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The Supreme Court held that where sales tax assessed and paid by the order, is declared by a competent court to be invalid in law the payment of the tax already made is one made under a mistake within Section 72 of the Contract Act and so the Government to whom the payment has been made by mistake must in law repay it.

14. In Patel India (Private) Ltd. v. Union of India and Ors. the excess duty was charged in violation of Sections 29 and 30 of the Sea Customs Act, 1878 and in excess of jurisdiction. The Union of India relied on Section 40 which provides that no customs duties or charges which have been paid, and of which repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction shall be returned unless such a claim is made within three months from the date of such payment. Supreme Court held that Section 40 clearly applies only to cases where duties have been paid through inadvertence, error or misconstruction and where refund application has to be made within three months from the date of such payment. The present case was not one where the excess duty was paid through any of the three reasons set out in Section 40. The excess duty demanded on the ground that the invoice price was not real value of the imported goods and payment under protest was also made on that footing. The ultimate result in the appellant-company's revision was that charging of excess duty was not warranted under the Act, and that the value on which duty should have been assessed was the invoice price and nothing else. That being the position. Section 40 did not apply and could not have been relied upon by the customs authorities for refusing to refund the excess duty unlawfully levied on the appellant-company. The Supreme Court observed :

22. It is contended by Mr. Roy Chowdhury that the claim of the petitioner is barred by limitation both under the Central Excises and Salt Act and/or the Rules made thereunder as well as under the general law. It is his contention that the Assistant Collector of Central Excise in his order dated 11th November, 1982 has held that the petitioner has not paid the duty under protest and as such the claim was barred having been preferred more than six months from the date of payment of duty. The payment documents do not anywhere show that the petitioner has paid under protest. Mr. Roy Chowdhury has relied on a decision of this Court in the case of Inchek Tyres v. Union of India reported in (1978) ELT J643. There, one of the contentions raised by revenue was that by preferring objections in respect of two consignments the assessee would not Ipso facto claim that other subsequent payments of duty were also made under protest. It was also contended that payment in respect of each bill of entry constituted separate cause of action and unless protest was made for payment in respect of each of such consignments it cannot be held that the petitioner made payment under protest within the meaning of proviso to Section 27 of the Customs Act. In that context G.N. Ray, 3. held as follows :

"It is true that the petitioner had protested against payment of customs duty in respect of 2 earlier consignments and as a matter of fact took up appropriate legal proceedings in respect of such payment and ultimately succeeded in his contention but by the said fact alone it cannot be held that the petitioner had made payment in respect of other consignments under protest. In my view, until the payment is made under protest explicitly there is no scope to infer from circumstances that the petitioner had paid the duty in respect of other consignments under protest so as to entitle the petitioner to get the benefit of the proviso to Section 27 of the Customs Act. It is not enough to proceed on the footing that there is no liability for the duty in question and because of illegal demand involuntary payment was made. In my view, it is also necessary to lodge protest in clear terms that the payment was made not only involuntarily but under protest. Involuntary payment and payment under protest are not the same thing. For imposition of unjust duty one may be compelled to make payment and such payment will then be involuntary, but every involuntary payment cannot be held payment within the meaning of proviso to Section 27 of the Customs Act."

23. It is no doubt true that the observation made by the learned Judge in that case supports the contention of Mr. Roy Chowdhury but the observations must be understood in the context in which they were made. In the Customs Act the clearance of the goods has to be made after submission of the bill of entry. Therefore, unless a protest is made in respect of each and every consignment the protest made for one consignment cannot cover the other. In that context it was said that the protest cannot be gathered from the circumstances, if there is a protest in respect of 2 consignments, it does not follow that there was protest regarding payment so far as other consignments are concerned. Under the excise law, however, the position is different. One has to go on clearing the goods upon payment of duty unless it is known to him the duty is not exigible. Only when it becomes known to him that duty is not leviable, he can then clear the goods under protest. Thus for the period 12th August, 1977 to 31st Duly, 1979 the question of payment under protest did not arise as he was not aware at all that no duty was payable on the goods at all. Whatever might have been the position before 1st August, 1979 it could not be said about the payment made after 1st August, 1979. The petitioner made the payment from 1st August, 1979 till 14th May, 1982 subject to the determination by the appropriate authority of the question whether the products were exempt from duty or not. Payment under protest in this context can only mean that payment is made provisionally subject to the determination of the question of exigibility of the duty. A provisional payment is conditional. It was not a payment once for all. Such payment was temporary in nature on the implied condition that if ultimately the petitioner is not liable to pay, it will be refunded to him. On the facts of this case, I am unable to hold that the petitioner made the payment from August, 1979 without any protest.