A suit for refund of tax paid under a mistake of law is maintainable if it is filed within the period prescribed by Art. 96 of the 1st Schedule of the Limitation Act 1908, i.e., within three years from the date on which the mistake became known to the taxpayers.

Judgement

SIKRI, J. (With Wanchoo and Subba Rao, JJ.) : These are two appeals on certificates granted by the High Court of Bombay and raise the same questions of law. It is, therefore, only necessary to give facts in Civil Appeal No. 219 of 1964, which are as follows. M/s. Jagmohandas masruwala, a registered dealer under the Bombay Sales Tax Act, 1946 (Bombay Act V of 1946) filed Original Suit No. 10 of 1956 against the State of Bombay for recovery of Rs. 31852-8-3 which they had paid as advance sales tax on various dates when submitting returns for the period January 26, 1950 to March 31, 1951, and interest thereon at 4 per cent, viz., Rs. 2998. The suit was filed on the allegations that the amount was paid as advance tax in respect of sale of goods effected outside the State of Bombay. These sales were taxable under the Bombay Sales Tax Act, 1946 (hereinafter referred to as the Act). It was further alleged that the Act became void by virtue of Art. 286(1)(a) of the Constitution on January 26, 1950, and this amount was paid under a mistake of law and that the mistake was discovered when the Governor of Bombay promulgated Bombay Ordinance No. 2 of 1952.

2. The State of Bombay raised various pleas, but we are concerned with two; (1) that the suit was barred by Ss. 13 and 20 of the Bombay Sales Tax Act, 1946, and Ss. 19 and 29 of the Bombay Sales Tax Act, 1952; and (2) that the suit was barred by limitation. The Second Joint Civil Judge, Senior Division, Surat, held that the suit was not barred under the statutory provisions above mentioned and that it was filed within limitation. He passed a decree in favour of the plaintiff for a sum of Rs. 35850-8-3 with future interest from the date of the suit at 4 per cent per annum of Rs. 31852-8-3, together with the cost of the suit.

3. The State of Bombay appealed to the High Court. It was urged before the High Court, as has been urged before us, that the Act was a complete code and the issue of law relating to non-maintainability of the suit was, for all practical purposes, answered by the conclusions reached by their Lordships of the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in Council, 74 Ind App 50;, in examining the provisions of S. 67 of the Income-tax Act which are very similar to those of 20 of the Sales Tax Act, 1946. The High Court held that the present case must be governed by the opinion expressed by this Court in State of Tripura v. Province of East Bengal, 1951 SCR 1. On the question of limitation, the High Court held that the case fell within the purview of Art. 96 of the Limitation Act and the terminus a quo of that article is the date on which the mistake becomes known to the plaintiff. It expressed agreement with the Court below that the mistake of law became known to the plaintiff on a date which brings the suit within the period prescribed by the Law of Limitation. The High Court further held that the Trial Court was in error in allowing interest as damages. In the result, the High Court varied the decree by omitting the directions as regards the payment of interest as damages, but otherwise affirmed the decree. Having obtained the certificate of fitness from the Bombay High Court, the State of Bombay has now come up on appeal to this Court.

4. The learned Solicitor-General has raised two points on behalf of the appellant: First that the suit was either expressly barred by S. 20 of the Bombay Sales Tax Act, 1946, or was impliedly barred by virtue of S. 13 of the Bombay Sales Tax Act, 1946; and (2) that the suit was barred by limitation. We are unable to appreciate how S. 20 expressly bars the suit. It is admitted that no assessment has been made under the Act and the plaintiff has not in his suit called into question any assessment or order made under the Act. In our opinion, this part of the argument is covered by the decision of this Court in the Tripura case, 1951 SCR 1 and the High Court was right in so holding.

5. The learned Solicitor-General