J K SYNTHETICS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) M/s J.K. Synthetics limited invoked the extraordinary jurisdiction of this court under Article 226 of the Constitution of India, principally, for a refund of the tax paid by it under a mistake of law for the assessment year 1970-71. Although the petition was founded on the invalidity of Rule 19A(3) of the I.T. Rules, subsequently the petitioner challenged the assessment and appellate orders as well by way of an amendment application, which was allowed, and a prayer for quashing these orders was permitted to be added.

(2.) REFUND of tax paid under a mistake of law is now a fully established principle. As far back as 1958 it was held by the Supreme Court in STO v. Kanhaiya Lal Makund Lal Saraf [1958] 9 STC 747, that (p. 756):

(3.) PAYMENT made under an invalid Act or rule is a payment under a mistake of law, which cannot be and is not disputed. In State of Madhya Pradesh v. Bhailal Bhai [1964] 15 STC 450 (SC), it was held (at p. 457):