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Judgment
By an order dated 14th August, 1985, a Division Bench comprising Hon'ble Mr. Justice P.N. Bhagwati and Hon'ble Mr. Justice Ranganath Misra ordered this group of matters to be placed before a Bench of 7 Judges as in their view the decision of the Constitution Bench comprising 5 Judges in the case of Sales Tax Officer, Banaras and Others Vs. Kanhaiya Lal Mukundlal Saraf, required reconsideration. Subsequent to this order, certain other matters also came on to be tagged on with this batch of appeals. While making that order it appears that the attention of the Division Bench was not drawn to a 7- Judge Bench decision in the State of Kerala v. Aluminium Industries Ltd. 16 STC 689.
Mr. F.S. Nariman, the learned Counsel who opened the submissions on behalf of the appellants/petitioners, stated that the decision in Kanhaiyalal's case has been 'expressly approved' on both the points in the case of State of Kerala. He placed emphasis on the following observation:
There is no doubt in view of the decision of this Court in Sales Tax Officer, Banaras and Others Vs. Kanhaiya Lal Mukundlal Saraf, that money paid under a mistake of law comes within the word `mistake' in Section 72 of the Contract Act and there is no estoppel when the mistake of law is common to both the parties, which was the case here inasmuch the respondent did not raise the question relating to Article 286 of the Constitution and the Sales Tax Officer had no occasion to consider it. In such a case where tax is levied by mistake of law it is ordinarily the duty of the State subject to any provision in the law relating to sales tax (and no such provision has been brought to our notice) to refund the tax. If refund is not made, remedy through Court is open....
This being the position and in view of the observations extract above, we feel it desirable that the matters be placed for decision before a larger Bench so that if the aforesaid observations are hold to be approving the ratio in Kanhaiyalal's case, that bench may not have any difficulty in dealing with contentions which may arise therefrom in these matters in relation to the decision in Kanhaiyalal's case.
We, therefore, in the above circumstances, direct that the papers be placed before the learned Chief Justice for constituting a larger Bench to decide the questions which arise in this batch of matters. Having regard to the urgency of the matters we would request the learned Chief Justice to constitute a larger Bench as early as possible, more so because those matters wherein the interpretation and constitutionality of the provisions introduced by the Excise and Customs Laws (Amendment Act) 1991 arise, also have been tagged along with these cases.