Mafatlal Plywood Industries Ltd. vs Assistant Collector Of Central … on 20 September, 1990

ORDER

B.P. Singh, J.

1. The appellant herein M/s. Mysore Plywoods Ltd., is a Public Limited Company carrying on business of manufacture and sale of decorative plywoods, flush doors, having Its principal place of business in Bangalore. The appellant has been paying Central Excise Duty on articles manufactured by it, Including flush doors. The Assistant Collector of Central Excise, respondent No. 1, had been levying Central Excise duty on flush doors under Excise Tariff Item No. 16-8 of Schedule-1 of the Central Excise and Salt Act. The Trade Notice No. 157/73, dated 30th July, 1973 also provided that flush doors were included in Item No. 16-B aforesaid and therefore liable to pay excise duty at the rates specified thereon. The appellant was aggrieved by levy of excise duty on flush doors under Excise Tariff, item No. 16-8 and therefore on 4-5-1974 it wrote to respondent No. 1 objecting that flush doors could not be classified as plywood or block boards as defined under Tariff Item No. 16-B. It was contended that flush doors at best were the product of plywood. It is further stated in the aforesaid communication, Annexure-D, that henceforth payment of excise duty on flush doors shall be under protest till such time as decision was taken by the first respondent or other concerned authorities. To this communication, respondent-1 sent a reply dated 29-6-1974, which is Annexure-E to the Writ Petition. Respondent No. 1 in his communication mentioned that the appellant should submit within 10 days specific grounds on which it could substantiate payment of duty under protest. In response to Annexure-E the petitioner by communication dated 9th of July 1974, Annexure-F, submitted the grounds on which it claimed that levy of excise duty on flush doors under Tariff, Item 16-B was not justified. It is not necessary to refer to all the grounds, but it may be noticed that the appellant resisted the levy of excise duty under Tariff Item No. 16-8 mainly on the ground that flush doors were distinctly different from plywood, block boards, etc., even though plywood was used in the manufacturing process.

2. It appears that on the same day i.e., on 9th of July 1974 by Annexure-I the appellant wrote to the Superintendent/Assistant Collector of Central Excise, claiming refund of Rs. 2,42,470-04 for the period 1-7-1973 to 20-7-1973 and 21-7-1973 to 30-6-1974 on the ground that flush doors do not come within Tariff Item No. 16-B of Schedule-1 of the Act. The Superintendent of Central Excise replied, vide Annexure-J, dated 26-8-1974 and referring to Trade Notice Nos. 148 and 157 of 1973, dated 21-7-1973 and 30-7-1973 respectively stated that flush doors were to be assessed on an ad valorem basis. In this view of the matter, the refund bill was returned.

3. Since the petitioner had submitted detailed grounds objecting to the levy of excise duty on flush doors under Trade Tariff Item No. 16-B of Schedule-I vide their representation dated 9th of July 1974, Annexure-F, the Assistant Collector of Central Excise, respondent No. 1 after considering the contentions raised on behalf of the petitioner rejected their objections and held that flush doors did fall under “Block Boards” and therefore correctly assessable under Tariff Item No. 16-B. The order of the Assistant Collector, dated 31-10-1974, is Annexure-A to the Writ Petition.

The appellants preferred an appeal to respondent No. 2 the Appellate Collector of Central Excise but by his order dated 5-6-1975 he dismissed the appeal and affirmed the order of the Assistant Collector. He referred to another Notification dated 19-5-1975 Issued by the Central Government exempting flush doors from the whole of duty of excise leviable thereon subject to certain conditions. In the Instant case, it is not necessary to refer to that Notification because admittedly a manufacturer, such as the appellant, could not get the benefit of that Notification having regard to its turnover.

4. Aggrieved by the appellate order dated 5th/7th of June, 1975 the appellant preferred a revision before the Union of India, on 22-9-1975. It appears that finally the matter was heard on 27-1-1977 on which date, the appellant was to be heard by the Provisional Authority, The appellant did not appear on that day, for reasons to which we shall advert later. The Revisional Authority, however, by its order Annexure-C, dated 15th March 1977 rejected the revision preferred by the appellant holding that flush door was in essence a board as defined in Item No. 16-B of the Central Excise Tariff. In the Writ Petition, the petitioner did not dispute the fact that the order of the third respondent was received by it on 28-4-1977, but it referred to other facts to explain why It could not take Immediate steps to move this Court for quashing that order. It was stated in the Writ Petition that the Secretary of the petitioner–Company had resigned his job and since a new Secretary had not been appointed, its Chief Accountant was appointed to look after the work of the Secretary, who mainly looked after accounts and filing of returns etc. In such a situation, when the revisional order, Annexure-C, was received on 28-4-1977 it was not brought to the notice of the Secretary and it remained lying in the Secretariat Department unattended. At about that time, the office of the appellant was also reorganised and all departments, barring the production department, were shifted to the City Office, which had been taken on lease far away from the factory premises. In the course of transfer of files from the Factory to the City office several files got mixed up and some files were mislaid and others were inadvertantly consigned along with the old records. It took considerable time to re-organise and re-arrange the City office and papers were systematically sorted out and arranged. While this was being done, the notice of hearing received from the Union of India was traced, but no other paper in relation thereto was readily traceable inspite of diligent search at the appellant’s City office and factory. Under these circumstances, a letter was addressed to the Senior Technical Officer in the Department of Revenue and Banking, Government of India, on 9th of July 1980, which was actually despatched on 11th of July 1980 and was received in the Department of Revenue and Banking on 14th of July 1980. No response was received to this communication. Later when some old files were being checked, the revisional order passed by the Union of India was found wrongly filed in an old file. Under these circumstances, the Writ Petition was filed challenging the order of the Assistant Collector of Central Excise, Annexure-A, the appellate order Annexure-B, and the revisional order Annexure-C. It was also prayed that It may be declared that flush doors were not exigible under Entry 168 of the Central Excise Tariff for the period ending 28th February 1982 and the respondent be directed to refund the amounts collected by way of Illegal levy of excise duty on flush doors under Excise Tariff 16B in the course of all these years amounting to Rs. 16,68,426-54 as detailed the Annexures-K and L.

5. It may be noticed that the Writ Petition was actually filed on the 1st of January 1981 though the affidavit in support thereof appears to have been sworn on 18th of December, 1980.

6. The respondents did not file their return in reply to the Writ Petition. The Writ Petition was allowed by order dated 6-1-1982 by the learned single Judge. However, an appeal was preferred by the respondents being Writ Appeal No. 373/1982, which was allowed and the case was remitted for fresh disposal with liberty to respondents to file their return. It was only thereafter, the respondents have filed their statement of objections and in that their main objection to the grant of relief to the appellant was that the Writ Petition was delayed and ought to be dismissed on the ground of laches alone. We may only notice that the learned single Judge had earlier allowed the Writ Petition filed by the appellant on the basis of a memo filed by the respondents on 14-12-1981 in the following terms;

“The petitioner has challenged the levy of Excise Duty under Tariff Item No. 16B of Central Excise Act in respect of Flush Doors manufactured by the petitioner. It has now been clarified that the said articles are to be assessed under Tariff Item 68 and therefore, petitioner’s grievance in the Writ Petition does not survive. Accordingly, the Writ Petition may be dismissed after recording the clarification and with liberty to the respondents to proceed to levy under Tariff Item 68.”

In view of the memo earlier filed on behalf of the respondents, in their statement of objections it was not contended that flush doors were exigible to duty under Tariff item No. 16-8 of the Central Excise and Salt Act. It was, however, vehemently pleaded on behalf of respondents that the appellant was not entitled to any relief because challenge to the orders passed by the Authorities under the Act was unreasonably delayed and the claim for refund could not be allowed on account of laches on the part of the appellant. It was contended by the respondents that before 4-5-1974 the appellant had been paying duty in respect of flush doors under Tariff item No. 16-8 without objection. It was only on 4-5-1974 that for the first time it protested against the levy of duty on flush doors under Tariff Item No. 16-B. It had not sought any refund in that letter dated 4-5-1974, Ultimately the Assistant Collector rejected the contention of the appellant, which order was upheld in appeal and in revision. Even though the revisional order was received by the appellant on 28-4-1977, the same was not challenged immediately and the Writ Petition was filed only in January 1981.

Referring to the explanation offered for the delay in filing the Writ Petition, it was stated that the facts stated therein with regard to the resignation of the Secretary of the Company and appointment of the Chief Accountant and the mixing up of the records in the course of shifting etc., were too vague and obviously an after-thought, and therefore the appellant could not pray for condonation of the delay in filing the Writ Petition. According to the respondents, the letter Annexure-G, dated 9-7-1980 said to have been written to the Government of India making enquiries about the fate of the revision petition was merely a device to create some evidence to establish that the appellant was not aware of the revisional order till that date. According to the respondents, the petitioner knew about the revisional order passed by the Government of India and It had not taken any part of the proceeding before the Government of India since it know that it had no case at all. It had therefore accepted the revisional order. Thereafter having come to know of the decision of the Delhi High Court, dated 17-3-1980 wherein it was held that flush doors cannot be assessed under Tariff Item No. 16-B, the appellant realised its mistake in not questioning the revisional order of the Government of India and schemed to create a ground for condonation of delay. Having regard to the delay, the appellant was not entitled to any relief prior to the date of the Writ Petition. As regards the refund of the excise duty already paid, it was contended that refund could not be allowed since the claim was barred by limitation. Even if the Writ Petition was maintainable as against the orders Annexures-A, 8 and C, yet the petitioner could not seek any refund of the tax paid because there was no demand made for the refund of the tax.

Referring to the letter dated 9-7-1974 Annexure-l where-under the appellant had claimed refund of the duty paid, it was stated that as per Annexure-J, dated 26-8-1974 the claim for refund was returned since It was rejected, and since no appeal was filed against Annexure-J nor was It challenged in any other manner, the same become final.

7. It was also contended by the respondents that no prior demand had been made by the appellant before seeking a Writ of Mandamus. By Annexure-J, the claim of the petitioner for refund upto 30th June, 1974 had been rejected. The issue, which was kept alive by the appellant by filing an appeal and revision was in relation to the payment made under protest as per Annexure-D, dated 4-5-1974. It was, therefore, contended that under no circumstance was the appellant entitled to seek refund of any amount for the period covered by Annexure-J or for any period prior to 4-5-1974, the date on which the appellant communicated to the respondent-1 that It was making payment henceforth under protest. The respondents thereafter reiterated the same facts in its parawise reply to the Writ Petition. It stated that the Delhi High Court’s decision was dated 17th March 1980 and the Special Leave Petition filed against the said order was rejected by the Supreme Court on 16-4-1981. Having come to know of that decision the appellant obviously came forward with false excuses. At this stage, we may only notice that the Writ Petition was filed on the 1st January 1981 that was before the date on which the Supreme Court rejected the Special Leave Petition against the Judgment of the Delhi High Court.

8. We may also notice the grievance of the petitioner on another aspect, namely, the discriminatory treatment meted out by the respondents to the appellant. In para-16(d) of the Writ Petition, which was inserted by an amendment, it was stated that in similar cases of collection of duty on flush doors, the respondents actually refunded the duty collected for the entire period. In the case of Indian Plywood Industries (P) Ltd., Dandeli and the Forest industries Ltd., Hubli, the respondents refunded the whole of the duty collected amounting to Rs. 28 lakhs and Rs. two lakhs respectively. The appellant therefore made, a grievance that there was no reason why it should be treated differently by refusing to refund the amount illegally collected from it. The action of the respondents in refusing to refund the duty illegally collected was characterised as being discriminatory and violative of Article 41 of the Constitution of India as also violative of Article 265 of the Constitution of India.

Replying to this allegation, the respondents stated that in case of M/s. Indian Plywood Manufacturing Company Ltd., Dandeli, it was found that they were paying duty under protest since 21-7-1973 under tariff Item 16-B and therefore, the amount of Rs. 27,76,283-25 was refunded to them for the period 21-7-1973 to 7-8-1981. In so far as the case of Forest Industries, Hubli, was concerned, the refund granted by the officers appear to be on a mistaken interpretation of law and facts. Defending their action it was contended that there had been no unjust enrichment since the amounts collected from the appellant had been used for public purpose by the Government of India. It was alleged “infact the petitioner is trying to enrich itself by taking advantage of the decision of the Delhi High Court, even though its conduct disentitles it for the said relief.”

9. After the statement of objections was filed by the respondents on or about nth January 1983, the appellant filed an application under Rule 21(1) of the Writ Proceedings Rules 1977 praying for leave to file the reply statement, in view of the fact that in their statement of objections, the respondents had disputed most of the averments made in the Writ Petition. After seeking permission of the Court, the appellant filed its reply statement enclosing thereto several Annexures to which we shall refer hereafter. In view of the averments contained in the statement of objections characterising the explanation furnished by the appellant for the delay in filing the Writ Petition as vague and general, the appellant furnished further details supporting the facts stated in the Writ Petition. It was mentioned in the reply statement that the Secretary of the Company Sri E.R. Sampathkumar resigned and his resignation was accepted with effect from 16-4-1976. A copy of the minutes of the Board Meeting held on 10th March 1976 was produced as Annexure-M. Thereafter Sri Kushal Chand, Accountant of the Company was appointed as Secretary with effect from 1-7-1976 and the minutes of the Board Meeting held on 21-6-1976 in this connection was produced as Annexure-N. It was further stated that one Sri Ramanathan, who was the concerned Assistant looking after the Central Excise matters and assisting the Secretary in that behalf took ill with terminal cancer and went on leave from the beginning of 1977 and thereafter never reported for duty as he died while on leave. The revisional order, Annexure-C, was received on 28-4-1977 when the said Sri Ramanathan was on leave and as such, It was lost sight of. It Is thereafter stated that the appellant took on lease premises at Fairfield Road, Bangalore, from July 1979, where the office of the appellant was located which dealt with the excise duty and other matters. Annexures-O and P were produced to show that such premises was leased and rent was paid. Thereafter, the office was shifted to the factory premises in June, 1982, which is evidenced by letter Annexure-O surrendering the lease. It was, therefore, submitted that in view of the absence of Sri Ramanathan the revisional order was mis-laid and mixed up with other files or papers, and in view of shifting of the office, the matter was further complicated. It was only after Sri C.D. Desai was appointed as Secretary with effect from 1-4-1979 that the relevant papers were brought to the notice of Sri Desai in the year 1980. Thereafter in December, 1980 steps were taken to file the Writ Petition,

10. In view of the memo filed on behalf of therespondents conceding that the articles in question are to be assessed under Tariff item No. 68, it was not contended on behalf of the respondents in the Writ Petition that the flush doors manufactured by the appellant were exigible to levy of duty under Tariff Item No. 16-B. The only controversy therefore, before the learned single Judge was as to whether the appellant having filed the Writ Petition as late as on the 1st of January 1381, relief regarding refund should be refused on the ground of delay, having regard to the fact that the revisional order was passed by the Government of India on 19-4-1977, which was received by the appellant on 28-4-1977, The appellant offered an explanation for the delay and contended that having regard to the facts stated by it, the delay stood explained and therefore It should not be held dis-entitled to the relief of refund claimed by it. On the other hand, the respondents contended that the explanation furnished by the appellant was merely an after-thought. The real fact was that in view of the decision of the Delhi High Court, dated 17th March 1980 holding that flush doors did not fall within tariff Item No. 16-B, the appellant became wiser and realised its mistake in not questioning the revisional order of the Government of India, It was only thereafter that It took steps to file the instant Writ Petition and tried to explain the delay on imaginary grounds.

11. The learned single Judge held that so far as the claim of the appellant for refund of difference of excise duty paid for a period of 3 years prior to the presentation of the Writ Petition, namely, from 1-1-1978 to 1-1-1981 was concerned, there was no justification for denying relief to it because the same was not barred by time. However, with regard to the earlier periods, namely, from 3-5-1974 to 1-1-1978 and the period prior to 3-5-1974, it observed that the explanation offered by the – petitioner for the inordinate delay of 3 years 8 months in approaching the High Court was not at all satisfactory and convincing. He however assumed that the explanation offered by the petitioner was true, correct and convincing, and proceeded to examine the case on that, basis. We may only observe that though the learned Judge characterised the explanation offered for the delay as not at ail satisfactory and convincing, he has not discussed the explanation furnished by the appellant in his Judgment, possible because, he proceeded to decide the matter on the assumption that the explanation offered was true, correct, and convincing. The learned Judge, thereafter, held that even if the explanation offered by the petitioner was taken to be correct, it did not make any difference in examining the plea of limitation urged by the respondents, which on the principles stated in Bhailal Bhai’s case cannot be brushed aside. In substance, he held that the claim for the earlier period was barred by the law of limitation and therefore even If an explanation was furnished for the delay in approaching the High Court that could not prevent the dismissal of the Writ Petition in so far as it related to the refund of excise duty paid which was barred by time. Accordingly, he allowed the claim for refund for the period subsequent to 1st January 1978 and refused to grant any refund for the period prior to 1-1-1978.

12. The Judgment of the learned single Judge has been assailed by the appellant contending that the learned single Judge was clearly in error in holding that even if the explanation furnished was satisfactory and convincing, no relief could be granted for the period prior to 1st January 1978, it was submitted that the learned Judge ought not to have applied strictly the law of limitation, which in view of the principles laid down by the Supreme Court in several decisions only provided a guide, and the law of limitation could not be strictly applied in the matter of grant of relief in Writ Jurisdiction. The respondents, on the other hand, have contended that the learned Judge was justified in refusing relief to the appellant for the period prior to 1-1-1978. In fact the respondents have also preferred an appeal against the Judgment of the learned single Judge contending that no relief whatsoever should have been granted to the appellant. Once the Court held that there was delay in approaching the High Court for relief, the entire Writ Petition ought to have been dismissed, it was further contended that in any event, no Writ of Mandamus could be issued directing the respondents to refund any part of the excise duty paid because the appellant before approaching the Court had not made a categorical demand, which had been refused by the respondents, for the excise duty paid during the period 1-1-1978 to 1-1-1981. Such demand and refusal being a condition precedent for the grant of Writ of Mandamus, in the absence of such demand and refusal, the appellant was not entitled to any relief whatsoever even in regard to this period.

13. As observed earlier, the learned single Judge assumed that the explanation for the delay furnished by the appellant was true, correct and convincing. But he refused to grant relief for the period prior to 1-1-1978 on the sole ground that the claim for refund was barred by time.

14. We have therefore to examine whether in the matter of grant of relief of refund of excise duty illegally collected, the Court will refuse to grant relief to the petitioner If he falls to move the High Court for a Writ within a period of 3 years, the limitation prescribed by law, or whether, it is open to the High Court to grant relief even if a Writ Petition is filed latter than 3 years satisfactorily explaining the delay in approaching the High Court. The parties have relied upon the same decisions of the Supreme Court in support of their rival contentions. We shall, therefore, first notice those decisions of the Supreme Court and reduce the principles laid down therein.

15. In State of Madhya Pradesh v. Bhailal Bhai, the Supreme Court was dealing with a batch of Civil Appeals in which the High Court of Madhya Pradesh in applications under Article 228 of the Constitution of India had quashed the Notification issued by the State Government in exercise of powers under Section 5 of the State Sales Tax Act and ordered refund or the tax Illegally collected. The Supreme Court upheld the decision of the High Court holding the Notification to be invalid, However, with regard to the refunds ordered, it allowed refund in some cases and refused the refund in other cases. The relevant facts on this aspect of the matter are that the High Court declared the law void by its decision rendered on January 17th, 1958. Relying upon the order of the High Court, the Appellate Authority under the Act passed an order on August 27th, 1957, which was claimed by the Writ Petitioners to be the source of their Knowledge. The Supreme Court upheld the order of refund in cases where applications were made for refund within 3 years of the High Court’s Judgment, but disallowed refund where applications were made later, it observed:

“(17) At the same time we cannot lose sight of the fact that the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a Civil Court or to deny defences legitimately open in such actions. It has been made clear more than once that the power to give relief under Article 226 is a discretionary power. This is specially true in the case of power to issue Writs in the nature of Mandamus. Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to fee decided as regards the availability of consequential relief. Thus, where, as in these cases, a person comes to the Court for relief under Article 226 on the allegation that be has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the Court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may however be stated as a general rule that if there has been unreasonable delay the Court ought not ordinarily to lend its aid to a party by this extraordinary remedy of Mandamus. Again, where even if there is no such delay the Government or the Statutory Authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the Court should ordinarily refuse to issue the Writ of Mandamus for such payment. In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a Civil Court and to refuse to exercise in his favour the extraordinary remedy under Article 226 of the Constitution.”

The Court further went on to observe:

“(21)………He argued that assuming that the remedy of recovery by action in a Civil Court stood barred on the date these applications were made that would be no reason to refuse relief under Article 226 of the Constitution. Learned Counsel is right in his submission that the provisions of the Limitation Act do not as such apply to the granting of relief under Article 226. It appears to us however that the maximum period fixed by the legislature as the time within which the relief by a suit in a Civil Court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Article 226 can be measured. This Court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the Court to hold that it is unreasonable. The period of limitation prescribed for recovery of money paid by mistake under the Limitation Act is three years from the date when the mistake is known. If the mistake was known in these cases on or shortly after January 17, 1956 the delay in making these applications should be considered unreasonable. If, on the other hand, as Mr. Andley seems to argue, that the mistake discovered much later this would be controversial fact which cannot conveniently be decided in writ proceedings. In either view of the matter we are of opinion the orders for refund made by the” High Court in these seven cases cannot be sustained,”

It will thus appear from the observations of the Supreme Court that though the provisions of the Limitation Act do not as such apply in the matter of grant of relief under Article 226, it may yet provide a reasonable standard by which, delay in seeking remedy under Article 226 can be measured. In some cases, even if the claim was not barred by limitation, the Court may yet be justified in considering the delay to be unreasonable in cases, where the claim was barred by limitation, it will almost always be proper for the Court to hold that the delay was unreasonable. Their Lordships also observed that in cases, where it was urged that mistake was discovered much later, that might raise a controversial fact which cannot conveniently be decided in writ proceedings. But even while so observing, their Lordships cautioned that it is not easy nor is it desirable to lay down any rule of universal application. The Supreme Court, therefore granted refund in cases where the claims were made within 3 years from the date of the High Court’s Judgment. No explanation was sought as to why the Writ Petition were not filed earlier than 3 years, it can therefore safely be concluded that in cases where a tax is paid under mistake, refund can be claimed by filing a Writ Petition within 3 years of the date on which the mistake was discovered by a Writ Petition,

16. In Tilokchand Motichand v. H.B. Munshl, the learned Chief Justice observed that a petition under Article 32 was not a suit and was also not a petition or an application to which the Limitation Act applied. The question yet arose as to what is the standard for the Courts to follow in entertaining Writ Petitions. It was observed in that context in paras-10 and 11 as follows:

“10. If then there is no period prescribed what is the standard for this Court to follow? I should say that utmost expedition is the sine qua non for such claims. The party
aggrieved must move the Court at the earliest possible time and explain satisfactorily all
semblance of delay. I am not indicating any period which may be regarded as the ultimate
limit of action for that would be taking upon myself legislative functions. In England a
period of 6 months has been provided statutorily, but that could be because there is
no guaranteed remedy and the matter is one entirely of discretion. In India I will only
say that each case will have to be considered on its own facts. Where there is appearance
of avoidable delay and this delay affects the merits of the claim, this Court will consider
it and in a proper case hold the party disentitled to invoke the extraordinary jurisdiction.

11. Therefore, the question is one of discretion for this Court to follow from case to case. There is no lower limit and there is no upper limit, A case may be brought within Limitation Act by reason of some Article but this Court need not necessarily give the total time to the litigant to move this Court under Amide 32. Similarly in a suitable case this Court may entertain such a petition even after a lapse of time. It will all depend on what the breach of the Fundamental Right and the remedy claimed are and how the delay arose.”

It will appear from the above observations that in the matter of exercise of discretion, the Court must took into the facts of each case and its exercise of discretion will depend on what the breach of the fundamental right and the remedy claimed are, and how the delay arose.

17. In SHRI VALLABH GLASS WORKS LTD. v. UNION OF INDIA Venkataramaiah, J, as he then was, declared the law in the following words:

“9…………..Whether relief should be granted to a petitioner under Article 226 of the Constitution where the cause of action had arisen in the remote past is a matter of sound judicial discretion governed by the doctrine of laches. Where a petitioner, who could have availed of the alternative remedy by way of suit approaches the High Court under Article 226 of the Constitution, it is appropriate ordinarily to construe that any unexplained delay in the filing of the Writ Petition after the expiry of the period of limitation prescribed for filing a suit as unreasonable. This rule, however, cannot be a rigid formula. There may be cases where even a delay of a shorter period may be considered to be sufficient to refuse relief in a petition under Article 226 of the Constitution. There may also be cases where there may be circumstances which may persuade the Court to grant relief even though the petition may have been filed beyond the period of limitation prescribed for a suit. Each case has to be judged on its own facts and circumstances touching the conduct of the parties, the change in situation the prejudice which is likely to be caused to the opposite party or to the general public etc….”

It will appear from the observations above quoted that the grant of relief under Article 226 of the Constitution is a matter of sound judicial discretion governed by the doctrine of laches.

18. The rule that ordinarily unexplained delay in filing of the Writ Petition after the expiry of period of limitation prescribed for filing a suit may be construed as unreasonable, that should not be considered to be a rigid formula. It may still be open to the Court having regard to the facts and circumstances of the case touching the conduct of the parties, the change in situation, the prejudice which is likely to be caused to the opposite party or the general public, etc., to grant relief even though the petition may have been filed beyond the period of limitation prescribed for a suit.

13. In Chandra Bhushan v. Deputy Director of Consolidation (Regional), U.P., the Supreme Court cautioned against exalting a rule of practice to a rule of limitation and rejecting the petition of a citizen for refund without considering whether he was guilty of laches and undue delay. The primary question that arose in each such case was whether the applicant had been guilty of laches or undue delay. Similarly in Shiv Shankar Dal Mills v. State of Haryana, the Supreme Court observed that where public bodies under colour of public laws recover people’s money, later discovered to be erroneous levies, the Dharma of the situation admits of no equivocation. There is no law of limitation specially for public bodies on the virtue of returning what was wrongly recovered to whom it belongs. In our jurisprudence it is not palatable to turn down the prayer for high prerogative writs on the negative pleas on the alternative remedy, since the root principle of law married to justice Is ubl jus ibi remedium.

20. In State of Madhya Pradesh v. Nandlal, AIR 1987 the learned Chief Justice observed that the High Court in exercise of Its discretion did not ordinarily assist the tardy and the Indolent or acquiescent and the lethargic, and If Inordinate delay on the part of the petitioner in filing a Writ Petition was not satisfactorily explained, the High Court might decline to intervene and grant relief. The effect of this rule of laches or delay was dependant upon a number of factors. The High Court did not ordinarily permit a belated resort to the extraordinary remedy under Writ Jurisdiction because it was likely to cause confusion and public inconvenience and bring in its train new injustices.

It was observed thus:

“23……………..The evolution of this rule of laches or delay is premised upon a number of factors. The High Court does not ordinarily permit a belated resort to the extraordinary remedy under the Writ Jurisdiction because it is likely to cause confusion and public inconvenience and bring in its train new injustices. The rights of third parties may intervene and if the Writ Jurisdiction is exercised on a Writ Petition filed after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. When the Writ Jurisdiction of the High Court is invoked, unexplained delay coupled with the creation of third party rights in the meanwhile is an important factor which always weighs with the High Court in deciding whether or not to exercise such jurisdiction……”

it was emphasised that this Rule of laches or delay is not a rigid Rule, which can be cast in a strait-Jacket formula for there may be cases where despite delay and creation of third party rights the High Court may still in the exercise of its discretion interfere and grant relief to the petitioner. But such cases where the demand of justice is so compelling that the High Court would be inclined to interfere in spite of delay or creation of third party rights, would by their very nature be few and far between. Ultimately, it would be a matter within the discretion of the Court, Ex-hypothesis every discretion must be exercised fairly and justly so as to promote justice and not to defeat ft.

21. In Salonah Tea Company Ltd. v. Superintendent Of Taxes, Nowgong Sabyasachi Mukharji, J, as he then was, considered the earlier decisions of the Supreme Court on the subject. He observed:

“6………..Courts have made a distinction between those cases where a claimant approaches a High Court seeking relief of obtaining refund only and those where refund is sought as a consequential relief after striking down of the order of assessment etc. Normally speaking in a society governed by Rule of Law taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law it follows that taxes collected without the authority of law as in this case from a citizen should be refunded because no State has the right to receive or to retain taxes or monies realised from citizens without the authority of law.”

“14………..We agree that normally in
a case where tax or money has been realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the Court has power to direct the refund unless there has been avoidable laches on the part of the petitioner which indicate either the abandonment of his claims or which is of such nature for which there is no probable explanation or which will cause any injury either to respondent or any third party. It is true that in some cases the period of three years is normally taken as a period beyond which the Court should not grant relief but that is not an inflexible rule. It depends upon the facts of each case…”

Ranganathan, J, however considered it unnecessary to go into the larger question whether the bar of limitation should be considered as fatal to a Writ Petition as to a suit for recovery, or whether it is only a relevant but not conclusive factor that should be taken into account by the Court in exercising discretion. He held that in that case, the Writ Petition having been filed within the period of limitation prescribed by law after the appellants realised their mistake, the High Court was clearly in error in refusing to grant refund of the tax illegally collected. Having regard to the authoritative pronouncements of the Supreme Court referred to above, the following principles emerge:

The special remedy provided in Article 226 of the Constitution is not intended to supersede completely the modes of obtaining relief by an action in a Civil Court or to deny defences legitimately open in such actions. The power to give relief under Article 226 is a discretionary power and in exercise of that discretion, the Court may take into consideration the delay made by the aggrieved party in seeking this special remedy and what excuses there is for it. It must also take into account the nature of the controversy of facts and law that may have to be decided as regards the availability of consequential relief. Whether the Court should exercise its discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule of universal application. As a general rule however, if there has been unreasonable delay, the Court ought not ordinarily to lend its aid to a party by the extraordinary remedy of Mandamus. Even if there is no inordinate delay, the Government or the Statutory Authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits of the grounds like limitation, the Court should ordinarily refuse to issue the Writ of Mandamus for such payment. The provisions of the Limitation Act do not as such apply to the granting of relief under Article 226, but the maximum period fixed by the Legislature as the time within which the relief by a suit in a Civil Court must be brought, may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Article 226 can be measured. The question is one of discretion for the Courts to follow from case to case. There is no lower limit and there is no upper limit. In exercise of such discretion, there cannot be a rigid formula governing the exercise. There may be cases where even a delay of a shorter period may be considered to be sufficient to refuse the relief in a petition under Article 226 of the Constitution. But there may also be cases where there may be circumstances which may persuade the Court to grant relief even though the petition may have been filed beyond the period of limitation prescribed for a suit. The Rule of practice should not be exalted to a Rule of limitation. In the context of public bodies, which under cover of public law recover people’s money, later discovered to be erroneous levies, there is no law of limitation on the virtue of returning what was wrongly recovered to whom it belongs. It is not possible to lay down an exhaustive list of facts and circumstances that the Courts must take into consideration in exercise of such discretion. The Courts will, however, be justified in taking into account what the breach of the fundamental right and the remedy claimed are/and how the delay arose. Circumstances touching the conduct of the parties, the change in the situation and the prejudice which is likely to be caused to the opposite party or the general public etc., are also relevant. The Court may not ordinarily permit a belated resort to the extraordinary remedy under the Writ Jurisdiction if that is likely to cause confusion and public inconvenience and bring in its train new injustices. The creation of third party rights and also injustices on such third parties will have to be taken into account. The Rule of laches or delay is not a rigid Rule, which can be cast in a strait-jacket formula for there may be cases, though few, where despite delay and creation of third party rights, the High Court may still in the exercise of its discretion interfere and grant relief to the petitioner. Similarly, it would be permissible to take into account the avoidable laches on the part of the petitioner which may indicate either the abandonment of his claims or which may be of such nature for which there is no probable explanation or which will cause injury either to the respondent or any third party.

There may be cases where even if a party approaches the Court within the period prescribe by law for filing the suit, the Court may, having regard to the facts and circumstances, refuse to grant any relief in exercise of its discretion. At the same time, there may be cases where a party may approach the Court under Article 226 of the Constitution after the period of limitation prescribed by law has run out and yet having regard to all the relevant facts and circumstances, the Court may exercise its discretion to grant relief.

22. In the instant case, the appellant had challenged the order of assessment, the appellate as well as the revisional order, Annexures-A, B and C, and had prayed for a declaration that the flush doors were not exigible to duty under Entry 16-B of the Central Excise Tariff. In view of the memo filed on behalf of respondents, It was not necessary for the learned single Judge, to go Into the question on merit, because It was conceded by the respondents that flush doors were not exigible to duty under Entry 16-B. The learned single Judge, however, partly allowed the Writ Petition and granted refund of excise duty Illegally collected during the period of 3 years preceding the filing of the Writ Petition. Though, he observed that he did not find the explanation furnished by the appellant to be satisfactory or convincing, he did not consider the explanation in detail in his Judgment, because he proceeded to decide the Writ Petition on the assumption that the explanation offered by the petitioner was true, correct and convincing. He came to the conclusion that the explanation offered by the petitioner for the delay even if correct, did not make any difference in examining the plea of limitation urged by the respondents following the principles laid down in Bhailal Bhai’s case. We are of the opinion that in coming to this conclusion, the learned Judge committed the error of exalting a Rule of practice to a Rule of limitation and rejecting the petition of the appellant for refund without considering whether the appellant was guilty of laches and undue delay. This was precisely the error committed by the learned single Judge which was pointed out by the Supreme Court in Chandrabhushan’s case.

23. We are therefore inclined to consider the explanation furnished by the appellants for the delay in filing the Writ Petition. If we are convinced that the delay in filing the Writ Petition was unavoidable and that the appellant was not guilty of laches, but was prevented from filing the Writ Petition for reasons beyond its control, there should be no objection -to the grant of relief for refund of excise duty paid during the period prior to 1st January 1978. If, however, we come to the conclusion that the delay was avoidable, and that the appellant is guilty of laches, no further relief can be granted to the appellant.

The respondents have categorically contended in their return and it was also argued before us, that the explanation for the delay furnished by the appellant was only an after-thought. The true fact was that the appellant having exhausted his remedies under the Act, did not care to challenge the revisional order passed by the Government of India. But thereafter, having come to know of the decision of the Delhi High Court, which was pronounced on 17th March 1980, holding that flush doors cannot be assessed under tariff Item No. 16-B, the appellant realised its mistake ‘in not questioning the revisional order of the Government of India and therefore it filed the instant Writ Petition making out a false ground for condonation of delay. We may observe that if we ignore the explanation furnished by the appellants and accept the contention of the respondents that the appellant realised its mistake only after the Delhi High Court pronounced its Judgment on 17th March 1980, we must allow the appeal of the appellant and grant the entire relief prayed for because the Writ Petition was filed about 9 months after the appellant realised its mistake, i.e., within the period of limitation prescribed by law for recovery of monies paid under, a mistake.

24. We have earlier set out in detail the explanation offered by the appellant. It has been explained that the Secretary of the appellant-Company had resigned his job and a new Secretary had not been appointed. Its Chief-Accountant, who was looking after the work of the Secretary, was mainly looking after the accounts. It was also explained that the dealing Assistant, who normally looked after such matters had to go on leave and never returned as died due to cancer while on leave. In such a situation, when the office premises were shifted and then re-shifted, the communication received from the Government of India was mis-placed and the same having not been brought to the notice of the concerned officers of the appellant, a Writ Petition could not be filed immediately. These facts have not been denied by the respondents. Indeed some documentary evidence has also been produced by the appellant to support the explanation furnished by it. It is worth noticing that as late as on the 9th July 1980 the appellant had made enquiries from the Department of Revenue and Banking, Government of India, as to the fate of its revision petition pending before the Government of India. The fact that such a communication had been sent by the appellant to the Government of India was not denied. It is also not denied that the Government of India did not respond to the aforesaid communication. It is not disputed by the appellant that the revisional order passed by the Government of India was received on 28-4-1977. But the explanation offered is that having regard to the facts and circumstances, the same could not be brought to the notice of the Secretary of the Company and was misplaced in the office of the appellant and this mistake was discovered much later. Applying strictly the law of limitation, the appellant could have filed the Writ Petition on or before 20th April 1980. If that were done, there could be no objection to the grant of refund. In that sense, the delay is of nearly 8 months in filing the Writ Petition, and we find no reason why the appellant is not entitled to refund of excise: duty illegally paid when it has been given a plausible explanation for the delay, which is not controverted by the respondents. In the instant case, the respondents have not changed their position in such a way that granting relief of refund would cause either injury to respondent or anybody else. This Is also not a case, where rights of third parties have emerged by reason of delay. The refund is not likely to cause confusion and public inconvenience and bring in Its train new injustices. This is a case, where the respondents did not even consider it necessary to contest the Writ Petition and conceded that levy of excise duty on flush doors under Item 16-B of the Tariff Item was not justified. Obviously, therefore, the appellant was compelled to pay at a much higher rate of duty than what was permissible in law. All that the appellant demands is that the excess may be refunded to It. We fall to understand what Injustice would be caused to the respondents if it is directed to refund the extra amount collected by way of duty. On the other hand, it appears to us unjust that the State should be permitted to retain the money recovered by It illegally despite the appellant’s protest. Having regard to the facts and circumstances of this case, the explanation for the delay offered by the appellant, the breach of, the right complained of and the remedy claimed, we ere of the view that the appellant is entitled to refund of excess duty collected from it on the erroneous assumption that flush doors manufactured by it were exigible to levy of duty under tariff Item No. 16-B. For the period prior to 4th May 1974 it may be said that the appellant went on paying duty and made no grievance of it. But it clearly protested on the 4th of May 1974 and thereafter it made all payments under protest. It objected to the levy of duty under tariff 16-B which led to a proceeding under the Act, against which, the appellant preferred an appeal and then a revision. We are, therefore, of the view that justice demands that the excess excise duty paid under protest must be refunded to the appellant.

25. The appellant has made a grievance before us that the respondents have chosen the appellant for discriminatory treatment in the matter of refund of levies illegally collected. Whereas in similar circumstances, refund has been granted to others, only in the case of the appellant technical objections are being raised. The appellant has referred to specific Instances where refund was granted without any controversy. It has referred to the case of Indian Plywood Industries Pvt. Ltd., Dandeli and the case of Forest Industries Ltd., Hubli. According to the appellant in the case of Indian Plywood Industries Pvt. Ltd., a sum of Rs. 28 lakhs illegally collected was refunded. This is not denied by the respondents. The explanation offered by the respondents is that M/s. Indian Plywood Industries Pvt. Ltd., Dandeli, were paying duty under protest since 2-1-1973 under tariff Item No. 16-B and therefore, the amount of Rs. 27,76,283-25 was refunded to them for the period from 21-7-1973 to 7-8-1981. The explanation offered by the respondents in fact supports the allegations made by the appellant. In the Instant case as well appellant has been paying excise duty under tariff Item No. 16-B under protest with effect from 4th May 1974. Not only that, they also challenged the levy and went up in appeal and revision. The case of the appellant therefore stands on the same footing as the case of Indian Plywood Industries Pvt. Ltd., Dandeli, if not on a better footing. Similarly, the explanation offered in the case of Forest Industries Ltd., that the refund was made under an erroneous impression of the law, is most unconvincing. There is therefore justification in the grievance of the appellant that the respondents have treated it unreasonably.

26. It cannot be disputed that the respondents have been illegally levying excise duty at higher rates under tariff Item No. 16-B against the appellant. Undoubtedly, therefore, the respondents have collected huge amounts in excess not sanctioned by law. The appellant claims that such amount illegally collected should be refunded to them. As observed by the Supreme Court, in a society governed by Rule of Law tax should be paid by citizens as soon as they are due in accordance with law, equally as a, corollary it follows that taxes collected without authority of law from a citizen should be refunded because no State has the right to receive or retain taxes or monies realised from citizen’s without the authority of law. There is no law of limitation specially for public bodies on the virtue of returning what was wrongly recovered to whom it belongs. In the Instant case, the appellant paid the excise duty demanded from it though under protest. It now claims, that the respondents having admitted that they levied the duty illegally and in excess, they should be directed to refund the excess collected from it. If the Writ Petitions were filed before this Court 8 months earlier the respondents could have no defence to the claim for refund as it would have been within a period of 3 years from the date of the revisional order of the Central Government. The appellant has furnished an explanation which we do not find to be such as can be rejected out of hand. In these circumstances, can it be said that the exercise of discretion in favour of the appellant may result in Injustice and would not be a sound exercise of discretion. In this regard, we may also take into account the stand of the respondents that in reality the appellant discovered its mistake only after the High Court of Delhi delivered the Judgment on 17-3-1980 holding that flush doors cannot be assessed under tariff Item No. 16-B. If that be so, the appellant could have presented a Writ Petition within 3 years from the date on which It discovered its mistake, namely, within 3 years from 17th March 1980. The Writ Petition was filed on the 1st January 1981 that is within 9 months of its realising its mistake. We do not think that the appellant should be placed in a worse situation because It had taken up the matter before the Assistant Collector and then in appeal and revision denying its liability to pay excise duty under tariff Item No. 16-B. Having regard to all these facts and circumstances, we are of the view that the appellant is entitled to the refund of excess excise duty paid by it atleast for the period during which it paid the duty under protest i.e., from 4th of May 1974 onwards.

 27.    A   submission    was   urged   on   behalf   of    the respondents   that  grant  of   refund  would  result   in  unjust enrichment of the appellant. We find that no such plea has been raised by the respondents- What has been contended by them is that refusal to grant refund would not result in unjust enrichment of the State. In the absence of any allegation of unjust enrichment, it is not necessary to consider the submission further, because the plea of unjust enrichment is a plea of fact, which cannot be examined in the absence of necessary pleadings. 
 

 28. We therefore partly allow this appeal and while refusing the relief of refund of excess excise duty paid before 4th May 1974, we direct that the respondents shall re-calculate the excise duty liability of the appellant for the period from 4th of May 1974 onwards and refund to the appellant the excess excise duty collected by them during that period. This shall be done by the respondents within a period of 4 months from the date of this Judgment. 
 

 29. The appeal is partly allowed in the above terms. There will be no order as to costs.