Gujarat High Court
Hasmukhraj vs Commissioner on 11 November, 2011
Author: Akil Kureshi
Bench: Akil Kureshi
Gujarat High Court Case Information System
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SCA/14055/2011 21/ 21 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 14055 of 2011
With
SPECIAL
CIVIL APPLICATION No. 14056 of 2011
With
SPECIAL
CIVIL APPLICATION No. 14066 of 2011
With
SPECIAL
CIVIL APPLICATION No. 14324 of 2011
For
Approval and Signature:
HONOURABLE
MR.JUSTICE AKIL KURESHI
HONOURABLE
MS JUSTICE SONIA GOKANI
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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HASMUKHRAJ
V NADA - Petitioner(s)
Versus
COMMISSIONER
OF INCOME TAX-III & 2 - Respondent(s)
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Appearance
:
MR
MANISH J SHAH for Petitioner(s) : 1,
None for Respondent(s) : 1 -
3.
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CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 27/09/2011
COMMON
ORAL JUDGMENT
(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) These writ petitions arise out of similar factual background. Having been heard together they would stand disposed of by this common judgment.
2. For the purpose of this judgement facts arising in Special Civil Application No.14055 of 2011 may be noticed. The petitioner is an income tax assessee having permanent account number. He is being assessed in status as an individual. On 16th June 1995 the petitioner preferred an application before the Settlement Commission for the assessment years, including assessment years 1992-93 to 1994-95. The same was registered before the Settlement Commission and was admitted by the Commission on 14th May 1996. The Settlement Commission passed final order of settlement u/Sec.245D(4) of the Income Tax Act, 1961 (hereinafter be referred to as `the Act') on 26th March 2007. In the said order the Settlement Commission charged interest from the petitioner u/Sec.234B and 234C of the Act upto the date of the order u/Sec.245D(4) of the Act. Settlement Commission noted that such interest was being charged as per the decisions of the Apex Court in the case of M/s.
Hindustan Bulk Carriers (259 ITR 449), Damani Brothers (254 ITR 91) and Anjuman Mohammed Hussein Ghaswala and others (252 ITR 1).
3. Respondent no.2, i.e. the Income Tax Officer while giving effect to the order or the Settlement Commission, therefore, charged interest on the petitioner u/Sec.234B and 234C upto the date of the order passed u/Sec.245D(4) of the Act.
4. It is not in dispute that the petitioner did not challenge the order of the Settlement Commission or any part thereof. In other words, the petitioner accepted the order of the Settlement Commission including the portion of the order whereby the Settlement Commission charged interest from the petitioner upto the date of the order u/Sec.245D(4) of the Act. The Assessing Officer also levied such interest from the petitioner while giving effect to the order of the Settlement Commission. Such order was passed by the Assessing Officer on or around 11th June 2007. It is not in dispute that the petitioner paid up the entire amount as directed by the Settlement Commission with interest as so directed.
5. Such payment was without any protest. The Settlement Commission in the order dated 26th March 2007 had also granted immunity to the petitioner against penalty and prosecution. However, such immunity was subject to following amongst other conditions:-
"9.1 Immunity granted to the applicant by this order may be withdrawn, if he fails to pay the tax within the time and the manner as specified in this order or fails to comply with other conditions, if any, subject to which the immunity is granted and thereupon the provisions of the Income-tax Act shall apply as if such immunity had not been granted."
The petitioner has all along enjoyed such immunity on the terms and conditions provided by the Settlement Commission in the said order dated 26th March 2007 without any protest or murmur.
6. The petitioner not only accepted the order of the Settlement Commission, also paid the principal amount with interest as provided by the Settlement Commission in the said order and as calculated and worked out by the Assessing Officer while giving effect to the order of the Settlement Commission.
7. For a long time thereafter the petitioner raised no issue or dispute with respect to the order of the Settlement Commission or the demand of interest contained in such order. However, for the first time by filing the present petition on or around 14th September 2011 the petitioner has prayed that direction for payment of interest u/Sec.234B and 234C of the Act upto the date of order u/Sec.245D(4) contained in the order passed by the Settlement Commission be quashed. As a consequence thereof, the order passed by the Assessing Officer charging interest for the period between 14th May 1996 to 16th March 2007 be also set aside.
8. The prayer of the petitioner is based primarily on the decision of the Apex Court in the case of Brijlal and others reported in (2010) 328 ITR 477 in which it is held that such interest can be charged only upto the date envisaged u/Sec.245D(1) of the Act which according to the petitioner comes to 14th May 1996.
9. We were prima facie of the view that despite the decision of the Apex Court in case of Brijlal and others (supra) the petitioner could not have approached this Court after several years and thereby revive a cause which was either abandoned or had not survived. Counsel for the petitioner had thereupon taken time to cite judicial decisions with respect to this aspect of the matter. Before adverting to the contentions raised by the counsel for the petitioner and the authorities cited, we may notice that the petition is filed in September 2011 challenging the order of the Settlement Commission passed on 26th March 2007. Thus, after a period of well over four years a portion of the order of the Settlement Commission is challenged in a writ petition. In the petition, to explain such delay all that the petitioner has stated is that recently the Larger Bench of the Apex Court comprising of five Hon'ble Judges has in case of Brijlal and others (supra) held that interest u/Sec.234B and 234C of the Act is to be charged only upto the date of the order of the Settlement Commission u/Sec.245D(1) and not upto the date of order u/Sec.245D(4) of the Act. It is the further case of the petitioner that in the same decision it is held that such order of the Settlement Commission is not open to rectification proceeding u/Sec.154 of the Act. The petitioner has further stated that very recently he has come to know about the decision. He was advised that he has no other remedy except to approach the High Court.
10. In the above background of facts, counsel for the petitioner strenuously attempted to convince us that the petition should be entertained ignoring the time gap between the date of the impugned order and filing of the petition. Counsel submitted that the law was settled recently by the Apex Court in the decision in the case of Brijlal and others (supra).
The petitioner only thereupon could have questioned the direction contained in the order of Settlement Commission charging interest right upto the stage of such an order u/Sec.245D(4) of the Act. The petitioner was obviously bound by the decision of the Supreme Court on account of which the petitioner could not have carried the issue any further. He submitted that now that the law is laid down by the Apex Court by a Larger Bench, the benefit thereof must flow to the petitioner. To our query as to upto what extent such issues could be reopened once not having pursued by individuals, counsel submitted that there should no time limit or in other words such issues can be and should be permitted to be reopened after without any reference to time and even decades together. It is this bold assertion of the counsel for the petitioner which worries us. We have examined the case law presented before us. We have also taken into consideration several other authorities on the point.
11. On behalf of the petitioner counsel relied on the following judgments:
12. In the case of Brijlal and others (supra) wherein five Judge Bench of the Apex Court held that in settlement cases interest u/Sec.234B of the Act can be charged only upto the order u/Sec.245D(1) of the Act and not upto the date of order of settlement u/Sec.245D(4). The Apex Court also concluded that the Settlement Commission cannot reopen its concluded proceedings by invoking Sec.154 of the Act to levy interest u/Sec.234B.
We may notice that the Apex Court distinguished the decision in the case of Ghaswala (supra) observing that the said decision was rendered in the background of a proceeding u/Sec.143 or Sec.144 of the Act and not in connection to the settlement proceeding u/Sec.245D of the Act.
13. Reliance was placed on the decision of Bombay High Court in the case of Walchand Nagar Industries Ltd. v. V.S. Gaitonde, Income-Tax Officer, Companies Circle I(3), Bombay and another (44 ITR 260). It was a case wherein by virtue of subsequent decision certain levy of dividend tax was held to be invalid. The Bombay High Court held that by virtue of such decision even though subsequently rendered, the order of the Assessing Officer levying tax would be rendered bad at its inception and the Income-Tax authorities, therefore, were in error in not rectifying the mistake. In other words, the Court was of the opinion that by virtue of the subsequent decision of the Apex Court, the assessee was entitled to seek rectification of the order of the Assessing Officer.
We may notice that the decision was specifically with respect to right of an assessee to seek rectification of a completed assessment order by virtue of a subsequent decision of the Apex Court.
14. Reliance was placed on the decision in the case of Poothundu Plantations Pvt. Ltd. v. Agricultural Income-Tax Officer and others (221 ITR 557) wherein the Apex Court observed as under:-
"It is well settled that if the Supreme Court has construed the meaning of a section, then any decision to the contrary given by any other authority must be held to be erroneous and such error must be treated as an error apparent on the record."
Here also we may notice that the issue arose out of the rectification application filed by the assessee on the basis of the Supreme Court decision.
15. Reliance was also placed on a decision of Division Bench of this Court in the case of Suhrid Geigy Ltd. v. Commissioner of Surtax (237 ITR 834) wherein also in the background of an application seeking rectification of an order of assessment the Division Bench observed that by decision of High Court rendered prior to or subsequent to an order of rectification, the point ceases to be debatable.
Here also we may notice that the decision was rendered in the background of rectification application filed by the assessee.
16. Reliance was also placed on the decision of the Apex Court in the case of Assistant Commissioner of Income-Tax v. Saurashtra Kutch Stock Exchange Ltd. (305 ITR 227) wherein the Apex Court once again in the background of the application for rectification of mistakes observed that a patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it can be said to be an error apparent on the face of the record and can be corrected by exercising certiorari jurisdiction.
17. Reliance was also placed on the decision of the Apex Court in the case of Syed Yakoob v. K.S. Radhakrishnan [(1964) 5 SCR 64] which pertain to the jurisdiction of the High Court in issuing writ of certiorari for correcting errors of jurisdiction committed by inferior courts or Tribunals.
18. Reliance was also placed on the decision in the case of Thanthi Trust v. Income-Tax Officer (177 ITR 307) of the Madras High Court. Entertaining the writ petition challenging the reopening of the assessment the Bench held that the writ was maintainable for the limited purpose of deciding jurisdictional issue. In the facts of the case, it was also observed that the assessee could not be denied relief on the ground of delay.
19. Reliance was also placed on the decision in the case of Skycell Communications Ltd. And another v. Deputy Commissioner of Income-Tax and others (251 ITR 53) wherein the Madras High Court was of the opinion that the writ petition can be entertained even if alternate remedy was available on certain limited grounds. We are, however, not concerned with such an issue in these writ petitions.
20. Reliance was also placed on the decision of the Apex Court in the case of Nani Gopal Paul v. T. Prasad Singh and others reported in AIR 1995 SC 1971 wherein the Apex Court in a suo motu action set aside the auction sale of a hypothecated property conducted by the Court Receiver finding that there were illegalities pointed by the Division Bench of the High Court in such sale. Once again, we are not directly concerned with such issue in the present cases.
21. Reliance was also placed on the decision in the case of Chandabai Daga v. Income-Tax Appellate Tribunal and another (194 ITR 422) wherein the Bombay High Court entertained the writ petition of an assessee for refund of tax collected by the Union of India when it was found that another assessee had succeeded on the same legal issue before the High Court. The Court was of the opinion in a case where the monies had been realised without authority same must be refunded in an application under Article 226 of the Constitution of India and the High Court has power to direct refund unless there had been avoidable laches on the part of the petitioner. It is of course a case where the petition was filed several years after the assessment order was passed on the ground that in a similar case the High Court had held in favour of the assessee.
22. Lastly reference was also made to the decision of the Bombay High Court in the case of Bharatiya Engineering Corporation P. Ltd. v. R.G. Deshpande, Addl. Commissioner of Income-Tax, Bombay City-II, and others (130 ITR 442) wherein the Bench had recorded the statement of the Finance Secretary with respect to refunds, which had stated thus:-
"Such instructions are already there. Regarding refund petitions, we advise the Commissioner of Income-Tax to condone the delay even though the petitions are filed beyond the permissible limit of two years. We condone delay in hundreds of cases. We have instructed that it should be condoned freely."
23. Relying on the above decisions, counsel reiterated that the petitioner has no other remedy available, application for rectification is still not maintainable, levy of interest is declared illegal and excess amount recovered must be refunded.
24. We have already noticed that the orders were passed by the Settlement Commission more than four and half years back. The Assessing Officer had also passed orders giving effect to such order of Settlement Commission shortly thereafter. The petitioner had paid not only the principal, but also the interest as directed by the Settlement Commission and as calculated by the Assessing Officer without protest. All this happened nearly more than four and half years before filing of the petition.
25. It is well known that a writ petition under Article 226 of the Constitution of India is not governed by any rigid law of limitation. It is, however, equally well settled that the writ petition cannot be filed after indefinite period of cause of action arising without any explanation for delay. In other words, delay and laches would be the grounds on which the Courts would ordinarily refuse to exercise writ jurisdiction.
26. As noted earlier, the only ground stated in the petition to explain the delay was that the law with respect to the chargeability of interest upto the date of the order u/Sec.245D(4) of the Act was settled only recently by the decision of the Apex Court in the case of Brijlal and others (supra).
The petitioner having recently come to know about the same and having been advised to file the petition, such petition is filed.
27. We are of the opinion that even on the basis of such subsequent decision of the Apex Court, writ jurisdiction cannot be invoked after indefinite period of time. The Settlement Commission passed the order on the basis of its understanding of the law prevailing at the relevant time. Admittedly, the petition did not challenge such order. The question, therefore, is can the petitioner go to a court of law at any point of time without any reference to the passage of time and invoke writ jurisdiction on the basis of the decision of the Apex Court subsequently rendered.
28. We may notice the legal trend emerging from the decisions of the Apex Court.
29. In the case of Banda Development Authority, Banda v. Moti Lal Agarwal and others reported in (2011) 5 SCC 394 the Apex Court observed as under:
"17.
It is true that no limitation has been prescribed for filing a petition under Article 226 of the Constitution but one of the several rules of self imposed restraint evolved by the superior courts is that the High Court will not entertain petitions filed after long lapse of time because that may adversely affect the settled/crystallized rights of the parties. If the writ petition is filed beyond the period of limitation prescribed for filing a civil suit for similar cause, the High Court will treat the delay unreasonable and decline to entertain the grievance of the petitioner on merits."
30. In case of Shankara Cooperative Housing Society limited v. M. Prabhakar and others reported in (2011) 5 SCC 607 the Apex Court held as under:
"46.
Delay and laches is one of the factors that requires to be borne in mind by the High Courts when they exercise their discretionary power under Article 226 of the Constitution of India. In an appropriate case, the High Court may refuse to invoke its extraordinary powers if there is such negligence or omission on the part of the applicant to assert his rights taken in conjunction with the lapse of time and other circumstances.
"54.
The relevant considerations, in determining whether delay or laches should be put against a person who approaches the writ court under Article 226 of the Constitution is now well settled. They are: (1) there is no inviolable rule of law that whenever there is a delay, the court must necessarily refuse to entertain the petition; it is a rule of practice based on sound and proper exercise of discretion, and each case must be dealt with on its own facts. (2) The principle on which the court refuses relief on the ground of laches or delay is that the rights accrued to others by the delay in filing the petition should not be disturbed, unless there is a reasonable explanation for the delay, because court should not harm innocent parties if their rights had emerged by the delay on the part of the petitioners. (3) The satisfactory way of explaining delay in making an application under Article 226 is for the petitioner to show that he had been seeking relief elsewhere in a manner provided by law. If he runs after a remedy not provided in the Statute or the statutory rules, it is not desirable for the High Court to condone the delay. It is immaterial what the petitioner chooses to believe in regard to the remedy. (4) No hard and fast rule, can be laid down in this regard. Every case shall have to be decided on its own facts.
(5) That representations would not be adequate explanation to take care of the delay."
31. In the case of State of Orissa and Another reported in (2011) 3 SCC 436 the Apex Court observed that:
"34.
This Court has consistently rejected the contention that a petition should be considered ignoring the delay and laches in case the petitioner approaches the Court after coming to know of the relief granted by the Court in a similar case as the same cannot furnish a proper explanation for delay and laches. A litigant cannot wake up from deep slumber and claim impetus from the judgment in cases where some diligent person had approached the Court within a reasonable time. (See: M/s Rup Diamonds v. Union of India, State of Karnataka v. S.M. Kotrayya and Jagdish Lal v. State of Haryana."
32. In the case of bhakra Beas Management Board v. Krishan Kumar Vij and another reported in (2010) 8 SCC 701 the Apex Court observed that:
"37.
Yet, another question that draws our attention is with regard to delay and laches. In fact, respondent no.1's petition deserved to be dismissed only on that ground but surprisingly the High Court overlooked that aspect of the matter and dealt with it in a rather casual and cursory manner. The appellant had categorically raised the ground of delay of over eight years in approaching the High Court for grant of the said relief. But the High Court has simply brushed it aside and condoned such an inordinate, long and explained delay in a casual manner.
Since, we have decided the matter on merits, thus it is not proper to make avoidable observations, except to say that the approach of the High Court was neither proper nor legal."
33. We may also notice some of the decisions of the Apex Court in connection with taxing statutes and the effect of delay.
34. In the case of State of Madhya Pradesh and another v. Bhailal Bhai reported in AIR 1964 SC 1006 the Apex Court found that sales tax imposed by notification issued under Madhya Bharat Sales Tax Act on tobacco leaves, manufactured tobacco, etc., was declared invalid by the Apex Court. However, assessees had thereupon approached the High Court filing writ petitions claiming that the tax was paid under a mistaken belief of law and the same must be repaid. The Court was of the opinion that the Government to whom the payment had been made must repay it and in that respect High Court had the power in exercise of writ jurisdiction to enforce such rights and to other consequential reliefs by ordering repayment of money realized by the Government without authority of law. The Apex Court, however, was of the opinion that at the same time proceedings under Article 226 of the Constitution was not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. It was observed that relief under Article 226 was discretionary in nature. The Apex Court was of the opinion that though the Limitation Act do not apply to the writ proceedings under Article 226, however, the maximum period fixed by the Legislature as a 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 Apex Court held and observed as under:-
"21.
The learned Judges appear to have failed to notice that the delay in these petitions was more than the delay in the petition made in Bhailal Bhai's case out of which Civil Appeal No. 362 of 1962 has arisen. On behalf of the respondents-petitioners in these appeals (C.A. Nos. 861 to 867 of 1962) Mr. Andley has argued that the delay in these cases even is not such as would justify refusal of the order for refund. 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 Art. 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 Art. 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 Art. 226 can be measured. The 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, the mistake was discovered much later, this would be a 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."
35. In the case of M/s.
Rup Diamonds and others v. Union of India and others reported in (1989) 2 SCC 356 the Apex Court finding that the petitioner had lodged a belated claim of facility for import of OGL items and it was not pursued for several years found that no relief could be granted. It was observed that there was inordinate delay in preferring the claim before the authorities as also in filing the writ petition before the Apex Court, the relief was therefore not granted. The Apex Court observed as under:
"Apart altogether from the merits of the grounds for rejection on which it cannot be said that the mere rejection of the Special Leave Petitions in the cases of M/s. Ripal Kumar & Co., and M/s. H. Patel & Co., could by itself, be construed as the imprimatur of this Court on the correctness of the decisions sought to be appealed against--there is one more ground which basically sets the present case apart. Petitioners are re-agitating claims which they had not pursued for several years. Petitioners were not vigilant but were content to be dormant and chose to sit on the fence till somebody else's case came to be decided. There case cannot be consideration on the analogy of one where a law had been declared unconstitutional and void by a Court, so as to enable persons to recover monies paid under the compulsion of a law later so declared void. There is also an unexplained, inordinate delay in preferring this writ petition which is brought after almost an year after the first rejection. From the orders in M/s. Ripal Kumar & Co. 's case and M/s H. Patel & Co. 's case it is seen that in the former case the application for revalidation and endorsement was made on 12.3.1984 within four months of the date of the redemption certificate dated 16.11. 1983 and in the latter case the application for revalidation was filed on 20.6.1984 in about three months from the Redemption Certificate dated 9.3.1984."
36. The Swadeshi Cotton Mills Co. Ltd. v. The Government of U.P. And others reported in (1975) 4 SCC 378 was a case wherein the assessee had filed writ petition in the year 1956 challenging the validity of an assessment made in the year 1949 and prayed for refund of tax collected. For the delay, the petitioner gave the explanation that it came to know about the correct legal position after the decision in the case of Modi Food Products Ltd. reported in (1955) 6 STC 287.
The Apex Court observed as under:-
"3.
We do not think that in this case it is necessary for us to consider whether Article 226 can be used for challenging the validity of the orders passed prior to January 26, 1950. But we are in agreement with the High Court on the other two grounds. As mentioned earlier, the impugned assessments were made in 1949. The writ petition was filed in 1956. The explanation given by the petitioner for this long delay is that he did not know the correct legal position and he came to know about the same after the decision of the Allahabad High Court in the Commissioner of Sales Tax, U.P. v. Modi Food Products Ltd. Every individual is deemed to know the law of the land. The courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within the limitation. Ignorance of law is not one that can be accepted in law. That apart, even after the High Court rendered its decision in Modi Food Products' case the petitioner did not move the High Court for over several months. There is no satisfactory explanation for that delay. That being so, the High Court was fully justified in refusing to exercise its discretion under Article 226 of the Constitution in favour of the appellant."
37. We will now advert to some of the decisions of the Apex Court with respect to right of a person to approach a court on the basis of decision rendered in someone else's case.
38. In the case of M/s.
Tilokchand Motichand and others v. H.B. Munshi, Commissioner of Sales tax, Bombay and another reported in AIR 1970 SC 898 the decision was rendered by a five Judge Bench of the Apex Court. There was a division of opinion. The majority view was that the petitioner cannot take advantage of the Supreme Court decision in another case after a lapse of a number of years. The petitioner's contention that the ground on which a statute was struck down was not within his knowledge and therefore he could not pursue it before the Apex Court would not stand. It was observed by Hidayatullah, J. concurring with the view of Sikri, J. and Hegde, J. (which found the majority view) that it was the duty of the petitioner to have brought the matter before the Supreme Court for consideration. In any event, having set the machinery of law in motion, he could not abandon it to resume it after a number of years.
39. In the case of Rafeeqan (dead) by LR v. Hussan Bano reported in (2010) 9 SCC 23 the Apex Court was of the opinion that the view of the High Court was erroneous in view of subsequent Constitution Bench judgement in the case of Nathi Devi reported in (2005) 2 SCC 271.
It was a case where the decision of the Delhi High Court which held the view different from what the Supreme Court propounded in the case of Nathi Devi was not challenged by the person aggrieved of such decision. However, the Apex Court was of the opinion that by virtue of the decision of the Constitution Bench in the case of Nathi Devi and in view of the mandate of Article 141 of the Constitution, the view of the Supreme Court would be binding on all subordinate courts as also the Delhi High Court. It was a case wherein the appellant before the Apex Court had kept the issue alive and agitated the same before the Apex Court. It was in this background that the above observations were made.
40. The issue that the person in taking recourse to legal remedies cannot take advantage of a decision in the case of others was conclusively propounded by the Apex Court in a five Judge Bench in the case of Mafatlal Industries Ltd. And others v. Union of India and others reported in (1997) 5 SCC 536.
The Apex Court following the decision in the case of M/s. Tilokchand Motichand and others (supra) held and observed as under:-
"79.
We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after a year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasize that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of misconstruction, misapplication or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the case may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him? Can he invoke Section 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading Section 72 of the Contract Act along with Section 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way o fa suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiya Lal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect tot he learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back
- is sought to be recovered on the ground of alleged discovery of mistake of law on the basis of a decision of a High Court or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law. The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excises Act and the Rules made thereunder including Section 11-B/Rule 11 too constitute "law" within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature - no claim for refund is maintainable except of law which is violated by permitting the above situation is the sanctity of the provisions of the Central Excises and Salt Act itself. The Act provides for levy, assessment, recovery, refund, appeals and all incidental/ancillary matters, Rule 11 and Section 11-B, in particular, provide for refund of taxes which have been collected contrary to law, I.e., on account of a misinterpretation or misconstruction of a provision of law, rule, notification or regulation. The Act provides for both the situations represented by Sections 11-A and 11-B. As held by a seven Judge Bench in Kamala Mills following the principles enunciated in Firm & Illuri Subbayya Chetty the words "any assessment made under this Act" are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words "an assessment made"
cannot mean an assessment properly and correctly made. It was also pointed out in the said decision that the provisions of the Bombay Sales Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act. It was clarified that even if the authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is ununderstandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for reopening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article. In short, o claim for refund is permissible except under and in accordance with Rule 11 and Section 11-B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable, as demonstrated hereinbefore. As a matter of fact, the situation today is chaotic because of the principles supposedly emerging from Kanhaiya Lal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be,l and ought to have been, filed only under and in accordance with Rule 11/Section 11-B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, C.J. In Tilokchand Motichand extracted in para 46.) The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith.
"108(iv) It is not open to any person to make a refund claim on the basis of a decision of a court or tribunal rendered in the case of another person. He cannot also claim that the decision of the court/tribunal in another person's case has led him to discover the mistake of law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law. A person, whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings. Once the assessment or levy has become final in his case, he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person's case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well-established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1963, has no application to such a claim for refund."
41. From the above analysis of various judicial pronouncements it clearly emerges that though there is no fixed or rigid time limit for approaching a court for a writ under Article 226 of the Constitution of India for a writ of certiorari, such approach must be made within a reasonable period of time. What is the reasonable period must depend on circumstances of each case. Ordinarily, when the alternate remedy is available to a person and such remedy has to be availed within a specified time limit in such a case the Courts have often accepted such yardstick as reasonable period for approaching the High Court.
42. It is equally well settled that a person who has not agitated an issue or having agitated at the first stage and thereafter not pursued further legal remedy, cannot revive a stale claim only on the ground that under similar circumstances in favour of some other person the High Court or Supreme Court has ruled otherwise.
43. Counsel for the petitioner, however, briefly touched on the aspect of prospective overruling contending that the decision in the case of Brijlal and others (supra) is not made to be applicable prospectively. His contention therefore was that the judgment would have retrospective operation for all purposes. We are however unable to agree. The concept of prospective overruling was developed and adapted in India by the Apex Court in case of I.C. Golaknath and others v. State of Punjab and others reported in AIR 1967 SC 1643.
It was thereafter sparingly but on some occasions applied in subsequent cases. When the decision in the case of Mohammad Ramjankhan (AIR 1991 SC 471) was rendered, the Apex Court was of the opinion that till the time of requirement of supply of a copy of the enquiry report to a delinquent Government servant facing departmental enquiry was settled by the Larger Bench, the issue was not free from doubt. In this background the Apex Court made the decision in case of Mohammad Ramjankhan applicable prospectively observing:
"Therefore, the conclusion to the contrary reached by any two-Judge Bench in this Court will also no longer be taken to be laying down good law, but this shall have prospective application and no punishment imposed shall be open to challenge on this ground."
44. The decision in case of Mohammad Ramzankhan and the effect of its prospective application came up for consideration before the Supreme Court in the case of Managing Director ECIL v. B. Karunakar (AIR 1994 SC 1074). Majority opinion was expressed in following terms:
"However, it cannot be gainsaid that while Mohd. Ramzan Khan's case (AIR 1991 SC 471) (supra) made the law laid down there prospective in operation, while disposing of the cases which were before the Court, the Court through inadvertence gave relief to the employees concerned in those cases by allowing their appeals and setting aside the disciplinary proceedings. The relief granted was obviously per incuriam. The said relief has, therefore, to be confined only to the employees concerned in those appeals. The law which is expressly made prospective in operation there cannot be applied retrospectively on account of the said error. It is now well settled that the courts can make the law laid down by them prospective in operation to prevent unsettlement of the settled positions, to prevent administrative chaos and to meet the ends of justice. In this connection, we may refer to some well-known decisions on the point.
".....
It will, therefore, have to be held that notwithstanding the decision of the Central Administrative Tribunal in Premnath K. Sharma's case (1988 (2) ASLJ 449) (supra) and of the Gujarat High Court in H. G. Patel's case (1985 (2) 26 Guj LR 1385) (supra) and of the other courts and tribunals, the law was in an unsettled condition till at least 20th November, 1990 on which day the Mohd. Ramzan Khan's case was decided. Since the said decision made the law expressly prospective in operation the law laid down there will apply only to those orders of punishment which are passed by the disciplinary authority after 20th November, 1990. This is so, notwithstanding the ultimate relief which was granted there which, as pointed out earlier, was per incuriam. No order of punishment passed before that date would be challengeable on the ground that there was a failure to furnish the inquiry report to the delinquent employee. The proceedings pending in courts/tribunals in respect of orders of punishment passed prior to 20th November, 1990 will have to be decided according to the law that prevailed prior to the said date and not according to the law laid down in Mohd. Ramzan Khan's case (AIR 1991 SC 471) (supra). This is so notwithstanding the view taken by the different benches of the Central Administrative Tribunal or by the High Courts or by this Court in R. K. Vashist's case, (1993 Supp (I) SCC 431) (supra).
Thus, ordinarily, when the law is stated by the Apex Court, by virtue of Article 141 of the Constitution, it becomes law of the land and is applicable to all pending cases or the cases which may arise thereafter. However, judgement or a decision not made applicable prospectively would not mean that the issues long closed, rights foregone years or decades back can be reopened, re-agitated or reclaimed on the basis of such decisions of the Apex Court.
45. Majority of the decisions brought to our notice by the counsel for the petitioners arose in the background of rectification applications filed before various authorities or the Tribunal by the assessees concerned. Such rectification applications have a time limit, beyond which, the orders cannot be sought to be corrected. Under the Income Tax Act as is well known the period of four years is prescribed for permitting rectification of an order passed by the Assessing Officer or C.I.T. (Appeal) or that of the Tribunal. It was in this background, Courts have held that any pronouncement of law unequivocally made by the jurisdictional High Court or Apex Court would permit the assessee to seek rectification of an order which may be in conflict with such a decision. Thus, the terminal point for going backwards is provided in the provisions of the Income Tax Act itself. In the present case, when the petitioners urge this Court to exercise writ jurisdiction, we are afraid, such approach after more than four and half years of the order of the Settlement Commission, which the petitioners never challenged in the interregnum must be held to be belated. Only on the ground that subsequently the Apex Court laid down the law differently, we are afraid, would not permit the petitioners to reopen the issue long closed.
46. In the result, all the petitions fail and are dismissed.
(AKIL KURESHI, J.) (SONIA GOKANI, J.) [sn devu] pps Top