MAFATLAL INDUSTRIES LTD. ETC. ETC. v. UNION OF INDIA ETC. ETC.

H (Emphasis supplied)

MAFATLALINDS. LID. v. U.0.1. [PARIPOORNAN, J.) 737

14. It is apparent that in Kanhaiya Lal's case there was no plea by A the Revenue that since the assessee has passed cin the tax, the claim for refund is unsustainable. Such a question was not posed before this Court for consideration. One of tlie main aspe,cts 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 con- B sidered. In such a situation the following observations of Lord Halsbury in . Quinn v. Leathern, (1901) AC. 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 and Industries Ltd. and Another v. State of Orissa & Others, [1991] Supp. 1 SCC 81, at page 96, should govern the matter. C "...... there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every 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 b,6 expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be I found. The other is that a case is only an authority }or 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 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 Lat's case, and the cases following the said case. The said decisions cannot be understood as laying down the law that even ll;l cases the liability has been "passed on", the assessee can maintain ;m action for restitution. · "

It also appe~ that there is some int;:'1i:isistency in the Kanhaiya .(.,izl's G 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 estoppe~ waiver, limitation or the like". Even so, at page 1366, the Court has observed H

738 SUPREME COURT REPORTS(1996] SUPP. 10 S.C.R.

A "equitable considerations could scarcely be imported when there is a clear ·and unambiguous provision of law which entitles the plaintiff to the relief claims 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 adjudicat- B ing the claim for restitution (refund)? If an assessee has passed on the tax to the consumer or a thii:d 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 emiched. 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 of innumerable - C 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.

MAFATLALINDS. LTD. v. U.0.I. [PARIPOORNAN,J.] 739

cannot be construed in a vacuo ~r isolation, but should 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 con- B stitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizen:

JUSTICE, social, economic and political;

xxxx xxxx xxxx" c 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; D (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the com- mon detriment;"

(Emphasis supplied) E 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. Jail v. Union of India, [1962] Suppl. 3 SCR 436 and The Province of Madras v. M/s. Boddu Paidanna and Sons, (1942) F.C.R. F 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 of Kamataka and Anr. Etc. v. Shri Ranganqtha R~ddy & Anr. G Etc., (1978] 1 SCR 641 (689); Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. & Anr. (1983] 1 SCR 1000 (1023-24 and 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 Prakash and Ors. Etc. v. State of Punjab and Ors. Etc., [1985) 2 H

740 SUPREME COURTREPORTS(1996] SUPP.10 S.C.R.

A SCR 72, at pp. 96, 97, 99, 100; Shiv Shanker Dal Mills Etc. Etc. v. State of · Haryana & Ors. Etc., [1980] 1SCR1170 (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 emiched 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".

C· 16. On an evaluation of the rival pleas urged in the matter, lam 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. fall v.Union of India D (supra) at·page 451 stated the nature and character of excise duty, thus :

"Excise duty is primarily a duty on the production of manufactured of goods produced m; 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 E the consumer".

(Emphasis supplied)

Section 64A of the Sale of Goods Act after its amendment by Act 33 of F 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, G expressely states that the provisions 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 t H SCR 1000 and L. Abu, AIR (1984) SC 326 go to show that the words "material resources" occuring in Article 39 clause (b) will take in, natural

. M(\FATLALINDS.LTD,v. U.OJ.(PARIPOORNAN,J.) 741

'We are inclined to accept the view urged on behalf of the State that a finding regarding the invalidity of a levy need not automat- H

742 SUPREME COURTREPORTS[l996] SUPP.10 S.C.R.

A · ically 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 B 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." ·

io ,.17. It is open the Court to deny the equitable remedy of refund C (restitution) in such cases. The attempt of persons who have passed on the liability in claiming refund is only to strike at a barg~ - 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 D restitution is valid. There is nothing abhorent 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 E (566, 568); M/s. Amar Nath Om Prakash and Ors. v. State of Punjab and Ors., [1985) 2 SCR 72 (96-100); Indian Aluminium Company Limited' v. Thane Municipal Corporation, [1992) 1 Supp. 1SCC480 (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 F notice. The various decisions of foreign courts and their scope have been very exhaustively censidered by Jeevan Reddy, J. in his judgment under the heading "Decisions of foreign courts on the subject". I am in broad agree- ment with my learned brother Jeevan Reddy, J., in the analysis of the various decisions aforesaid. It is unnecessary to cover that ground over again. G

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 -

H (1) "When Money is paid in Pursuance of a void authority...." - A

MAFATLAL INDS. LTD. v. U.O.l. [PARIPOORNAN, J.] 743

duty to replay? by Peter Birks : (Public Law (1992) page 580) A

(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. 'B (3) "Restitution of Overpaid Tax, Discretion and Passing-on" - by J. Beatson. (Law Quarterly Review Vol. 111 (1995) page 375 Notes. c (4) "Unjust Enrichment" - by Steve Hedley, (Cambridge La~ Journal 1995 (578-599) -

(5) "Unjust Enrichment Claims : A Comparative Overview" - by D 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 E Review (1993) (442-467) ·

(7) "Payments of Money under Mistake of Law : A Comparative View" - by Gareth Jones [Cambridge Law Journal (1993) Comment (225)] F (8) "Restitution, Misdirected Funds and Change of Position" - by Ewen McKendrick, [Modern Law Review (1992) Vol. 55 (377-385)]. G In some of the arti'cles, the defences to a claim for restitution of overpaid taxes, has been dealt with the detail. One of them is the article by Graham Virgo's appearing in British Tax Review (1993) (pp. 442-467) titled "The Law of Taxation is not an Island - Overpaid Taxes and the Law of H Restitution". pages 462 and 463 under the sub-heading "Passing on", the learned author has made the following comment :

"(vii)_Passing on 48

-· 48 Since restitution at common _law is based upon the principle of reversing an unjust enrichment, it is important to determine 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 pay.

744 SUPREME COURT REPORTS[1996] SUPP.10 S.C.R.

A whether the defendant was actually enriched at the· plaintiffs expense. This raises a difficult problem where the Revenue was initially enriched at 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 B colild arise if the taxpayer pays excessive VAT and passes the amount overpaid ori to customers 49. As a matter of principle it, could be argued that, in such a .case, the taxpayer should not be allowed to fecovery the amount overpaid frqm the Revenue, because recovery . i.voutd mean tha~ the taxpayer was unjustly enriched at the expense of thi>se wlio ulti/inately bore the burden of the tax :SO. A possible c solution to 'this is to allow those who effectively paid the tax to recover from the tax payer, who u;, turn sho,uld recovet from the Revenue, However, typically in cases of passing on there are many . people who effectively bear the burden of the tax arid to encourage actions by them would be impractical and unrealistic, Thus, in such cases the best approach is to allow the.Revenue a defence ofpassing 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 Am~inistrazione del/e Finanze del/o 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 to do so would entail unjust enrichment of the recipients," for example where the unduly levied charges have been inrorporated in the price of goods and passed F

49 This specifically dealt with by P.A.. 1989, s. 24(5) discussed infra, which denies the repayment of VAT if it would unjustly enrich the recipient of the payment.

50 In Meses 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 suggest that a defence of passing on should exist, for simple reasons of justice.

51 51. In Woolwich, supra, Lord Goff deferred the issue of the existence of a passing on defence, suggesting (at p. 178) that the availability to 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 determiningwhether the burden of the tax really was passed on.

MAFATI.AL INDS. LTD. v. U.0.1. [PARIPOORNAN, J.] 745

on to purchasers, Although this decision is confined to charges levied contrary to the rules or 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.goods. 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 an:d because / · of the consequent impossibility of definitively relating any part of · E 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 F on when the initial" taxpayer suffers a net loss.

It is submitted that in principle a defence of passing on should exist, with'u burden of proving this being on the Revenue : in unlawfully demanded the taxes and so it should show that repay- ment would unjustly enrich the taxpayer. It is unlikely that such a G defence would operate successfully in practice in many cases because of the difficulty of proving that the tax was actually passed on."

(Emphasis supplied) H

746 SUPREME COURT REPORTS[l996] SUPP.10 S.C.R. 'A 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 was "passed on" to others, for instance by price B 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

c 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. South Wales. However, the underlying rationale of a "passing on" defence might be achieved by providing, as in the statutes on recovery of D 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 E limit would achieve the same policy ends as the "reasonable and just" limit in provisions such as section 33 of the Taxes Manage· ment Act 1970 and, if so, it might provide a useful method of achieving a measure of rationalisation." (pp. 427-428)

F 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 jurisdiction, an observation is made thus :

G "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."

MAFA1LALINDS. LTD. v. U.0.1. [PARIPOORNAN,J.) 747

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 tax- payer, 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 indepth 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 hel<;l accordingly. E

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 ll(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 llC, llD and also to H

748 SUPREME COURT REPORTS[1996] SUPP.10 S.C.R.

A 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 B the Civil Courts is not barred to annul the levy and/or order refund.

23. As stated by me e.arlier 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 C 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 Fun- D damental Principles of judicial procedure.

(III) mistake of law - the levy or imposition was unconstitutional or illegal or not exigible in law (without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, E 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.

F 24. The relevant provisions of law that existed during different periods dealing with the claim for refund are different in content and scope. They are as follows :

G (a) Period up to 7.8.1977 - Rule 11 before amendment; J the Central Excise Rules,

(b) Period from 7.8.1977 to 16.11.80 - Rule 11 of the Central Excise Rules; as amended;

(c) Period from 16.11.1980to19.9.1991- Section UA and Section H llB of the Central Excises & Salt Act; and

MAFATLALINDS. LTD: v. U.O.l. [PARIPOORNAN,J.] 749

(d) Period after 19.9.1991- Section llA read along with Section A llB 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 ouster of jurisdiction of the courts. B

25. Rule 11 of the Central Excise Rules as amended, Section llA al'ld Section llB before Amendment Act 40 of 1991 and Section llB, as amended by Act 40 of 1991, will be more important to consider the question of ouster of jurisdiction of courts. Sections llC, llD as also Sections 12A to D of the Act, will throw light on the scheme of the Act as C 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. - D

(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. E

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 F six months shall be computed from the date on which the duty is adjusted after fmal 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 G 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) Whether as a rl!sult of any order passed in appeal or revision under the Act, refund of any duty becomes due to any H

750 SUPREME COURT REPORTS(1996] SUPP. 10 S.C.R.

A person, the proper officer may refund the amount to such person without his having to make any claim in that behalf.

Save as otherwise provided by or under these rules no claim for refund of any duty shall be .entertained.

B Explanation. - For the purposes of this rule, 'refund' includes rebate referred to in Rules 12 and 12A."

Section 11-A

c "JJA. 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 charge- able with the duty which has not been levied or paid or which has / D been short-levied or short-paid or to whom the refund has er- roneously 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 per&on 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, - G (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 H under this Act or the rules made thereunder;"

MAFA1LALINDS. LTD. v. U.0.l[PARIPOORNAN,J.] 751

SECTION 11-B BEFORE AMENDMENT BY ACT 4011991 A

"llB. 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 : B 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 C · of excise 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 this Act refund of any duty of excise becomes due to any D 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 othenvise provided by or under this Act, no claim for refund of any duty of excise shall be entertained. E

(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 F excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of su.ch claim.

Explanation. - For the purpose of this section......... .

(B) 'relevant date' means. - G

(1) in any othet case, the date of payment of duty."

SECTIONS JJB, IJD AND 12A TO D, AS AMENDED BY ACT 4011991 H

752 SUPREME COURT REPORTS[1996] SUPP.10 S.C.R.

A "JJB. Claim for refund of duty. - (1) Any person claiming refund of any duty or excise may make as application for refund of such duty (o the Assisant 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 accom- B panied by such documentary or other evidence including the docu- ments 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 C 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 D 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. E (2) If, on receipt of any such application, the Assistant Com- missioner of Central Excise is satisfied th~ 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 : F 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 befog credited to the Fund, be paid to the applicant, if such amount is relatable to - G (a) rebate of duty of excise on excisable goods exported 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 H account current maintained with the Commissioner of Central

MAFATLALINDS. LTD. v. U.0.1. [PARIPOORNAN,J~ 753.

--- Excise; A ( 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 B 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 c 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 D Government the incidence of duty has not been passed on by the persons concerne.d to any other person.

(3) Notwithstanding.anything to the contrary contained in any judg- ment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this A ct or the mies made E 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, ...... F (B) 'relevant date' means -

· (f) in any other case, the date of payment of duty."

(Emphasis supplied) G

-- Section llC 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 110 and Sections 12A to D highlight the new scheme of the Act, relating to refund and they are as follows :

"110, Duties of excise collected from the buyer to be deposited with H

SUPREME COURT REPORTS[l996) SUPP.10 S.C.R.

A the Central Government.

(1) Notwithstanding anything to the contrary contained in any order cir direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder every person who has collected any amount from the buyer of any goods B in any manner as representing duty of excise, shall forthwith pay 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 c 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 llB 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 is liat:Ie 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 assess- ment, 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

H (1) There shall be established by the Central Government a

MAFATLALINDS.LTD. v. U.O.L [PARIPOORNAN,J.) 755

fund, to be called the Consumer Welfare Fund. A (2) There 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 llB or sub-section (2) of section llC or sub-section B (2) of section llD;

(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 (2) of section 28B of the Customs Act, 1962 (52 of 1962); c (c) any income from investment of the amount credited to the Fund and any other monies received by the Central Govern- ment for the purposes of this Fund.

12D. Utilisation of the Fund D (1) Any money credited to the Fund shall be utilised by the Central Government for the welfare of the consumers in accord- ance with such rules as that Government may make in this behalf.

(2) The Central Government shall maintain or, if it thinks fit, 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 re~d. Rule 11(4) as amended, Section llB clauses (4) and (5) before amendment and Section llB 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 llD and G 12A to D - Section llD 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 con- cerned on fmalisation of the assessment. Section llD requires clarification. Excise duty is, ordinarily paid or payable at the time of clearance of the H

756 SUPREME COURT REPORTS[lcf96] SUPP. 10 S.C.R.

A goods. The sale of the goods may be later. So, if excise duty due is aheady paid by the manufacturer, and later collected by him when the goods are sold, such collection, need not be paid to the Govemment. Only if the duty has not been paid already or if any excess is collected over 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 llD. The said section (Section llD) 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.

D 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 wa~ of appeals, revisions, claims for refund and· the period of limitation provided therefor, etc. and specifi- cally excluding the jucisdiction of the civil courts for claiming refund? In E discussing this aspect, one has to bear in mind the content of Article 265 also. It will apply when: the stz.tute is unconstitutional or invalid and also where the collection is unauthorised/illegal, i.e., without "authority of law".

F 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 Com- mittee 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 G (1940) P.C. 105, 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 H settled that even if jurisdiction is so excluded, the Civil Eourts have

MAFATLALINDS. LID. v. U.0.1. [PARIPOORNAN,J.) 757

.- jurisdiction to examine into cases where the provisions of the Act A have not been complied with, or the statutory tribunal has not acted in confonnity with the fundamental principles of judicial proce- dure."

(Emphasis supplied) B

The scope of the above observation has been explained by a Constitution Bench of this Court, in Finn of /lluri Subbayya Chetty and Sons v. State of 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 C 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 D "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 main- tainable in view of the adequate alternate remedies provided by the Act E 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 F Committee in Secretary of State v. Mask & Co., (supra). After referring to the observations of the Judicial Committee quoted hereinabove, this Court in Finn of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh, AIR \, (1964) SC 322 at pages 325 and 326 explained the said observations thus :

"........ .It is necessary to add that these observations, though made G in somewhat wide terms, do not justify the assumption that if a decision has been made by a taxing authority under provisions of the relevant taxing statute, its validity can be challenged by a suit on the ground that it is inco"ect on the merits and as such, it can be claimed that the provisions of the )iaid statute have not been H ' _,

758 SUPREME COURT REPORTS[l996] SUPP.10 S.C.R. '· A 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 B 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 c perhaps be invoked in support of the plea that civil court 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, D cannot be Ehe subject-matter of the suit because S. 18-A clearly bars such a claim in the civil courts."

(Emphasis supplied) ~ E In this case, the relevant Act contained detailed and specific provisions by way of appeal, revision etc. to ventilate the grievances of the assessee. 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 F affirmed and explained.

28. The decision of the Privy Council in Mask & Co. case (supra), and either 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 r Madhya Pradesh &Anr., AIR (1969) SC 78. In that case, the assessees filed G 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) of the Con- ~

stitution. 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 H · and no order passed under the Act or the Rules by any of the statutory

MAFATLALINDS.LTD.v. U.O.I.[PARIPOORNAN,J.) 759

authorities, shall be called in question in any case. The court held that A notwithstanding, the alternate remedies by way of appeal, revision, rec- tification and reference to the High Court, the tax therein was levied without a complete charging section and this affected the jurisdiction of the tax auth01ities, and so, the suit was maintainable, and decreed the suit. After referring to the relevant decisions and in particular, Secretary of State B v. Mask & Co., AIR (1940) P.C. 105; Finn 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 :

(Emphasis supplied)

Referring to the facts of Finn of flluri Subbayya Chetty and Sons v. State of E Andhra Pradesh, AIR {1964) SC 322, it was further observed :

"The case of Firm of Illuri Subbayya, [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 p Sections 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 G Bench of of 7-Judges in Kamala Mills Ltd. v. 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 H

760 SUPREME COURT REPORTS(l996] SUPP. 10 S.C.R.

A 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 & B . 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 (1966) SC 893, a Constitution· Bench of this Court again considered the scope of the decisions in Mask & Co.'s case (supra) and Kamala Mills's case (supra). Ram Swarup's case arose ilnder the U.P. (Temporary) Control of Rent and Eviction Act. C 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 Constitu- tion 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, hai 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 ord~r 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 ci"il 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.

H (Emphasis supplied)

MAFATLALINDS. LTD. v. U.0.1. [PARIPOORNAN,J.] 761

Even so, this Court proceeded to state in paragraph13 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 be 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 rooi of the matter and would, if upheld, lead to the conclusion that 'the impugned order is a nullity." · . _;;... . c (Emphasis supplied)

This Court referred to the decisions of the Judicial Committee, in Secretary of State v. Jatindra Nath Chaudhry, AIR {1924) PC 175 and the decision in . 1 Mask & Co., and also quoted the observations in the latter case which have been quoted hereinbefore (para 27 - supra) and concluded thus : D

(Emphasis supplied)

It is evident that in Ram Swarup's case, this Court expressed the view that the decision in Kamala 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 G 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 - in other words, where the order or proceeding is attacked 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' H

762 SUPREME COURT REPORTS[1996] SUPP.10 S.C.R.

A 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 : llluri Subbayya Chetty AIR (1964) SC 322; Kamala Mill AIR (1965) SC 942 and Ram Swamp AIR (1966) SC 893.

In considering Mask & Co. AIR (1940) PC 105 and Kamala 'Mills B AIR (1965) SC 1942 the Constitution Bench in Ram Swamp'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. c 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 Subbayya, [1964] 1 SCR 752 = AIR (1964) SC 322 or Kamala Mills [1966] 1 SCR 64 - AIR .' D (1965) SC 1942) can be said to .rnn 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) Whether the statute gives a finality to the orders of the special tribunals the civil court's jurisdiction must be held to be E 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 conjormity with the fundamental principles of judicial procedure. F (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 dvil court. G 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 determina-

MAFATLALINDS. LTD.v. U.O.L [PARIPOORNAN,J.] 763

tion 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. B (3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the fligh 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 c 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. D (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 ofthe cori:ectness of the assessment apart from E 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 rui express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. F

(7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above 'set down apply."

(Emphasis supplied) G

Dulabhai's case (supra) has been consistently followed by this Court later - see : Sree Raja Kandregula Srinivasa Jagannadharao Panthulu Bahadur Gum v. The State of Andhra Pradesh mid Others, AIR (1971) SC 71 and other cases. H

764 SUPREME COURTREPORTS[1996] SUPP. 10 S.C.R.

A 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/un- authorised levy of tax, can be made only in accordance with the provisions of the Act (Rule 11, Section llB 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, 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 the specific statute wi)J. _have no application. Collector of Central Excise, Chandigarh v. Mis. 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. llB, 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:- E In such cases, the jurisdiction of the civil courts is not barred. The ag- grieved party can invoke Section 72 of the Contract Act, file a suit or 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)). F 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 fundamen- tal provisions of the Act or by acting in violation of the Fundamen- tal Principles of judicial procedure:- G 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 H has not acted in conformity with fundamental principles of judicial proce-

MAFA1LALINDS. LTD. v. U.0.1. [PARIPOORNAN,J.] . 765

dure", as stated in Mask & Co.'s (supra) and in Dulabhai's case (supra). A 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 Finn of llluri Subbayya Chetty and Sons v. State of Andhra Pradesh, AIR (19(/4) SC. 322 at page 326, to the following effect :

"...Non-compliance with the provisions of the statute, to which B 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 c 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........ " D [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 E of the Contract Act, as the case may be.

Category (III) - Mistake of law '- the levy or imposition was unconstitutional or illegal or not exigible in law (i.e. without juris- diction) and, so found in a proceeding initiated not by the par- ticular 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 H

766 SUPREME COURT REPORTS(1996) SUPP.10 S.C.R.

A 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; Mis. Tilokchand B 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 C is open to the assessee to take advantage of the declaration of the law so made, and pray for appropriate relief inclusive of refund on the ground that tax was paid due to mistake of law, provided he initiated action within the period of limitation prescribed under the Limitation Act. Such assessee should prove the necessary ingredients to enable him to claim the benefit under Section 72 of the Contract Act read with Section 17 of the Limitation D 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 E 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, prpposition No. (1) or clause No. (1) enun- . ciated in Dulabhai's case (supra) should be understood in the background. · ·of or in accord with the observations of the earlier Constitution Bench in · F 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 G .and without jurisdiction or the defect or infinnity in the order goes to the root of the matter and ma:kes 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

MAFATLALINDS.LTD. v. U.0.1. [PARIPOORNAN,J.] 767

situation/cases the non-compliance or error or mistake, committed by the statutory authority or Tribunal, makes the decision rendered ultra-vires or a imllity 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 B inAnisminic Ltd. v. 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 modem 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 c 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 deter- minable at the commencement, and not at the conclusion of the inquiry. The D said approach has been given a go bye in Anisminic case, as we shall see from the discus.sion hereinafter (See De Smith, Woolf and Jowell - Judicial Review of Administrative Action (1995 edn.) P. 268; Halsbuny's Laws of England (4th edn.) p. U4 - 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 musl retain it E · unimpaired until it has discharged its task". The decision inAnisminic case has been cited with approval in a number of cases by this Court : Citation of few such cases; Union of India v. Tarachand Gupta & Bros., AIR (1971) SC 1558 (at 1565), A.R. Antulay v. R.S. Nayak and Another, (1988] 2 SCC 602 (650), Mis. R.B. Shreeram Durga Prasad and Fatehchand Nursing Das F v. Settlement Commission. (IT & WT) and Another, (1989] 1 SCC 628, 634; N. Panhasarathy Etc. Etc. v., Controller of Capital Issues & Anr. Etc .. Etc., (1991] 3 SCC 153 at 195; _Associated Engineering Co. v. Government of Andhra Pradesh and Anr,. AIR (1992) SC 232; Shiv Kumar Chadha v. Municipa!Corporation of Delhi and Others, (1993) 3SCC161173. Deliver- ing the judgment of a two-Member Bench in Shri M.L. Sethi v. Shri R.P. G 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 a verbal cast of many colours. J urisdic- H

768 SUPREME COURT REPORTS[1996J SUPP.10 S.C.R.

A tion originally seems to have had the meaning which Lord Baid ascribed to it in Anisminic Ltd. v. Foreign Compensation Commis- sion, (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 at the commencement, not at the conclusion of the enquiry. InAnisminic Ltd., (1969) 2 AC 147 Lord Reid said:

"Put there are many cases where, although the tribunal had juris- c diction to enter ·on the enquiry, it has done 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 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 :

F "Lack of jurisdiction may arise in various ways. There may be an absence. of those formalities or things which are conditions prece- dent 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 G' 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 .1 ' 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." \

MAFA1LALINDS. LTD. v. U.O.I. [PARIPOORNAN,J.) 769

11. The dicta or the majority of the House of Lords, in the above case would show the extent to which .'lack' and 'excess' of jurisdic- tion have been assimilated or, in other words, the extent to which we have moved away from the traditional concept of "jurisdiction". The effect of the dicta in that case is to reduce the difference between jurisdictional error and mor of law within jurisdiction almost to vanishing point. The practical effect of the decision is that any error of law can be reckoned as jurisdicponal. 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" c 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 con- struing the empowering statute, which will give little guidance. It D is really a question of how much latitude the Court is prepared to allow.............."

In. a subsequent Constitution Bench decision, Hari Prasad Mu_lshankar Trivedi v. V.B. Raju and Others, AIR (1973) SC 2602, delivering the judgment of the Bench, Mathew, J., in para 27 at page 2608 of the E 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 F 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 a variety of senses and takes its colour from its context, G (see Per Diplock, J. at p. 394 in the Anisminic Case). Whereas the 'pure' theory of jurisdiction would reduce jurisdietional 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 H

770 SUPREME COURT REPORTS(1996] SUPP.10 S.C.R.

A problem of defining the concept of jurisdiction for purpose of judicial review has been one of public policy rather than one of logic". (SA. De Smith, "Judicial Review of Administrative Action". 2nd Edn., p. 98.)" (1968 edition)

(emphasis supplied) B 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 C that the said observation is omitted from the latest edition of. the book De Smith, Woolf and Jowell - Judicial Review of Administrative Action - 5th edition (1995) as is evident from page 229; probably due to later develop- ments in the law and the academic opinion that has emerged due to the change in the perspective.

D 32. After 1980, the decision in Anisminic case came up for further con- sideration 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 Communica- tions Ltd., (1981) AC 374; O'Reilly & Ors. v. Mackman & Ors., (1983) 2 AC E 237, Regina v. 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 Union & Ors. v. Minister For F 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 G 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 Jowell, Q.C. [(Professor of Public Law) (Fifth edition) - (1995)], Chapter 5, titled as "Jurisdiction, Vires, Law and Fact" (pp. 223-294), there is exhaustive analysis about the concept, "jurisdiction", and its ramifications. H The authors have discussed the pure theory of jurisdiction, the innovative

MAFATIALINDS. LTD. v. U.O.I. [PARIPOORNAN,J.J 771

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 proposi- . tions at pages 250-256 which could be advanc~d 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 admis- sion of evidence). Perhaps the most precise indication of jurisdic- C tional 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 Peariman 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. F Much of the superstrncture has already crnmbled. What remains is likely quickly to fall away as the courts rightly insist that all ad- ministrative action should be, simply, lawful, whether or not jurisdic- tionally lawful.". G (Emphasis supplied)

33. The jurisdictional control exercised by superior courts over sub- ordinate 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 : H

772 SUPREME COURT REPORTS[l996] SUPP. 10 S.C.R.

A "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 eJTor of substance, form or procedure, or by making an order or taking action outside its B limited area of competence. Not every error committed by an inferior Court or tribunal or other body, however, goes to jurisdic- tion. Jur_isdiction to decide a matter imports a limited power to decide that matter incoJTectly."

c "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 ofany other prerequisite of a valid adjudication. Excess of jurisdiction is not materially distinguishable from lack of jurisdiction and the expres- sions 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 pmyers on a body, that if that body makes an error of law while purporting to act within that jurisdic- tion 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 ir- G relevant 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 of a H particular statute, so that the relevant body will not exceed its

MAFATLAL INDS. LID. v. U.O.I. [PARIPOORNAN, J.] 773

jurisdiction by going wrong in law. Previously, the courts were more A likely to"find that errors of law were within jurisdiction; but with the modern approach e"ors 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" B (p.120)

"Errors of law include misinterpretation of a statute or any other legal document or a rule of common law; asking oneself and answering the wrong question, taking irrelevant considerations into account or ffliling to take relevant considerations into account when purporting to apply the law to the facts; admitting inadmis- sible evidence or rejecting admissible and relevant evidence; exer- cising a discretion on the basis of incorrect legal principles; giving reasons which disclose faulty legal reasoning or which are inade- quate 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 : F "Jurisdiction over fact and law : Summary

At the end of a chapter which is top-heavy with obsolescent matelial it may be useful to summarise the position as shortly as possible. The overall picture is of an expanding system struggling to free itself G 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 broadl}r rnles which have now H

774 SUPREME COURT REPORTS[1996] SUPP. 10 S.C.R.

A superseded them, much for the be1iefit of the law. Together they are as follows :

Errors of fact

Old rule The court would quash only if the erroneous fact was B 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 ( c) wrong, misunderstood or ignored.

Errors of law

Old rule The court would quash only if the error was (a) jurisdictional; or D (b) on the face of the record.

New rule The court will quash for any decisive error, because all errors of Jaw are now jurisdictional."

(emphasis supplied) E

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 p "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 G 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.

H (2) Cases of nullity may arise when there is lack of jurisdiction

MAFATLALINOS. LTD. v. U.O.I.(PARIPOORNAN,J.] 775

at the stage of commencement of enquiry e.g., when (a) authority A 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 over which the tribunal has no authority to· inquire; and ( d) there is want of essential preliminaries prescribed by the law for commencement of the inquiry. B (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) C 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 D 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." E With great respect to the learned author, I would adopt the above state- ment 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 men~ F tioned 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 llB of the Act was amended in 1991, deserve mention. They are ·· Union of India and G others v. Jain Spinners Limited and Another, [1992] 4 SCC 389; Union of . .. , India and others v. ITC Ltd., [1993] Supp. (4) SCC 326. hi 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 llB of the Act came into force. There was an earlier H

776 SUPREME COURTREPORTS[1996] SUPP.10 S.C.R.

A interim order passed by the High Court directing the deposit of the duty levied with a liberty to the Reve'nue 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 B 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 un- authorised or unconstitutional or without jurisdiction or illegal. In Union C 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 (llB, 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 n'ot 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 llB 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 H refund legitimately due. The relevant statutory provisions have been ex-

MAFATLALINDS. LTD. v. U.O.L [PARIPOORNAN,J.] 777

tracted earlier in this judgment. Briefly stated the position is this. Clause A (3) of Section llB 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, therefori<, shall be made under Section llB(l) and dealt with by the concerned authority under Section 11B(2) of the Act. These B 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 c 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 120 of the Act. D

38. As stated, Section 11B(2) and Section 11B(3) go together. The applications for refund made before the commencement of the Amend- ment Act, 1991, shall be deemed to have been made .under Section llB(l) 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 E 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 ~r due as per orders passed by Court, in a F • I 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. G 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 H

778 SUPREME COURTREPORTS[1996] SUPP.10 S.C.R.

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 H 11B(2), that in such cases where the duty is refundable, it will be credited

MAFATLALINDS. LTD. v. U.O.L [PARIPOORNAN,J.] 779

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 11-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 stage 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 ritu~I 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 H