiction      is intended to be excluded, appears      to be  inescapable.  Therefore,  we      are satisfied  that  Mr.  Goyal  is      right  in   contending   that   the      jurisdiction of the civil Courts is      excluded  in  relation  to  matters      covered  by   the  orders  included      within the provisions of S.3(4) and      S. 16.           (Emphasis supplied)      Even so,  this Court proceeded to state in paragraph 13 at page 896, to the following effect:-      "This conclusion, however, does not      necessarily  mean   that  the  plea      against the  validity of  the order      passed by  the District Magistrate,      or the  Commissioner, or  the State      Government, can  never by raised in      a civil  Court. In our opinion, the      bar   created   by   the   relevant      provisions of the Act excluding the      jurisdiction of  the  civil  Courts      cannot operate  in cases  where the      plea raised  before the civil Court      goes to  the root of the matter and      would,  if   upheld,  lead  to  the      conclusion that  the impugned order      is a nullity.           (Emphasis supplied)      This Court  referred to  the decisions  of the judicial committee, in  Secretary of  State v. Jatindra Nath Choudhry (AIR 1924  PC 175)  and the  decision in Mask & Co, and also quoted the  observations in  the latter case which have been quoted hereinbefore (para 27 - supra) and concluded thus:-      "In M/s.  Kamla Mills  Ltd. v.  The      State of  Bombay, C.A.  No. 481  of      1963, dated 23-4-1965: (AIR 1965 SC      1942), while dealing with a similar      point, this  Court  has  considered      the effect  of the  two decisions f      the Privy  council, one in the case      of Mask  and Co.,  67 Ind  app 222.      (AIR 1940  PC 105) (supra), and the      other  in  raleigh  Investment  Co.      Ltd.   v.    Governor-General    in      Council, 74 Ind App 50 at pp.62-63:      (AIR 1947  PC 78 at pp. 80-81). The      conclusion reached by this Court in      M/s. Kamla  Mill’s case,  C.A.  No.      481 of  1963 dated  23-4-1965: (AIR      1965   SC   1942),   (supra)   also      supports  the  view  which  we  are      taking in the present appeal.           (Emphasis supplied)      It is  evident that  in Ram  Swarup’s case,  this Court expressed the view that the decision in Kamla Mills’ case is in  accord   with  Mask   &  Co.’s  case,  and  the  bar  of jurisdiction of  civil courts  cannot operate in cases where the plea  raised before  the civil court goes to the root of



the matter and would, if upheld, lead to the conclusion that the impugned  order is  nullity -- in other works, where the order or  proceeding  is  attached  as  one  passed  without jurisdiction. Again, the principle laid down in Mask & Co.’s case was only reiterated and observations were made that the decision in  Kamala Mills’  case  was  in  accord  with  the decision in  Mask &  Co.’s case.  It is  important to notice that Gajendragadkar,  C.J., spoke  for the  Bench in all the three decisions:  Illuri Subayya  Chetty (AIR  1964 SC 322), Kamala Mill  (AIR 1965  SC 942)  and Ram Swarup (AIR 1966 SC 893).      In considering Mask & Co. (AIR 1940 PC 105), and Kamala Mills (AIR  1965 SC  1942) the  Constitution  Bench  in  Ram Swarup’s case  (AIR 1966 SC 893) held that if the proceeding assailed  is  totally  invalid  and  a  nullity  or  without jurisdiction, the  jurisdiction of  the civil  courts is not barred. Again, the principle laid down in Mask & Co. (supra) was only affirmed.      On an  analysis of  the various  decisions, this  Court laid  down  the  law  in  paragraph  32  at  page  89,  thus (Dulabhai’s case):      "Neither of  the two  cases of Firm      of Illuri Subayya, 1964-1 SCR 752 =      (AIR 1964  SC 322)  or Kamla Mills,      1966 1  SCR 64 = (AIR 1965 SC 1942)      can be  said to  run counter to the      series of  cases  earlier  noticed.      The result of this inquiry into the      diverse  views  expressed  in  this      Court may be stated as follows:           (1) Where  the statute gives a      finality  to   the  orders  of  the      special tribunals the civil court’s      jurisdiction must  be  held  to  be      excluded  if   there  is   adequate      remedy to  do what the civil courts      would normally  do in  a suit. Such      provision,   however,    does   not      exclude  those   cases  where   the      provisions of  the  particular  Act      have not  been complied with or the      statutory tribunal has not acted in      conformity  with   the  fundamental      principles of judicial procedure.           (2) Where  there is an express      bar  of  the  jurisdiction  of  the      court, an examination of the scheme      of the  particular Act  to Find the      adequacy or  the sufficiency of the      remedies provided  may be  relevant      but is  not decisive to sustain the      jurisdiction of the civil court.           Where  there   is  no  express      exclusion the  examination  of  the      remedies  and  the  scheme  of  the      particular  Act  to  find  out  the      intendment  becomes  necessary  and      the result  of the  inquiry may  be      decisive. In  the latter case it is      necessary to  see  if  the  statute      creates  a   special  right   or  a      liability  and   provides  for  the      determination  of   the  right   or      liability  and  further  lays  down      that all  questions about  the said



    right  and   liability   shall   be      determined  by   the  tribunals  so      constituted, and  whether  remedies      normally associated with actions in      civil courts  are prescribed by the      said statute or not.           (3)    Challenge     to    the      provisions of the particular Act as      ultra  vires   cannot  be   brought      before Tribunals  constituted under      that  Act.   Even  the  High  Court      cannot go  into that  question on a      revision  or   reference  from  the      decision of the Tribunals.           (4)  When   a   provision   is      already  declared  unconstitutional      or  the  constitutionality  of  any      provision is  to be  challenged,  a      suit is  open. A writ of certiorari      may include  a direction for refund      if the  claim is clearly within the      time prescribed  by the  Limitation      Act but  it  is  not  a  compulsory      remedy to replace a suit.           (5) Where  the particular  Act      contains no machinery for refund of      tax   collected    in   excess   of      constitutional limits  or illegally      collected a suit lies.           (6)    Questions     of    the      correctness of the assessment apart      from its  constitutionality are for      the decision of the authorities and      a civil  suit does  not lie  if the      orders  of   the  authorities   are      declared to be final or there is an      express    prohibition    in    the      particular Act.  In either case the      scheme of  the particular  Act must      be  examined   because  it   is   a      relevant enquiry.           (7)   An   exclusion   f   the      jurisdiction of  the civil court is      not readily  to be  inferred unless      the  conditions   above  set   down      apply.           (Emphasis supplied)      Dulabhai’s case  (supra) has been consistently followed by this  Court later  -- see: Sree Raja Kandregula Srinivasa Jagannadharao Panthulu  Bahadur Guru  v. The State of Andhra Pradesh and others (AIR 1971 SC 71) and other cases. (29) Applying the  law laid down in the decisions aforesaid, it is  not possible to conclude that any and every claim for refund of illegal/unauthorised levy of tax, can be made only in accordance  with the  provisions of  the  Act  (Rule  11, Section 11B  etc. as  the case may be), and an action by way of suit  or writ  petition under  Article 226  will  not  be maintainable under  any circumstances.  An action  by way of suit or  a petition under Article 226 of the Constitution is maintainable to  assail the  levy or order which is illegal, void or  unauthorised or  without jurisdiction  and/or claim refund, in  cases covered  by propositions  No.(1), (3), (4) and (5)  in Dulabhai’s case, as explained hereinabove, a one passed outside  the Act and ultra vires. Such action will be governed by  the general law and the procedure and period of



limitation provided  by the  specific statute  will have  no application. [Collector  of Central  Excise,  Chandigarh  v. M/s. Doaba  Co-operative Sugar  Mills Ltd..  Jalandhar (1988 Supp. SCC  683); Escorts Ltd. v. Union of India & Ors. (1994 Supp. (3)  SCC 86)].  Rule 11 before and after amendment, or S. 11B,  cannot affect  S.72 of  the  Contract  Act  or  the provisions of  Limitation Act  in such situations. My answer to the  claims for  refund broadly  falling under  the three groups or  categories enumerated  in  paragraph  5  of  this judgment is as follows:      Category (I)  where  the  levy  is  unconstitutional  - outside the provisions of the Act or not contemplated by the Act:-      In such  cases, the jurisdiction of the civil courts is not barred. The aggrieved party can invoke Section 72 of the Contract Act, file a suit of a petition under Article 226 of the Constitution,  and pray for appropriate relief inclusive of refund  within the  period of  limitation provided by the appropriate law.  [Dulabhai’s  case  (supra)  -  para  32  - Clauses (3) and (4)]      Category   (II)    where   the   levy   is   based   on misconstruction or  wrong or erroneous interpretation of the relevant provisions  of the  Act, Rules or Notifications; or by failure  to follow the vital or fundamental provisions of the Act  or  by  acting  in  violation  of  the  Fundamental Principles of judicial procedure:-      Under  this  category,  every  error  of  fact  or  law committed  by   the   statutory   authority   or   Tribunal, irrespective of  its gravity,  or nature  of infirmity, will not be  covered. It is confined to exceptional cases, "where the provisions  of a  particular Act  have not been complied with or  the statutory  tribunal has not acted in conformity with fundamental principles of judicial procedure" as stated in Mask & Co.’s case (supra) and in Dulabhai’s case (supra). The scope  of the  above dicta,  should be understood in the background of/in accord with the observations of the earlier constitution Bench  of this Court in Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh (AIR 1964 SC. 322 at page 326), to the following effect;      "....Non-compliance    with     the      provisions of the statute, to which      reference  is  made  by  the  Privy      Council must,  we  think,  be  non-      compliance  with  such  fundamental      provisions of  the statute as would      make the  entire proceedings before      the appropriate  authority  illegal      and      without      jurisdiction.      Similarly,   if    an   appropriate      authority has acted in violation of      the   fundamental   principles   of      judicial procedure,  that may  also      tend  to   make   the   proceedings      illegal  and   void  and  make  the      proceedings illegal  and  void  and      this  infirmity   may  affect   the      validity of the order passed by the      authority in  question. It is cases      of this  character where the defect      or the  infirmity in the order goes      to the  root of the order and makes      it in law invalid and void...      [Dulabhai’s case (supra) -- para 32      Clause (1)]           (Emphasis supplied)



    Here also, the appropriate action should be laid within the period of limitation provided by the appropriate law and also can  invoke Section 72 of the contract Act, as the case may be.      Category  (III)  -  Mistake  of  law  --  the  levy  or imposition was  unconstitutional or  illegal or not eligible in law  (i.e. without  jurisdiction)  and,  so  found  in  a proceeding initiated  not by the particular assessee, but in a proceeding initiated by some other assessee, either by the High Court or the Supreme Court, and as soon as the assessee came  to  know  of  the  judgment,  (within  the  period  of limitation) he  initiated action  for refund of the tax paid by him, due to mistake of law:-      In this  category, assessees  who initiated proceedings and impugned the assessments/claimed refund, for any reason, either by  way of  suit or petition under Article 226 of the Constitution, and  the action  was dismissed on merits, they cannot maintain an action over again. He who fights and runs away, cannot have another day. If the levy or imposition was held to  be unconstitutional  or illegal  or not exigible in law, in  a similar  case filed  by some  other  person,  the assessee who  had already  lost the  battle in  a proceeding initiated by  him  or  has  otherwise  abandoned  the  claim cannot,  take   advantage  of   the  subsequent  declaration rendered in  another case  where the  levy  is  held  to  be unconstitutional, illegal  or not exigible in law. The claim will be  unsustainable and  barred by  res  judicata.  [M/s. Tilokchand Motichand  and Ors.  v. H.B. Munshi, commissioner of Sales  Tax, Bombay  and another (AIR 1970 SC 898)]. (This will be confined to the period for which action was laid and lost).      Subject to the above, if a levy or imposition of tax is held to  be unconstitutional  or illegal  or not exigible in law i.e. without jurisdiction, it is open to the assessee to take advantage  of the  declaration of  the law so make, and pray for  appropriate relief  inclusive  of  refund  on  the ground that  tax was paid due to mistake of law, provided he initiates 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 Section 72 of the Contract Act read with Section 17 of the Limitation  Act. [Dulabhai’s  case (supra)  - para  32 - clauses (4) and (5)]. 30.  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, Article 226, etc. 31.  As observed  earlier, proposition  No.(1) of clause No. (1),  enunciated   in  Dulabhai’s  case  (supra)  should  be understood in  the background  of  or  in  accord  with  the observations of  the earlier  Constitution Bench  in  Illuri Subbayya Chetty’s  case - [AIR 1964 SC 322 (at pp. 325-326)] as quoted  in para  27 (supra)  --  (see  para  29  of  this judgment).      Opinions may  differ as  to when it can be said that in the "public  law" domain,  the entire  proceeding before the appropriate authority is illegal and without jurisdiction or the defect or infirmity in the order goes to the root of the matter and  makes it  in law invalid or void (Referred to in Illuri Subbayya  Chetty’s  case  and  approved  in  Dulabhai case). The  matter may have to be considered in the light of the provisions of the particular statute in question and the



fact situation  obtaining , in each case. It is difficult to visualise  all  situations  hypothetically  and  provide  an answer. Be  that as  it may,  the question  that  frequently arises for  consideration, is,  in what  situation/cases the non-compliance  or   error  or  mistake,  committed  by  the statutory authority or Tribunal, makes the decision rendered ultra-vires or a nullity or one without jurisdiction? If the decision  is   without  jurisdiction,   notwithstanding  the provisions for  obtaining reliefs  contained in  the Act and the "ouster clauses", the jurisdiction of the ordinary court is not  excluded. So, the matter assumes significance. Since the  landmark   decision  in   Anisminic  Ltd.  vs.  Foreign compensation commission  [1969 (2)  AC 147 = 1969 (1) All ER 208 (H.L.)], the legal world seems to have accepted that any "jurisdictional error"  as  understood  in  the  liberal  or modern approach,  laid down  therein, makes a decision ultra vires or  a nullity  or without jurisdiction and the "ouster clauses", are  construed restrictively,  and such provisions whatever their stringent language be, have been held, not to prevent challenge  on the  ground that the decision is ultra vires and  being a  complete nullity,  it is  not a decision within the  meaning of  the Act. The concept of jurisdiction has acquired  "new dimensions".  The original or pure theory of jurisdiction  means, "the authority to decide", and it is determinable at  the commencement, and not at the conclusion of the inquiry. The said approach has been given a go bye in Anisminic  case,   as  we  shall  see  from  the  discussion hereinafter [see  De Smith,  Woolf  and  Jowel]  -  Judicial Review  of   administrative  Action   (1995  edn.)  p.  238; Halsburry’s Laws  of England  (4th edn.)  p.114 -  para 67 - foot note  (9)]. As  Sir William  Wade observes in his book, Administrative  Law  (7th  edn.),  1994,  at  p.  299,  "The tribunal must  not only have jurisdiction at the outset, but must retain it unimpaired until it has discharged its task". The decision  in Anisminic case has been cited with approval in a  number of  cases by  this Court:  Citation of few such cases; Union  of India vs. Tarachand Gupta & Bros. [AIR 1971 SC 1558  (at 1565)],  A.R. Antulay v. R.S. Nayak and another [1988 (2)  SCC 602  (650)], M/s.  R.B. Shreeram Durga Prasad and Fatehchand  Nursing Das  v. Settlement  Commission (IT & WT) and  another [1989  (1) SCC 628 (634)], N. Parthasarathy etc. etc.  v. Controller  of Capital Issues & anr. etc. etc. [1991 (3)  SCC 153  (at 195), Associated Engineering Co. vs. Government of  Andhra Pradesh  and anr.  [AIR 1992  SC 232], Shiv Kumar  Chadha v.  Municipal Corporation  of  Delhi  and others [1993  (3) SCC 161 (173)]. Delivering the judgment of a two-member  Bench in  Shri M.L.  Sethi v.  Shri R.P. Kapur (AIR 1972 SC 2379) Methew, J. in paragraphs 10 and 11 of the judgment explained  the legal position after  Anisminic case to the following effect:      "The word  "jurisdiction" is verbal      cast of  many colours. Jurisdiction      originally seems  to have  had  the      meaning which Lord Baid ascribed to      it in  Anisminic  Ltd.  v.  Foreign      Compensation Commission (1969) 2 AC      147, namely,  the  entitlement  "to      enter   upon    the   enquiry    in      question".   If    there   was   an      entitlement  to   enter   upon   an      inquiry into the question, then any      subsequent  error   could  only  be      regarded as  an  error  within  the      jurisdiction.   The    best   known      formulation of  this theory is that



    made by Lord Denman in R. v. Bolton      (1841) 1  QB 66.  He said  that the      question   of    jurisdiction    is      determinable  of  the  enquiry.  In      Anisminic Ltd.,  (1969)  2  AC  147      Lord Reid said:      But there  are  many  cases  where,      although    the     tribunal    had      jurisdiction  to   enter   on   the      enquiry, it  has hone  or failed to      do something  in the  course of the      enquiry which  is of  such a nature      that its  decision is a nullity. It      may have  given its decision in bad      faith. It  may have made a decision      which it  had no  power to make. It      may have  failed in  the course  of      the  enquiry  to  comply  with  the      requirements of natural justice. It      may  in  perfect  good  faith  have      misconstrued the  provisions giving      it power  to act  so that it failed      to deal  with the question remitted      to it  and  decided  some  question      which was  not remitted  to it.  It      may  have   refused  to  take  into      account  something   which  it  was      required to  take into  account. Or      it may  have based  its decision on      some  matter   which,   under   the      provisions setting it up, it had no      right to  take into  account. i  do      not  intend   this   list   to   be      exhaustive."      In the same case, Lord Pearce said:      Lack of  jurisdiction may  arise in      various  ways.   There  may  be  an      absence  of  those  formalities  or      things   which    are    conditions      precedent to  the  tribunal  having      any jurisdiction  to embark  on  an      enquiry. Or the tribunal may at the      end make  an order  that it  has no      jurisdiction to  make.  Or  in  the      intervening stage  while engaged on      a proper  enquiry, the tribunal may      depart from  the rules  of  natural      justice; or  it may  ask itself the      wrong questions;  or  it  may  take      into account  matters which  it was      not directed  to take into account.      Thereby it  would step  outside its      jurisdiction.  It  would  turn  its      inquiry into something not directed      by Parliament  and fail to make the      inquiry which  the  Parliament  did      direct. Any  of these  things would      cause its  purported decision to be      a nullity.      11.  The dicta  of the  majority of      the House  of Lords,  in the  above      case would show the extent to which      ‘lack’ and ‘excess’ of jurisdiction      have been  assimilated or, in other      words, the  extent to which we have



    moved  away  form  the  traditional      concept  of   "jurisdiction".   The      effect of the dicta in that case is      to reduce  the  difference  between      jurisdictional error  and error  of      law within  jurisdiction almost  to      vanishing  point.   The   practical      effect of  the decision is that any      error of  law can  be  reckoned  as      jurisdictional.     That      comes      perilously  close  to  saying  that      there  is   jurisdiction   if   the      decision is  right in  law but none      if  it   is   wrong.   Almost   any      misconstruction of a statute can be      represented   as    "basing   their      decision on  a  matter  with  which      they  have   no  right   to  deal",      "imposing an unwarranted condition"      or addressing themselves to a wrong      question". The  Majority opinion in      the case leaves a Court or Tribunal      with virtually  no margin  of legal      error. Whether  there is  excess of      jurisdiction or merely error within      jurisdiction can be determined only      by   construing    the   empowering      statute,  which  will  give  little      guidance. It  is really  a question      of how  much latitude  the Court is      prepared to allow................"      In  a  subsequent  constitution  Bench  decision,  Hari Prasad Mulshankar Trivedi v. V.B. Raju anothers (AIR 1973 SC 2602), delivering  the judgment of the Bench, Mathew, J., in para 27 at page 2608 of the judgment, stated thus:      "..........Though the dividing line      between  lack  of  jurisdiction  or      power and  erroneous exercise of it      has become  thin with  the decision      of  the   House  of  Lords  in  the      Anisminic  Case,  (1967)  3  W.L.R.      382, we  do not    think  that  the      distinction  between  the  two  has      been completely  wiped out.  We are      aware   of    the   difficulty   in      formulating an  exhaustive rule  to      tell when  there is  lack of  power      and  when  there  is  an  erroneous      exercise of  it. The difficulty has      arisen     because     the     word      "jurisdiction"  is   an  expression      which is  used in variety of senses      and  takes   its  colour  from  its      context, (see Per Diplock, J. at p.      394 in the Anisminic Case). Whereas      the ‘pure’  theory of  jurisdiction      would reduce jurisdictional control      to a  vanishing point, the adoption      of a  narrower meaning might result      in a more useful legal concept even      though the  formal structure of law      may lose  something of  its logical      symmetry. "At bottom the problem of      defining     the     concept     of      jurisdiction   for    purpose    of



    judicial review  has  been  one  of      public policy  rather than  one  of      logic".  (S.A.De  Smith,  "Judicial      Review of  Administrative  Action".      2nd Edn., p. 98.)      (1988 edition)           (emphasis supplied)      The observation  of the learned author, (S.A. De Smith) was continued  in its third edition (1973) at page 98 and in its fourth  edition (1980)  at page  112 of  the  book.  The observation aforesaid  was  based  on  the  then  prevailing academic opinion  only as  is seen  from the  foot notes. it should be  stated that  the said observation is omitted from the latest  edition of the book De Smith, Woolf and Jowel] - Judicial Review  of  administrative  Action  -  5th  edition (1995) as  is evident  from page  229; probably due to later developments in  the law  and the  academic opinion that has emerged due to the change in the perspective. 32.  After 1980,  the decision in Anisminic case came up for further consideration  before  the  House  of  Lords,  Privy council and other courts. The three leading decisions of the House of Lords wherein anisminic principle, was followed and explained, are  the following:-  In re: Racal Communications Ltd. [1981 AC 374], O’Reilly & ors. vs. Mackman & ors. [1983 (2) AC  237], Regina  vs. Hull  University Visitor  [1993 AC 682]. It  should be  noted that  In  re  Racal’s  case,  the Anisminic Principle  was held to be inapplicable in the case of (superior)  court where the decision of the court is made final and  conclusive by  the statute.  (The superior  court referred to in this decision is the High Court) [1981 AC 374 (383, 384,  386, 391)]. In the meanwhile, the House of Lords in Council  for Civil Service Unions & ors. vs. Minister For the Civil  Service [1985  (1) AC 374] enunciated three broad grounds for  judicial  review,  as  "legality",  "procedural Propriety" and  "rationality"  and  this  decision  had  its impact in  the development  of  the  law  in  post-Anisminic period. In  the light  of the above four important decisions of the  House of  Lords, other  decisions of  the  court  of appeal, Privy  council, etc.  and the later academic opinion in the  matter the  entire case  law on the subject has been reviewed in  leading text books. In the latest edition of De Smith on "Judicial Review of Administrative Action" - edited by Lord  Woolf and  Jowel], Q.C. [(Professor  of Public Law) (Fifth  edition)   -  (1995)],   in  Chapter  5,  titled  as "Jurisdiction, Vires,  Law and Fact" (pp. 223-294), there is exhaustive analysis  about the  concept, "Jurisdiction", and its ramifications.  The  authors  have  discussed  the  pure theory  of   jurisdiction,  the   innovative   decision   in "Anisminic" case  [1969 (2)  AC 147], the development of the law  in   the  post  Anisminic  period,  the  scope  of  the "finality" clauses  (exclusion of jurisdiction of courts) in the Statutes, and have laid down a few propositions at pages 250-256 which  could be advanced on the subject. The authors have concluded the discussion thus at page 256:      "After  Anisminic  virtually  every      error of  law is  a  jurisdictional      error, and  the only place left for      non-jurisdictional error  is  where      the components of the decision made      by  the   inferior  body   included      matters of  fact and policy as well      as law,  or  where  the  error  was      evidential (concerning  for example      the burden of proof or admission of      evidence). Perhaps the most precise



    indication of  jurisdictional error      is that advanced by Lord Diplock in      Racal   Communications,   when   he      suggested  that   a   tribunal   is      entitled to  make an error when the      matter "involves, as many do inter-      related questions  of law, fact and      degree". Thus it was for the county      court judge  in Pearlman  to decide      whether the installation of central      heating in a dwelling amounted to a      "structural alteration extension or      addition".  This   was  a   typical      question of  mixed  law,  fact  and      degree which only a scholiast would      think  it  appropriate  to  dissect      into two  separate  questions,  one      for decision by the superior court,      viz. the  meaning of these words, a      question    which    must    entail      considerations of  degree, and  the      other  for  decision  by  a  county      court,  viz.   the  application  of      words     to     the     particular      installation, a question which also      entails considerations of degree."           It   is,   however,   doubtful      whether any  test of jurisdictional      error will  prove satisfactory. The      distinction between  jurisdictional      and  non-jurisdictional   error  is      ultimately based  upon  foundations      of sand. Much of the superstructure      has already  crumbled. What remains      is likely  quickly to  fall away as      the courts  rightly insist that all      administrative  action  should  be,      simply,  lawful,   whether  or  not      jurisdictionally lawful."           (Emphasis supplied) 33.  The jurisdictional control exercised by superior courts over subordinate courts, tribunals or other statutory bodies and the  scope and  content of  such power  has been  pithly stated in  Halsbury Laws of England - 4th edition (Reissue), 1989, volume 1(1), p. 113 to the following effect :-      "The  inferior  court  or  tribunal      lacks jurisdiction  if  it  has  no      power to enter upon an inquiry into      a matter  at all;  and  it  exceeds      jurisdiction  if   it  nevertheless      enters upon  such  an  inquiry  or,      having jurisdiction  in  the  first      place, it  proceeds to  arrogate an      authority  withheld   from  it   by      perpetrating  a   major  error   of      substance, form or procedure, or by      making an  order or  taking  action      outside   its   limited   area   of      competence.   Not    every    error      committed by  an inferior  court or      tribunal or  other  body,  however,      goes to  jurisdiction. Jurisdiction      to  decide   a  matter   imports  a      limited power to decide that matter      incorrectly."



         "A tribunal lacks jurisdiction      if    (I)    it    is    improperly      constituted, or (2) the proceedings      have been improperly instituted, or      (3) authority  to decide  has  been      delegated to  it unlawfully, or (4)      it is  without competence  to  deal      with a  matter  by  reason  of  the      parties,  the  area  in  which  the      issue  arose,  the  nature  of  the      subject matter,  the value  of that      subject   matter,   or   the   non-      existence of any other prerequisite      of a  valid adjudication. Excess of      jurisdiction  is   not   materially      distinguishable   from    lack   of      jurisdiction  and  the  expressions      may be used interchangeably."           "Where the  jurisdiction of  a      tribunal  is   dependent   on   the      existence of  a particular state of      affairs, that  state of affairs may      be described  as preliminary to, or      collateral to  the merits  of,  the      issue, or  as jurisdictional."  (p.      114)           "There  is  a  presumption  in      construing  statutes  which  confer      jurisdiction    or    discretionary      powers on a body, that if that body      makes  an   error  of   law   while      purporting  to   act  within   that      jurisdiction or in exercising those      powers, its decision or action will      exceed the  jurisdiction  conferred      and will be quashed. The error must      be one  on which  the  decision  or      action depends.  An  error  of  law      going  to   jurisdiction   may   be      committed by  a body which fails to      follow   the    proper    procedure      required  by   law,   which   takes      legally  irrelevant  considerations      into account,  or  which  fails  to      take relevant  considerations  into      account, or  which asks  itself and      answers the  wrong  question.  (pp.      119-120)           The presumption  that error of      law goes  to  jurisdiction  may  be      rebutted on  the construction  of a      particular  statute,  so  that  the      relevant body  will not  exceed its      jurisdiction by going wrong in law.      Previously, the  courts  were  more      likely to  find that  errors of law      were within  jurisdiction; but with      the modern  approach errors  of law      will  be  held  to  fall  within  a      body’s   jurisdiction    only    in      exceptional cases.  The courts will      generally   assume    that    their      expertise   in    determining   the      principles of law applicable in any      case  has   not  been  excluded  by



    Parliament." (p. 120)           "Errors   of    law    include      misinterpretation of  a statute  or      any other  legal document or a rule      of common  law; asking  on self and      answering   the   wrong   question,      taking  irrelevant   considerations      into account  or  failing  to  take      relevant    considerations     into      account when  purporting  to  apply      the  law  to  the  acts;  admitting      inadmissible evidence  or rejecting      admissible and  relevant  evidence;      exercising  a   discretion  on  the      basis    of     incorrect     legal      principles;  giving  reasons  which      disclose faulty  legal reasoning or      which are  inadequate to  fulfil an      express duty  to give  reasons, and      misdirecting  oneself   as  to  the      burden of proof." (pp. 121-122)           (Emphasis supplied) 34.  H.W.R.  Wade   and  C.F.   Forsyth  in   their  book  - Administrative Law,  Seventh Edition,  (1994) -  discuss the subject regarding  the jurisdiction  of superior courts over subordinate   courts    and   tribunals   under   the   head "jurisdiction over  Fact and Law" in Chapter 9, pages 284 to 320. The  decisions before  Anisminic and  those in the post Anisminic period  have been  discussed in  detail. At  pages 319-320, the authors give the Summary of Rules thus:-      "Jurisdiction over  fact  and  law:      Summary      At the  end of  a chapter  which is      top-heavy with obsolescent material      it may  be useful  to summarise the      position as  shortly  as  possible.      the  overall   picture  is   of  an      expanding system struggling to free      itself   from   the   trammels   of      classical doctrines  laid  down  in      the past.  It is  not safe  to  say      that the  classical  doctrines  are      wholly obsolete  and that the broad      and simple  principles  of  review,      which    clearly     now    commend      themselves to  the judiciary,  will      entirely supplant  them. A  summary      can therefore  only state the long-      established rules together with the      simpler  and  broader  rules  which      have now  superseded them, much for      the benefit  of the  law.  Together      they are as follows:              Errors of fact      Old rule The court would quash only      if   the    erroneous   fact    was      jurisdictional      New rule The court will quash if an      erroneous and decisive fact was      (a) jurisdictional      (b)  found   on  the  basis  of  no      evidence; or      (c)   wrong,    misunderstood    or      ignored.              Errors of law



    Old rule The court would quash only      if the error was      (a) jurisdictional; or      (b) on the face of the record.      New rule  The court  will quash for      any  decisive  error,  because  all      errors    of     law    are     now      jurisdictional."           (emphasis supplied) 35.  The scope  of the exclusionary clauses contained in the statutes has  been considered in great detail with reference to the  decisions of the superior courts in England and also the decisions  of the Supreme Court of India by Justice G.P. Singh (former Chief Justice, M.P. High Court) in "Principles of Statutory  Interpretation", 6th  edition, (1996)  at page 475. The law is stated thus:-      "A   review    of   the    relevant      authorities on  the point  leads to      the following conclusions :           "(1)  An  Exclusionary  Clause      using the  formula‘an order  of the      tribunal under  this Act  shall not      be called in question in any Court’      is  ineffective   to  prevent   the      calling in  question of an order of      the tribunal if the order is really      not an  order under  the Act  but a      nullity.           (2) Cases of nullity may arise      when there  is lack of jurisdiction      at the  stage  of  commencement  of      enquiry e.g., when (a) authority is      assumed  under   an   ultra   vires      statute; (b)  the tribunal  is  not      properly   constituted,    or    is      disqualified  to   act;   (c)   the      subject-matter or  the parties  are      such inquire; and (d) there is want      of     essential      preliminaries      prescribed   by    the   law    for      commencement of the inquiry.           (3) Cases  of nullity may also      arise during  the course  or at the      conclusion of  the  inquiry.  These      cases are  also cases  of  want  of      jurisdiction    if     the     word      ‘jurisdiction’ is  understood in  a      wide sense.  Some examples of these      cases are:  (a) when  the  tribunal      has    wrongly     determined     a      jurisdictional question  of fact or      law; (b)  when  it  has  failed  to      follow the  fundamental  principles      of judicial  procedure,  e.g.,  has      passed the  order without giving an      opportunity of hearing to the party      affected; (c)  when it has violated      the fundamental  provisions of  the      Act, e.g.,  when it  fails to  take      into account  matters which  it  is      required to  take into  account  or      when   it    takes   into   account      extraneous and  irrelevant matters;      (d) when it has acted in bad faith;      and (e)  when it grants a relief or



    makes an  order  which  it  has  no      authority to  grant  or  make;  "as      also (f)  when by misapplication of      the law  it has  asked  itself  the      wrong question."      With great respect to the learned author, I would adopt the above statement of law, as my own.      I would  conclude  this  aspect  by  holding  that  the jurisdiction of  civil courts  is  not  barred  in  entirety regarding the  attack against  the  levy  and/or  claim  for refund; in  those cases,  coming within the three categories mentioned  in   paras  5   and  29  of  this  judgment,  the jurisdiction of  the ordinary  courts will not be ousted, in the circumstances  and  subject  to  the  conditions  stated therein and in para 30 (supra). 36.  Two decisions  of this Court rendered after Section 11B of the Act was amended in 1991, deserve mention. They are -- Union of  India and  others v.  Jain  Spinners  Limited  and another [1992 (4) SCC 389], Union of India and others v. ITC Ltd. [1993  Supp. (4)  SCC 326].  In Jain Spinners case, the application for refund itself was filed before the concerned statutory authority  (Assistant Collector,  Central Excise). While the  said application  was pending, Section 11B of the Act came  into force.  There was  an earlier  interim  order passed by  the High  Court directing the deposit of the duty levied with a liberty to the Revenue to withdraw it, subject to the  condition that  the amount  will be  refunded if the assessee  succeeded   ultimately.  The  Assistant  Collector applying the  amendments effected in 1991, declined to order refund,  holding   that  the  assessee  had  passed  on  the incidence of  duty to  others. it  was upheld  by this Court notwithstanding the  interim orders and other proceedings of the High  Court. Basically,  the application  for refund was filed  before   the  concerned   statutory  authority,   who negatived the  claim by  giving effect  to the provisions of the Amendment  Act. There  was no  attack in the above case, that  the   levy  or   collection  as  one  unauthorised  or unconstitutional or  without  jurisdiction  or  illegal.  In Union of  India v.  ITC Ltd., the Jain spinners case (supra) was followed.  The main  aspect that arose for consideration in the  latter case  was, whether the assessee had passed on the incidence  of duty to the consumers or other persons. In spite of  the repeated  orders of  this Court,  the assessee failed to  establish that  the burden  of excess excise duty was borne  by it  and was not passed on to any other person. The assessee  had filed  five applications for refund. Three of them  were allowed  by the  statutory authorities  in the appeals. Only  two refund  applications were  rejected which were assailed  in the High Court. The High Court allowed the said applications,  directing  the  Revenue  to  refund  the amounts due  as per  the two refund applications. In Appeal, this Court  stressed the fact that the assessee was not able to substantiate  that the  burden of  excess excise duty was borne by  it and  was not  passed on  to any  other  person. incidentally,  this  Court  also  referred  to  the  amended provisions of  the Act  (11B, 12B  etc.) and  held that  the amended provisions  would apply  when the  matter  regarding refund was  still pending for adjudication in this Court. In this case  also the  levy or  collection was not assailed as unconstitutional or  illegal or without jurisdiction and, in consequence refund  was called  for. The above two cases did not deal  with the maintainability of action in the ordinary courts where  the levy  or collection  is  assailed  on  the ground that  it  is  unconstitutional,  illegal  or  without jurisdiction.



37.  The changes  brought about  by the  Central Excise  and Customs  Laws   (Amendment)  Act,  1991  (w.e.f.  20.9.1991) regarding refund  and the  scope of  Section 11B  read  with Section 12B  was the subject of great controversy before us. The   Amendment    Act   1991,    is   also    attacked   as unconstitutional, illegal, invalid and unreasonable and as a "device" to  deny  refund  legitimately  due.  The  relevant statutory provisions  have been  extracted earlier  in  this judgment. Briefly stated the position is this. Clause (3) of Section 11B  provides  that  notwithstanding  any  judgment, decree or  order of the appellate tribunal or any court etc. no refund  shall be  made except  as provided in sub-section (2). In  other words, the procedure to obtain refund is made exclusive as per Section 11B(3) of the Act. The application, therefore, shall be made under Section 11B(1) and dealt with by the  concerned authority  under Section 11(2) of the Act. These provisions  mandate  amongst  other  things  that  the person  claiming   refund  should   substantiate  that   the incidence of duty has not been passed on by him to any other person. The application should also be filed within the time prescribed in  the  said  sub-section.  Section  11B(2)  and Section 11B(3) go together. Under Section 11B(2), in certain specified cases,  the duty  paid will  be  refunded  to  the applicant. One  such case is, the duty of excise paid by the manufacturer, if  he had not passed on the incidence of such duty to  any other  person and  substantiates the  same.  In cases not  falling within  the proviso  to Section 11B(2) of the Act  the duty collected will be credited to the Consumer Welfare Fund  and the  said Fund  will be  utilised  as  per Section 12D of the Act. 38.  As   stated,  Section  11B(2)  and  Section  11B(3)  go together.  The  applications  for  refund  made  before  the commencement of  the Amendment Act, 1991, shall be deemed to have been  made under  Section 11B(1)  of the Act as amended and it shall be dealt with in accordance with Section 11B(2) of  the  Act.  The  Section  contemplates  disposal  of  the applications pending  on the  date of  the Amendment  Act as also fresh applications filed after the Amendment Act, 1991, as per  the amended  provisions. Counsel  for the  assessees urged  that  the  provisions  relating  to  refund  and,  in particular, Section 11B(2) and (3) as amended in 1991 cannot apply to :- 1.   Refund’ made or due as per orders passed by Courts, in      a suit or in a petition under Article 226 of the      Constitution of India, which have become final. 2.   refunds ordered  by the  statutory authority  concerned      which have become final.      It is  obvious that in such cases no application can or will be deemed to be pending on the date of the commencement of the  Amendment Act.  No application praying for refund is to be  filed  in  such  cases,  either.  No  further  probe, regarding the  requisites for  obtaining refund specified in the Amendment  Act, 1991,  is called  for in such cases. The above aspects  are fairly  clear.  Section  11B(2)  and  (3) cannot be  made applicable to refunds already ordered by the court or  the refund  ordered by  the statutory authorities, which have  become final. It follows from a plain reading of Section 11B,  Clauses (1),  (2) and  (3)  of  the  Act.  The provisions contemplate  the pendency  of the  application on the date  of the  coming into  force of the Amendment Act or the filing  of an  application which  is contemplated  under law, to  obtain a refund, after the Amendment Act comes into force. I  am of the opinion, that if the said provisions are held applicable,  even to  matter concluded by the judgments or final  orders of  courts, it  amounts to stating that the



decision of  the court  shall not be binding and will result in reversing  or nullifying the decision made in exercise of the judicial  power. The  legislature does  not possess such power. The  court’s decision must always bind parties unless the condition  on which  it is  passed are  so fundamentally altered that  the decision  could not have been given in the altered circumstances.  It is  not so  herein. [Shri Prithvi Cotton Mills  Ltd. &  Anr. vs. Broach Borough Municipality & ors. (1970  (1) SCR 388) and Madan Mohan Pathak vs. Union of India &  ors. etc.  (1978 (3)  SCR 334)].  See also  Comorin Match Industries (P) Ltd. v. State of Tamil Nadu [JT 1996(5) SC 167].  Alternatively, it  may be stated that duty paid in cases, which finally ended in orders or decrees or judgments of courts,  mush be  deemed to  have been paid under protest and the  procedure and  limitation etc.  stated  in  Section 11B(2) read  with Section  11B(3) will  not  apply  to  such cases. It  need hardly  be stated,  that Section 11B(1), the proviso thereto,  Section 11B(2)  and  Section  11B(3)  read together will  apply only  to (1)  refund applications  made before the  Amendment of  the Act  and still  pending on the date  of   commencement  of  Amendment  Act,  1991  and  (2) applications contemplated  under law  to obtain  refund  and filed after  the commencement  of the  Amendment Act,  1991. (Cases dealt  with in  paras 5  and 29 of this judgment will not be covered by the above, to the extent stated therein). 39.  Excise duty  is an  indirect levy.  It is  intended  or presumed to be passed on. This is so under the ordinary law. Section 12B  of the Act only provides a statutory rebuttable presumption in that regard. If it turns out that the levy is not exigible,  it is  refundable to the person who had borne the liability.  Ordinarily, in  the case  of indirect taxes, such persons  will  be  innumerable  and  cannot  be  easily identified or  located. If  the duty, which is not exigible, is refunded  to the  person who had not borne the liability, it will  result in  an unjust benefit to him. So the Act has provided in  Section 11B(2),  that in  such cases  where the duty is  refundable, it  will be  credited to  the  Consumer Welfare Fund  (Section 12C). However, the proviso to Section 11B(2) provides  that the duty of excise will be refunded in few specified cases, subject to certain conditions -- one of them is  the manufacturer  -- in  cases, where  he  has  not passed on  the incidence  to any  other person [Clause (d)]. Those provisions  will apply  only for  refunds to  be  made under the  Act. In  the totality of the factual situation, t cannot be  said that  the provisions ushered in by Amendment Act, 1991  -- and  the scheme formulated in Sections 11B and 12A to  D --  are, a  "device" or  invalid or  arbitrary  or unreasonable (except  to the extent stated in para 38 supra) or in any way constitutionally infirm. (Of course, the cases dealt with  in paras  5 and  29 are  excluded to  the extent stated therein).  Brother Jeevan  Reddy, J.  has dealt  with this matter  rather elaborately  and  thee  is  no  need  to elaborate the  matter any further. In the matter of taxation laws, the  court permits  a great latitude to the discretion of the  legislature. The State is allowed to pick and choose districts, objects,  persons, methods  and  even  rates  for taxation, if it does so reasonably. The courts view the laws relating to  economic activities  with greater latitude than other matters. [See Collector of Customs. Madras v. Nathella Sampathu Chetty  and another  (1962 (3)  SCR 786); Khyerbari Tea Company  and anr.  v. State of Assam & Ors. (AIR 1964 SC 925); R.K. Garg v. Union of India & Ors. (AIR 1981 SC 2138); Gaurishanker &  ors. v.  Union of India & ors. (1994 (6) SCC 349): Union  of India  & anr. etc. etc. vs. A. Sanyasi Rao & ors. etc. etc. (AIR 1996 SC 1219), etc.]



40.  Before closing  I should  specifically  deal  with  two important aspects. In this judgment I have  dealt with cases where duty  is paid on items which are consumed as such. Due to paucity  of details,  the case of captive consumption has not been  dealt with.  It is  made clear  that  whatever  is stated in this judgment will not apply in the cases of goods which are captively consumed.      Chapter  II-A  of  the  Act  was  inserted  by  way  of amendment   in    1991.    The    establishment,    working, administration and  utilisation to the Consumer Welfare Fund is in  its state  of infancy. The scheme or set-up envisaged by Sections  12C and  12D and its working will require an in depth evaluation  by the appropriate authorities in order to vouchsafe that  the scheme  is not rendered a mere ritual or illusory, but  is meaningful and effective. For the present, I do not want to deal with that aspect in detail. 41.  For the  sake of  convenience.  I  shall  summarise  my conclusions as  here-under :- (in case of doubt, the body of the judgment should be looked into). A)   If the  excise duty paid by the assessee was ultimately      passed on  to the  buyers or any other person, and that      the assessee has suffered no loss or injury, the action      for restitution  based on  Section 72  of the  Contract      Act, is unsustainable. (This is the legal position even      under general  law, without reference to Section 11B of      Central Excises & Salt Act as amended by Act 40/1991). B)   The decision  in Kanhaiya  Lal’s case,  and  the  cases      following the same, cannot be understood as laying down      the law  that even  in cases  the  liability  has  been      "passed on",  the assessee  can maintain  an action for      restitution.      If the  decision in Kanhaiya Lal’s case (supra) and the      cases following  the  said  decision,  enables  such  a      person  to   claim  refund  (restitution),  with  great      respect to  the learned  Judges, who rendered the above      decisions,  I  express  my  dissent  thereto.  In  this      context, the observations in para 29 - clause III shall      be borne in mind. C)   Article 265 should be read along with the Preamble and      Article 39(b) and (c) of the Constitution, and so      construed in cases where the assessee has passed on the      liability to the consumer or third party, he is not      entitled to restitution or refund. The fact that the      levy is invalid need not automatically result in a      direction for refund of all collections made in      pursuance thereto. D)   The presumption  is that the taxpayer has passed on the      liability to  the consumer (or third party). It is open      to  him   to  rebut  the  presumption.  The  matter  is      exclusively  within  the  knowledge  of  the  taxpayer,      whether the  price of  the goods  included  the  ‘duty’      element also and/or also as to whether he has passed on      the liability since he is in possession of all relevant      details. Revenue  will not  be in a position to have an      in depth analysis in the innumerable cases to ascertain      and find  out whether  the taxpayer  has passed  on the      liability.  The   matter  being  within  the  exclusive      knowledge of  the taxpayer,  the burden of proving that      the liability has not been passed on should lie on him. E)   It is not possible to conclude that any and every claim      for refund  of illegal/unauthorised levy of tax, can be      made only  in accordance with the provisions of the Act      (Rule 11, Section 11B etc., as the case may be), and an      action by  way of  suit or  writ petition under Article      226 will  not be  maintainable under any circumstances.



    An action  by way  of suit  or a petition under Article      226 of  the Constitution  is maintainable to assail the      levy or order which is illegal, void or unauthorised or      without jurisdiction  and/or  claim  refund,  in  cases      covered by  propositions No.(1),  (3), (4)  and (5)  in      Dulabhai’s case,  as one  passed outside  the Act,  and      ultra vires.  Such  action  will  be  governed  by  the      general law  and the procedure and period of limitation      provided  by   he  specific   statute  will   have   no      application. F)   The attack  against the illegal or unauthorised levy as      also the  relief of  refund may  fall ordinarily within      the three  categories specified  in paragraph 29 of the      judgment. An  action by  way of  suit or  writ petition      under Article 226 of the Constitution of India will lie      in the  cases, and  subject to the conditions stated in      paragraphs 29 and 30 of the judgment. G)   The jurisdiction  of civil  courts  is  not  barred  in      entirety regarding  the attack  against the levy and/or      claim for  refund; in  those cases,  coming within  the      there categories  mentioned in  paras 5  and 29 of this      judgment, the  jurisdiction of the ordinary courts will      not be  ousted, in the circumstances and subject to the      conditions stated therein and in para 30 (supra). H)   Section 11B(2)  and (3)  cannot be  made applicable  to      refunds already  ordered by  the court  or  the  refund      ordered by the statutory authorities, which have become      final. It  follows from a plain reading of Section 11B,      Clauses (1),  (2) and  (3) of  the Act.  The provisions      contemplate the pendency of the application on the date      of the  coming into  force of  the Amendment Act or the      filing of  an application  which is  contemplated under      law, to  obtain a refund, after the Amendment Act comes      into force. If the said provisions are held applicable,      even to  matters concluded  by the  judgments or  final      orders of  courts,  it  amounts  to  stating  that  the      decision of  the court  shall not  be binding  and will      result in  reversing or nullifying the decision made in      exercise of  the judicial  power. The  legislature does      not possess such power. Alternatively, it may be stated      that duty  paid in cases, which finally ended in orders      or decrees  or judgments  of courts,  must be deemed to      have been  paid under  protest and  the  procedure  and      limitation etc.  stated in  Section  11B(2)  read  with      Section 11B(3) will not apply to such cases. I)   It read  hardly be  stated, that  Section  11B(1),  the      proviso thereto, Section 11B(2) and Section 11B(3) read      together will  apply, only  to (1)  refund applications      made under  the statute  and filed before the Amendment      of  the   Act  and   still  pending   on  the  date  of      commencement   of   Amendment   Act,   1991   and   (2)      applications contemplated  under law  to obtain  refund      and filed  after the commencement of the Amendment Act,      1991. (Cases  dealt with  in paras  5 and  29  of  this      judgment will not be covered by the above to the extent      stated therein). J)   The proviso  to Section 11B(2), provides, that the duty      of excise  will be  refunded in  few  specified  cases,      subject to  certain conditions  -- one  of them  is the      manufacturer - in cases, where he has not passed on the      incidence to  any  other  person  [Clause  (d)].  Those      provisions will apply only for refunds to be made under      the Act.  In the  totality of the factual situation, it      cannot be  said, that  the  provisions  ushered  in  by      Amendment Act,  1991 --  and the  scheme formulated  in



    Section 11B  and 12A  to D  -- (in  the  light  of  the      clarifications made  in the  body of  the judgment, and      more particularly  in paras  25 and  40 above)  are,  a      "device"  or   invalid  or  arbitrary  or  unreasonable      (except to  the extent  stated in  para 38 supra) or in      any way  constitutionally infirm. (Of course, the cases      dealt with in paras 5 and 29 are excluded to the extent      stated therein). 42.  The principles laid down in this     judgment should be applied to the fact situation obtaining in  individual cases and should be disposed of accordingly.      The matters  may be  placed before  My Lord  the  Chief justice for appropriate orders in this behalf. HANSARIA, J.      The  conclusions   arrived  at   by   learned   brother paripoornan, J.  and the  reasons given  in support thereof, have my  respectful concurrence.  I have  nothing useful  to add. The time at my disposal does not really permit me to do so, as  the draft  of this  judgment reached my hands on the night of  15th instant;  indeed, the first draft judgment of the case got me in the evening of 13th of this month.