Holding

The Supreme Court held that excess excise duty paid after September 28, 1973 is refundable for goods other than wired glass, but the claim for wired glass remains barred.

Summary

Vallabh Glass Works Ltd. and others, manufacturers of various types of glass, challenged the levy of excise duty by the Central Excise Department under Item 23A(1) of the Central Excise & Salt Act, 1944, contending that their products were not "sheet glass" and should be taxed under the residual Item 68. After the Assistant Collector rejected their refund claim for excess duty paid from October 1, 1963, the appellants pursued departmental appeals, a writ petition under Article 226, and finally a special leave appeal to the Supreme Court. The High Court had held that the goods fell under Item 68 and ordered refund of excess duty only for payments made after February 20, 1976, rejecting earlier payments. The Supreme Court examined the applicability of the Limitation Act, the Indian Contract Act, and the doctrine of discovery of mistake, and held that excess duty paid after September 28, 1973 (three years before the writ petition) was recoverable for goods other than wired glass. It modified the High Court’s order, directing fresh assessment and refund for those goods, but upheld the rejection of refund for wired glass. The appeal was allowed in part, granting relief for certain periods and goods while denying it for wired glass.

Issues considered

The appellants' entitlement to refund of excess excise duty paid prior to February 20, 1976.
Whether the refund claim can be made for all the glass goods, including wired glass, given the appellants' earlier position.
The effect of the limitation period under the Limitation Act, 1963 and Section 72 of the Indian Contract Act, 1872 on the refund claim.
The scope of Article 226 of the Constitution as an alternative remedy when the limitation period for a suit has expired.

Legislation cited

Central Excise & Salt Act, 1944s. First Schedule Item 23A(1), s. First Schedule Item 68
Constitution of Indias. Article 226
Indian Contract Act, 1872s. Section 72
Limitation Act, 1963s. Section 113, s. Section 17(1)(c)

Subjects

excise dutyrefundlimitation periodArticle 226Central Excise & Salt Actwired glasssheet glassstatutory interpretationSupreme Court

Judgment

I .

180 •
A
SHRI VALLABH GLASS_ WORKS LTD. & OTHERS

•
., v• •
•
UNION OF INDIA & OTHERS
B
March 14, 1984
r,
[B.S. VBNKATARAMIAH AND.R.B. MISRA J1.)

Constitution of India 1950, Article 2261ndian Contract Act 1872, Sectio~ 7.}:
C Limitation Act 19o3, Section J7(J)(c) & Article 113_.

~ntral E~cise & Salt Act 1944, FirSt Schedule, Item 23A(I) and Item 68.
Excise duty-Claim for refund of excess duty paid-Jurisdiction of the High
Court to order refund in a petition under Article 226. y

D Appellant No. 1 was a compaQ.y engaged in the business of manufacturing
different types of glass, viz., figured glass, wired glass, coloured figuft:d glass, ·
rolled glas;·and coolex wired glass. 1he Central Excise Department had levied
· and collected excise duty on the said go'Ods on the basis that they .,belonged to
the category of 'sheet glass' and were therefore subject· to pa:Ytnent of excise
duty under Item 23A(I) of the First Schedule to the Central Excise and Salt
- Act, - )944. On February 20, 1976, tjle appellauts. applied for the refund of
E excess duty paid by them from.October I, !%3 upto the date of the application .
On the ground that the items of glass in cjuestion could not be described as
'sheet glass' mentioned in Item 23A and that since they did not faJl undei any
()f the Items I to 67 in the First Schedule of the Act they could only be ~ubjected
to levy of e:xcise dutY uDder the resid.uary provision, Iten:i 68. The Assi~tant
Collector of dntral Excise rejected the claim_ for r~fund and the appellants
there-upon filed a Wrii petition in the High Court on September 28, 1976, but
"the same was withdrawn as a Departmental Appeal filed by the appellants was
pending with the Collector. The said Departmental Appeal was however later
dismissed and this order was confirmed in the appeUants' revision petition to the
-Government.

The appellants thereupon filed a Writ Petition in the High Court and
G assailed ihe order. The High cOurt rever~ed the decision of the departinental
authorities and held that the items of glass manufactured by the appeUants did
not fall within IDe scope of tariff Item 23A(I) of the First Schedule but that
they, "ame within tariff Item 68 thereof, liable to duty accordingly, and directed
refund of excess duty paid after February 20, 1976, on which date the dispute ·
was raised. The claim. for fefund of excess duty paid durin8 th~ period prior to · •
February 20, 1976 was, however, rejeCted.
H
In the appeal to this Court on the question : (I) whether the appellauts
~re ~e~titled to Claim ·refund of excess excise duty paid prior to Febrwary201 '
VALLABH GLASS WORKS v. UNION 181
1976 and whether they are entitled to claim refund of such duty paid between A
October l; 1%3 and February 20, 1976 or during any shorter period, and (2)
whether the appellants are· entitled to claim such refund ii;i respect of all the
good~

Allowing the appeal in part .
•
B
HELD : 1, (i) The excess amount paid by the appellants would have
become refundable b~ virtue of.section 72 of t'he Indian Contract Act if the
appellants had filed a suit within the period. of limitation. Section 17(1)(c) df
the Limitation Act, 1963 provides that where in the case of any suit or appli~
cation for-which a per\od of limitation is prescri)Jed under that Act~ the suit or
application is for relief fro.m the consequences of a mistake, the period Of /
limitation shalt not begin to run until the plaintiff or appliCant had discovered
it.or could ha¥e with reasonable diligence discovered it. [186F-G]
c

(ii) Under Article 113 of \]:le Limitation Act, 1963 a &uit for recovery of
excess duty had to be filed within three years from the date of payment to the
Department. [187B]

(iii) The J-Iigh Courts have p6wer, for the purpose of enforcement of
fundamental Tights and statutory rights-to make consequential Orders. for 'repay-
ment of money realised by .Government without the authority of law under Arti-
cle 226 of the Constitution. This. is an alternative remedy provided by the Cons-
titution in additiOn to, but not in ·supersession Of the ordinary remfdy by way
cir suit in the absence of any provision which would bar such a suit expressly
or by necessary 'Implication. While there are different periods of limitation
prescribed·for the institution of different kinds .Qf suits by the Limitation Act, E
1-963, there is no such period prescribed by law in respect of petitions filed ·lJnder
Article 226 of the Constitution. Whether relief should be_ granted to a petitioner
under Artide 226 where the cauSe of action had arisen in the remote past is a
matter of sound judicial discretion .governed by the doctrine of !aches. Where .
a petitioner wko ·could have availed of the alternative remedy by way of suit
approaches the High .Court under Article 226. it is appropriate ordinarily to
construe that any unexplained delay .in fi~ing of the wri't petition after the expiry F
of the period of limitation pres<;:ribed · for filing a suit as unieasonable. This
rule, however, cannot be a rigid formula. I;:ach 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. [187D-H]
G
In the instant case, the appellant had made excess payment on being
assessed by the Department and such payment cannot be treated as voluntary
payment preclµding them from r~coVering the amounts. The· appellants should
in the facts and Circumstances of this case be deemed· to have discovered the
mistake on the date of making e~h payment of excise duty in excess of the
proper duty payable" under law. All sQch excess payments made on or after
.September 28, 1973 which would fall within the period of.three years prior to the H
date on whic• the first writ petition was filed should.have been or~red to be
refunded under Article 226. But the High Court declined to do so. Though
•
182 SUl'RJ!ME COUR't REPORTS [19841 3 s.c.I\

A the appellant should not be granted apy relief in respect of pay1nent made ~t
ween October I; 1963 and· September 27, 1973 which would fall beyond the three
years from the date of the first writ petition, it .iS·not proper ·and just tO negative
the claim in respect of excess payments made after Septer;nber 28, 1973.
[}87H-188D]

_Sales Tax Officer, Banaras & Ors. v. Kanhaiya Lal· Mukundlal Saraf, [-1959]
B S.C.R. 1350, referred to.

2. · In respect of wired glass; a dispute h:s arisen between the Department ,.. .
and the appel1ants earlier anc}. in that c~e while the Department claimed that
wired ~lass was subject to payment of duty under tariff Item .23A(4) the appel-
' !ants.pleaded that wired glasJ was liable to duty under tariff Item 23A(I). The
Gove~ment of. India ultimately aCcepted the c~se of the appellants,
c and .duty was paid on that basis till February 20, 1976. While the eaflier order
may not be a legal bar to the .Contention raised by the appellants. on February
20, 1976 'that wired glass was not taxable under tariff Item 23A(l) but under
tariff Item 68 after that date, it is certainly a circllmstance which disentitles' the.
appellants 'to daim refund, of excess duiy pald by them in a petition under
Article 226. 'The claim for refU;nd of excess dutY paid on wired glass during the y
period prior to February 20, 1976 is therefore liable to rejected. [1850-186C]
n
CIVIL APPELATE JURISDICTION: Civil Appeal No. 3338 of
1979

From the Judgment and 'Order dated 22 and 23-11'78 .of
E Gujarat High Court in Sp!. Civil Application No. 577 of 1978.

Anil B. Divan, Ravinder Narain and Ms. Rainu Walia for
the.appellants.

M. M. Abdul Khader, G. S. Narayan and A. Subhashini for
f the respondents.

The Judgment of the Court was delivered by

VENKATARAMIAH, J. This appeal by spee.ial leave· is filed
against the judgment and order dated November' 22/23, 1978 of the
G High Court of Gujarat in Special Civil Application No. 577 of
1978 filed under Article 226 of the Constitution.-
•.
Appellant No. I° is a company which is ei1gaged in the
business of manufacturing diffrent type& of glass viz. figured glass
wired glass, coloured figured glass, rolled glass and coolex wired .
glass at Vallabh Vidyanagar in the State of Gujarat j-om the year
H
1963. Appellant No.2 is the Managing Director of appellant No. L
The Central Excise Dep:rrtmen t had levied .and collected excise duty
·•

' VALLABH GLASS WORKS v. UNION (Venkataramiah, J.) 183 •
' .
on the said goods on the basis that they belonged·to the.cataegory of A
.
sheet glass and wer.e therefore subject to payment of excise duty
'

under Item 23A (I) of the First Schedule to the Central Excises i«td
Salt Act, 1944 (hereinafter referred to as 'the Act'). On February
20, 1976, the appellants applied for. the refund of excess duty paid
by them from October 1, 1963 ~pto the date of the applicatioti on
the ground that the item of glass in question were distinct .com· B
mercial goo'ds known in the market as figured glass, · wired glass,
coloured figured glass, rolled glass,!coolex figured glass and coolex
.- wired glass and could not' be desc'ibed in common parlance as 'sheet .
glass' mentioned in Item 23A and that since they did not fall under .
any of the Items l to 67 in the First Schedule to the Act' they could .
only be subjected to levy of excise duty under the residuary provi·
c
sion Item 68 in that Schedule after it was inserted in it.
•
...,,, Item 23A of the First Schedule to the Act at all material times
read as.~
D
"23A. Glass and glassware-

(1) Sheet.glass and plate .
Thirty per cent ad valorem '

glass "'

(2) Laboratory glassware Ten per cent ad valorem E

(3) Glass shells, glass Fifteen per c~nt ad valorem
globes and chimneys ,.
for lamps and hinterns

. (4) Other glassware inclu- Thirty per cent ad valo· F
ding tableware rem."

The relevant part of tariff.Item 68 which was introducedjfrom
I
March .1. J975 read as:

a
"68.All other goods not ·
elsewhere spceified,
One per cent ad valorem G

manufactured jn a·
factory but excluding
...! (a)· alcohol, all sorts,
includin& a!cYcholic H
liquors for ·human
consumption.
•
A
I 84
.
SUPREME COURT REPORTS (19$4) 3 S.C.ll. , ' J
(b) opium, Indian hemp
· and other narcotic
• drugs and narcotics;
and

. (c) dutiable goods as
B defined in sections
2(c) of the Medici-
nal and Toilet
Preparations (Ex- 1
cise Duties) Act,
c 1955."

After holding an enquiry and hearing th'\: appellants, the
Assitimt Collector of Central Excise, Anand rejected the claim for
refund by his order dated September 20, 1976 because he was of the
view that the Items of goods in respect of which dispute had been
D . raised fell within the purview of tariff Item 23A (1). Against the said
order of the Assistant Collector the appellants' filed a writ petition
in Special Civil Application No. 1365 of 1976. on the file of the
Hi~h Court on September 28, 1976, The said petition was admitted
but. when it was taken up for final hearing it l'l'1S contended on
· behalf of the :bepartment that since . the. appellants· had also filed
E ~n appeal against the very same order before the Collector of Centra 1
Excise they could not pursue the remedy under Article' 226 of the
Constitution as it stood then. In view of the above contention the
writ petition was withdrawn without prejudice to the remedy by
way of appeal. The appeal was thereafter disposed of by th·e Collec-
p tor on July 27, 1977 affirming the .order of the Assistant. Collector.
A revision petition filed by the appellants against the .order of the
Collector was dismissed by the Government of India by its order
dated February 2, 1978. The said order in revision was challenged
before the High Court by the appellants under Article 226 cif the
Constitution. The High Court by its judgment under appeal 'reversed
the decision of the departmantal authorities which had;been affirmed
G by the Central Government and held that the items of glass ma•-
factured by the appellants namely, figured glass, wired glass,
coloured figured glass, rolled glass and coolex wired glass did not
fall within the scope of tariff Item 23A(l) of the First Sr:hedule to
the Act as it stood at the material time but' they came within
H ·_tariff Item 68 and were liable to bear duty ttcr:ordingly. The High
Court was, however, of the view that the appellants were only
entitled to refund of excess duty _paid by them after February 20,
VALLABH GLASS WORKS v. UNION (Venkataramiah, J:) 185

1976 on which date they raised the dispute. Accoi:dingly the High
Court issued a writ quashing the decision of the Department in so
far as the classification of the goods was concerned and declaring
that they were subject to payment of duty under tariff Item 68 of
the First Schedule. to the Act aud not under tariff Item 23A(l)
thereof. The Department was further directed to review the r~levant
assessments accordingly for the period subsequent to February 20,
1976 and to refund any excess duty that might after such review be
found to be refundable to the appellants. The claim of the appel-
lants for refund of· excess duty .paid during the period prior to
February 20, 1976 was,however, rejected. The appellants have filed
this appeal by special leave only ·as regards the reje~tion by the'
High Court pf their prayer for refund of excess duty paid by them c
prior to February 20, 1976.

The Departn1ent has not filed any appeal against the judgment
of the High Court. Hence the decision that the goods were taxable
under tariff Item 68 and not under tariff Item 23A(l) of the First D
Schedule to the Act has become final. Item 23A(l) is also stated
to have been since amended suitably so as to bring the items of
glass in dispute within its scope.

The question which arise for consideration in this appeal are
therefore (1) whether the appellants are entitled to·claim refund of E
)-
• excess excise duty which bad been paid by them prior of February
20, 1979 and if so, whether they are entitled to claim refund of .snch
duty paid betweeji <;>ctober 1, 1963 and February 20,1976 or during
any shorter period and (2) whether the appellants are entitied to
claim such refund in respect of all the goods in question.
F
. Since it is convenient to dispose of the second qu<stion at this
. stage,· we shall. take it .up first: A few more fr cts which are
relevant to this issue have to be stated here. As mentioned earlier
the goods in respect of which dispute had been raised by the
appellants in their applitation dated February 20, 1976 were figured
glass, wired glass, cqloured figured glass, roiled glass and coolex G
'wired glass. But it is seen that in respect of wired glass, a dispute
ha.d arisen between the Department and the appellants earlier· and
in that case while the Department claimed that wired glass was
> .
j subject to payment of duty under tariff Item 23A(4) the appellants
pleaded that wired glass was liable to duty under tariff Item 23A(l). H
The Gove111ment · of India ultimately by its order' dated August
·24, 1971 lin Order No. 26J of 1971 of the Government of India oil
I

SUPREME COUlt t REPORts (19s4i 3 s.c.ll..
Central Excise Revsion Application) accepted the case of the
appellants that wired glass was subject to duty under tariff· Item 23A
(I) and the appellants paid duty on that basis till Febuary 20, 1976.
These facts distinguish the case in respect of wired glass. from the
·case in respect of the other gooqs. While the said earlier order may
not be. a legal bar tq tpe contention raised by the appellants on
B February 20, 1976 that wired glass was not taxable under tariff Item
23A(l) but under tariff Item 6S after that date, i't is certainly 'll
circumstan.ce which disentitles the appellants to claim• refund of
excess duty paid by them in a petition under Article 226 of the
Constitution on a ground contrary to their earlier stand. The claim
for refund of ~xcess duty paid on wired glass during the period
prior.to February 20, 1976 i~ liable to be· rejected. The appeal of
.
the appellants to that extent should, therefore,. fail.

In regard to the relief of refund of excess duty paid in respect
of the other. goods, the case stands on an entirely different footing.
D This is a ca.se where t.he Department had ass.essed the duty payable
by the. appellants under a wrong. provision. The appellants were
obliged to pay the duty so assessed. They did not, no doubt, qlies·
tion the assessments by taking a specific stand as t\ley had done
earlier in the case of wired glass. The appellants, however, question·
ed the validity ofthe levy only on February 20, 1976 on the ground
that tariff Item 23A (1) of the First Schedule to the Act under which
the duty had been levied was not applicable to the goods. While •
the Departm~nt refused to accept the said plea, the High Court has
· upheld h. In view of the decision of the High Covrt, the fact that
the appellant had paid duty in excess of what they were bound in
F law to pay should be now taken as having been ·established. It is
not disputed that if the appellants had file,d a suit within the period . .
of limitation the excess amount would have become refundable by
virtue of section 72 of the Indian Contract Act. Section 17(1JtcJ of
the Limitation Act, !9'63 provides that where in the case of any suit
· or application for which a period of limitation. is prescribed under
that Act, the suit or application is for relieff.rom the consequence
G
of a mistake, the period of limitation shall.not begin to run until the
plaintiff or applioont had discovered it or could have with reason·
able diligence discovered it. In the instant case the date on which
-~ the mistake was discovered by the appellants or the date on .which
the appellants could with reasonab~e diligence have discovered it is
.H not clear from the record before us. No efforts also was made in the
course of the arguments urged on behalf of the appellants to
establish it. We have, therefore, tci assume that on the date
•
• j

. \iAI;LABH GLASS WORKS v. UNION (Venkataramiah, J.) 181

each payment of excise duty made by the appellants in excess .of the A
proper dut:y payable by them, ·the appellants could have discovered
with due diligence that the duty claimed from them was excessive.
Under Article 113 of the Limitation .:\,ct, 19p3. which is applicable
· to this case, a suit for recovery of such excess duty had to be filed
within three years from the date of payment to the Department. But
the appellants instead of filing a s\lit, first filed •a writ petition in B
Special Civil Application No. 1365 of 1976 on September 28; 1976
and that petition had to. be withdrawn in view of clause (3) of
. Article 226 of the Constitution as it stood then. because the alter-
. native remedy by way of an appeal was available. The appellants
couid, therefore, file the writ petition out of which the appeal arises •
only after the disposal of the revision petition by the Government
c
of India as mentioned earlier. It is not disputed that the High Courts
have power, for the purpose of enforcement of fundamental rights
and statutory rights~ to ·make consequential orders for repayment
of money realised by the Government without ·the authority of law
under Article 226 of the Constitution. This is an alteniative r.emedy D
provided by •.he Constitution in addition to but not in supersession of
the otdinary remedy by way of suit in ·the absence of any provision
which would bar such a suit. either expressly or by necessary implica-
tion. While there are different periods of limitation P.rescribed for
the institution of different kinds of suits by the Limitation Act, 1963,
there is no such period .Prescribed by law in respect of petitions .filed ·E
un<Jer Article 226 of the Constitution. Wl'!.ether 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, di.scretion governed by the dpctrine of !aches.
Where a petitioner who could have availed pf the alternative remedy
by way of suit approaches the High Court under Article 226 of the F
Constitution, it is appropriate ordinarily to construe that any
nnexplained delay in the filing of the writ petition after the expiry- of
the period of limitatipn 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 considerd to
G'·
be sufficient to refuse relief in a petition under Article 226 of the
Constitution. There may· also be cases where there may be circums-
tances which may persuade the court to grant reliet even though
the petition may have been filed beyond- the period of limitation
prescribed for a suit. Each case has to judged on its own facts and
? circumstance tou~hing the conduct ·or the parties, the change in H
situation, (he prejudice which is likely to be caused to the opposite
party or to the general public etc. In the instant case, the appellants
•
•
188 SuPRBME COURT REPORTS tl984] 3 s.c.i;
had iit facf approached .the High f:ourt on September 28, 1976
itself by filing Special Civil Application No. 1365 of 1976 for direc-
ting repayment of the excess duty paid by them. But no relief could·
be granted in that petition in view of the provisions of Article 226 of .
the Constitution as.it stood then and the petition had to be with-
drawn. Hence qren granting that on the date of making each ·,
B
payment 6f excise duty in excess of the proper duty payable under
law, the appellants should be deeihed to have discovered the mistake,
all such excess payments made on and after September 28, 1973 whi~h. ·
would fall within the period of three years prior to the date on
which Special Civil Application No. 1365 of 1.976 was*filed should
c have been ordered to be refunded under Article· 226 of the°Constiiu·
tion. But the High Court declined to do so on grounds of estoppel
and acquiesence. While we do agree that the appellants should not
be granted any relief in respect of payment made between October 1,
1963 and Septemb~r 27, 1973 which would fall beyond three
years from the date of the first writ petition filed in this case we do r'
D not find it proper and just to negative the claim of the appellants
in respeccof excess paymen!S 1llade after September 28, 1973. In
the instant case the appellants had ma"de excess payments on being
assessed by the· Department and such payments cannoJ be treated
as voluntary payments precluding them from recovering them.
(See Sales Tax. Officer, Banaras & Ors. v. Kanhaiya Lal Muku~dlal
.
E Saraf). 1 We do not also find that the conduct of t!fe appellants is
of such a nature as ·w~uld disentitle them to claim refund of excess
payments made in respect of goods other than wfred glass.

We, therefore, modify the judgment and order passed by the
High Court by quashing -tit~ assessments of excise duty made in
respect of the goods in question other than wired glass viz. figured
glitss, coloured figured glass, rolled glass and coolex wired glass for
•the period between September 28, 1973 and February 20, 1976 also
and directing the assessing anthority to make a fresh assessment in
accordance with law in the light of the decision of the High Court.
The respond.ents are further directed to refund after such fresh
determination any excess duty that· may .be found to have been
paid by the appellants. The fresh assessments shall be completed

-< .
(!) (1959] S. C. R. 1350. •
H
VALLABH GLASS WORKS v. UNION (Venkataramiah, J.) 189

within four monhts fro II\ today. The appeal is, however, dismissed in
so far it relates ro the claim for refund of excess duty paid in respect
of wired glass during that period.

The appeal is accordingly allowed in part. No costs .

•
•
. '
N.V.K. Appeal_partly allowed.

•