UNION OF INDIA AND ORS. versus I.T.C. LIMITED

Citation: [1993] SUPP. 1 S.C.R. 272 · Decided: 16-07-1993 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Appeal(s) allowed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
UNION OF INDIA AND ORS. 
v. 
I.T.C. LIMITED 
JULY 16, 1993 
B 
(KULDIP SINGH AND DR. A.S. ANAND, JJ.] 
Central Excises and Salt Act, 194~Section 4 (a)-Application for 
refund of excess excise duty paid under mistake of law-Lache!f-ffeld 
Government under a legal obligation to return the excess excise duty 
C received/reco-vered by it since the same was not payable by the part}-Assessee 
not guilty of any /aches to claim refund. 
D 
E 
Sections ll(B) and 12 (B) as amended by the Amending Act, 
1991-Scope of 
Section ll(B) as amended by the Amending Act, 1991-f'lea relating 
to interpretation of the amended provisions, coming into force only during the 
pendency of the appeal, whether could be pennitted-Held plea relating to 
interpretation of a statutory provision is essentially a question of /aw-Could 
be pennitted to be raised during the hearing of the Appeal. 
Constitution of India, 1950 : Alticle J3(r-Plea relating to interpretation 
of a statutory provision-Coming into existence during pendency of ap-
peal-Whether a question of la..-Whether could be pennitted to be raised 
for the fir.it time. 
F 
The respondent Company was carrying on the business of manufac-
turing and selling of cigarettes and smoking tobacco. It was selling its 
products to whole-sale buyers or dealers who were further selling the same 
to secondary whole-sellers from where the products reached the retailers 
and the consumers. The respondent Company had been paying the excise 
duty under a mistake of law taking the prices charged by the whole-sale 
G dealers to the secondary whole-sellers as the basis of assessment of excise 
duty. Later on, the respondent filed five applications before the ap-
propriate authority under the Central Excises & Salt Act seeking refund 
of the excess excise duty paid by it under mistake of law. The applications 
pertained to different periods. The Assistant Collector of Central Excise 
H rejected all the five applications. 
272 
ll.0.1. i·. l.T.C. 
273 
On appeal preferred by the respondent, the Appellate Collector A 
allowtcl the appeals arising out of the three refund applications relating 
to the period 20.2.1972 to 28.5.1973 and ordered consequential relief in 
favour of the respondent by directing the refund of the excess excise duty 
paid. The appeals pertaining to the refund application for period 1.9.1970 
to 28.5.1971 and 1.10.1971 to 19.2.19.72 were, however, rejected on the 
ground that the same were barred by time. 
The High Court allowed the writ petition filed by the respondent and 
held that the respondent could not be non-suited on the ground of limita-
tion since the excess excise duties had been paid on account of ntistake of 
B 
law and directed the Department to refund to the respondent the amount C 
pertaining to the two claims or such other lesser sum as may be found on 
verification to be due. 
Hence the appeal, by way of special leave, against the High Court's 
order. 
D 
During the pendency or the appeal, Sectioin 11 (B) was amende~by 
the Amending Act, 1991. Under the amended provisions of Section ll(B) 
an application for refund made before the commencement of the Amending 
Act, 1991 should be deemed to have been made under the amended 
provisions and should be dealt with in accordance with the provisions of E 
the amending sub-section (2). The thrust and effect or the amendment was 
that the refund of duty paid by the manufacturer could be allowed, if due, 
only in cases where the assessee had not passed on the incidence of such 
duty to any other person. 
Allowing the appeal, thh Court 
HELD : 1.1. It is settled law that where excess excise duty was not 
payable by the party under the provisions of a statute but had in fact been 
paid under a mistake of law, the party has a right to recover it and there 
F 
is a corresponding legal obligation on the part of the Government to G 
refund the excess excise duty so collected because the collection in such 
cases would be without the authority of law. (278-E-F] 
1.2. In the instant case, the High Court was justified in holding that 
the bar of limitation which had been put against the respondent by the 
Collector; Central Excise (Appeals) to deny the respondent the refund for H 
274 
SUPREME COURT REPORTS (1993) SUPP. 1 S.C.R. 
A the period 1.9.70 to 25.!'.71 and 1.6.71 to 19.2.1972 was not proper as, 
admittedly, the respondent had approached the Assistant Collector, Ex-
cise, soon after coming to know of the judgment in Valtas Case an

Excerpt shown. Read the full judgment & AI analysis in Lexace.