SALONAH TEA COMPANY versus SUPERINTENDENT OF TAXES NOWGONG & ORS. ETC.

Citation: [1988] 2 S.C.R. 474 · Decided: 18-12-1987 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 9 · see the full citation network in Lexace

Judgment (excerpt)

. " 
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A 
SALONAH TEA COMPANY 
'·,~ 
. . 
v. 
,. " 
SUPERINTENDENT OF TAXES NOWG(,.,'J & c-r,s. ETC. 
DECEMBER 18, 1987 
B · 
[SABYASACHI ~UKHARJI AND S. RANGANATHAN, JJ.l---r 
ConstitUtion of India, 1950: Article 226-Petition for refund of tax 
.. paid under mistake of law-Maintainability of-Not to be turned down 
on the negative plea of alternative remedy. 
C 
Assam Taxation (On Goods Carried by Road or on Inland Water-~ 
ways) Act, 1961: ss. 7, 9, '16 & 23-High Court Setting aside assessmwt 
order-but refusing refund on triable issue of /imitation-Validity of. 
, Limitation Act, 1963, Article 113, Laches-Discretion-Exercise 
D of by Court-Must be fair and equitable. · 
The Assam Taxation (On Goods Carried by Road or Inland.).. 
Water-ways) Act,1954 was struck down as ultra vires the Constitution 
in Atiabari Tea Co. Ltd. v, State of Assam, AIR 1961 SC 232. A new Act 
. was thereafter passed which received the President's assent on April 6, 
E 
1961. The High Court declared the said Act to be ultra vires on August , 
1, 1963. The State and other respondents preferred appeals hero~· 
Supreme Court against the decision. In the meantime, in Khyerbari Tea 
Co. Ltd. & Anr. v. State of Assam, (1964] 5 SCR 975 the Court held the 
Act to be intra vires on December 13, 1963. Following the decision in'1 
Khyerbari case the appeals filed by the State and others were allowed by 
, __ F this· Court on April 1, 1968. After this decision the respondents re-
-, __ quired the appellants by notices under s. 7(2) of the Act issued on July 
s;· 1968 to submit return for the period ending June 30, 1961, 
___ September 30, 1961, December 31, 1961 and March 31, 1962. Due to 
the penal consequences mentioned in the said notices the appellants filed 
returns on July 11, 1968. The assessment orders were passed under s. 
G 9(3) of the Act. The tax was duly paid. 
In November 1973. the appellants filed writ petitions before the 'f 
High Court seeking direction for refund of the tax paid under mistake 
relying on the High Court's Judgment in Loong Soong Tea Estate (Civil 
Rule No. 1005 of 1969) dated July 10, 1973 declaring the asSessment as 
H without jurisdiction. 
474 
• 
' 
l 
SALONAH TEA CO. v. SUPDT. OF TAXES NOWGONG 
475 
The High Court set aside the orders and notices of demand but 
refused claim of refund on the ground of delay and lacbes. It took the 
view that it was possible for the appellants to know about the legality of 
the tax sought to be imposed as early as 1963, when the Act in question 
was declared ultra vires. The taxes having been paid in 1968 the claim in 
November 1973 was belated. It, however, held that the claim for refund 
was a consequential relief. 
In the appeals to this Court it was contended for the appellants 
that they had paid the tax under a mistake of law and were entitled to 
seek refund thereof, and a writ petition seeking refund of tax realised 
without the authority of law cannot be rejected on the ground of limita-
tion or delay unless such delay can be said to amount to !aches or has 
caused some irreparable prejudice to the opposite party. 
Allowing the appeals, 
HELD: By the Court: (Per Sabyasachi Mukharji & Rangana-
A 
B 
c 
than, JJ.) 
D 
The money was refundable to the appellants. The writ petitions 
were within time. l484H] 
Per Mukharji, J. 
1. No State has the right to receive or to retain taxes or monies 
realised from citizens without the authority of law. There is in such 
cases concomitant duty to refund the realisation as a corollary of the 
constitutional inhibitiou that should be respected unless it causes 
injustice or loss in any specific case or violates any specific provision of 
E 
law. !480H; 485E-F] 
F 
In the instant case, tax was collected without the authority of law. 
The notices were without jurisdiction. So was the assessment made 
under s. 9(3) of the Act. The respondents, therefore, had no authority 
to retain the money so collected, and as such the money was liable to 
refund. l480DI 
G 
2.1 In an application under Article 226 of the Constitution the 
Court has power to direct the refund unless there has been avoidable 
!aches on the part of the petitioner which indicate either the abandon-
ment of his claims or which is of such nature for which there is no 
probable explanation or which will cause an injury either to respondent 
H 
or any third party. l484C-D] 
476 
SUPREME COURT REPORTS 
[ 1988] 2 S.C.R. 
A 
2.2 Courts have, however, made a distinction between

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