Law: Limitation Act, 1908

Section: 5,96

Sales tax---Limitation--Sales- tax on forward contracts illegally Refund recovered on mistaken view of law--Assessee, held, was entitled to refund of such amount--Limitation Act (IX of 1908), S.5 & Art.96. Assessee had paid the sales-tax in respect of forward contracts for the assessment year 1949-50 under the provision of the Act, which was declared to be ultra vires by the Supreme Court in 1954. The assessee after, coming to know of the decision of the Court filed a revision in 1955 for quashing the assessment order in question. The revision was dismissed in September, 1958 on the ground that it had been filed after a long period and was barred by limitation. The assessee subsequently filed application before the Sales Tax officer for refund of the amount, which was deposited in accordance with the assessment order for the year and the subsequent years under mistake. This claim of refund was again made on 24th May, 1959. The Sales Tax officer dismissed that application as barred by period of limitation prescribed under Article 96 of the First Schedule of he Limitation Act. 1908. The assessee thereafter filed revision against the order of the Sales Tax officer rejecting the claim for refund. Prior to 1st April, 195 there was no section dealing with any period of limitation for refund but was drought into force with effect from 1st April, 1959. The claim for refund by the assessee was made after 1st April, 1959. At the time when the taxes were paid and the assessment was made, there was no limitation. Held, that the direction of the appellate authority for refund of the amount to the dealer was proper and valid. There is no prohibition against refund except the prohibition of two years. In this case that two years prohibition is not applicable as it was enacted after making of the application for refund. If law of limitation is applicable then section 5 of the Limitation Act is also applicable and it is apparent that the application originally was made within time before two years as contained in the Limitation Act, 1908 prescribes a period of limitation of three years from the date when the mistake becomes known for filing a suit. If that principle is also…

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