Kerala High Court
M/S. Seahorse Ship Agencies Pvt. ... vs Union Of India on 19 January, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 19TH DAY OF JANUARY 2021/29TH POUSHA, 1942
WP(C).No.17924 OF 2020(M)
PETITIONER:
M/S. SEAHORSE SHIP AGENCIES PVT. LTD.,
PLOT NO.10A, NILHAT HOUSE, GROUND FLOOR,
J. THOMAS BUILDING, BRISTOW ROAD,
WILLINGDON ISLAND, KOCHI-682 003,
REP BY ITS BRANCH-IN-CHARGE MR. K.C DEVADAS
BY ADVS.
SRI.JOY THATTIL ITTOOP
SRI.BIJISH B.TOM
SRI.JACOB TOMLIN VARGHESE
SMT.BABY SONIA
SRI.GENS GEORGE ELAVINAMANNIL
SHRI.MATHEW JOSEPH BALUMMEL
RESPONDENTS:
1 UNION OF INDIA,
MINISTRY OF FINANCE, NORTH BLOCK,
NEW DELHI-110 001, REP. BY SECRETARY
2 COMMISSIONER OF CUSTOMS,
CUSTOMS HOUSE, WILLINGDON ISLAND,
COCHIN-682 009.
ADDL. 3 DIRECTOR GENERAL OF LIGHTHOUSES AND LIGHTSHIPS,
DIRECTORATE GENERAL OF LIGHT HOUSES AND
LIGHTSHIPS,
"DEEP BHAVAN", A-13, SECTOR 24,
NOIDA-201 301(U.P.)
(A SUBORDINATE OFFICE UNDER MINISTRY OF
SHIPPING, UNION OF INDIA).
IS IMPLEADED AS ADDITIONAL R3 AS PER ORDER
DATED 25.11.2020 IN I.A. 1/2020 IN WPC
17924/2020.
R1,R3 BY SRI.K.R.RAJKUMAR, C.G.C.
R2 BY SREELAL N. WARRIER, SC, CENTRAL BOARD OF
EXCISE & CUSTOMS
SRI P.VIJAYAKUMAR, ASGI
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 19-01-2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
WP(C) No.17924/2020
:2 :
[CR]
JUDGMENT
~~~~~~~~~
Dated this the 19th day of January, 2021
The writ petitioner, a company in the business of
shipping agents, is before this Court seeking to direct the 2 nd
respondent-Commissioner of Customs to return to the
petitioner the duplicate payment of ₹6,33,144/- made by the
petitioner under Ext.P2.
2. The petitioner was Agent of the vessel M. V. Cape
Chronos. The vessel was to call at Cochin Port Trust on
09.05.2016. The vessel was expected to arrive in the evening.
In the morning, the petitioner remitted Light Dues amounting
to ₹6,33,144/- through the web portal of the Director General
of Lighthouses and Lightships (DGLL). However, the receipt
was not generated by the web portal. The petitioner was
under the impression that the online payment had not gone
through. The vessel was to arrive in the evening and in the
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absence of proof of payment of Light Dues, the petitioner
would have faced difficulties. The petitioner therefore made a
manual payment of ₹6,33,144/- before the Cochin Customs,
for which Ext.P2 receipt was issued. On the following day, the
petitioner-Company received receipt for the payment made
online. The petitioner accordingly and unintentionally made
dual payment.
3. The petitioner would submit that though the double
payment was made in the year 2016, due to the resignation of
the Accountant of the petitioner soon thereafter, the petitioner
failed to take appropriate steps to get back the duplicate
payment made. When the Auditors of the petitioner noted the
dual payment, the petitioner submitted Ext.P3 letter to the 2 nd
respondent-Commissioner of Customs seeking repayment of
the duplicate payment. Ext.P3 was acknowledged as per
Ext.P4 dated 31.05.2018.
4. The 2nd respondent, however, instead of repaying
the duplicate payment, advised the petitioner to file an
application for refund before the Assistant Commissioner of
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Customs (Refunds). The petitioner accordingly made an
application on 23.08.2018. The Assistant Commissioner of
Customs rejected the petitioner's application for refund as per
Ext.P5 dated 05.10.2018, on the ground that the claim was
made after the period of six months prescribed under the
Lighthouse Act, 1927. The petitioner, aggrieved by Ext.P5,
submitted Ext.P6 application before the Commissioner of
Customs (Appeals) on 15.10.2018. On the Commissioner's
advise, the petitioner filed a statutory appeal against Ext.P5
order. The Commissioner of Customs (Appeals), by Ext.P9
order, dismissed the appeal filed under the Customs Act, 1962
holding that the appeal was filed beyond the period of
limitation.
5. The counsel for the petitioner would submit that the
dual payment made by the petitioner cannot be treated as
excess payment as contemplated under Section 9 of the
Lighthouse Act, 1927. Therefore, statutory limitation for
claiming excess payment would not be applicable to the case.
The petitioner was ill-advised to resort to an inappropriate
WP(C) No.17924/2020
statutory remedy by the Customs authorities. According to the
petitioner, the payment made by them as per Ext.P1 was not
excess payment. The claim of the petitioner is for
reimbursement of "Amount paid twice". The respondents are
therefore compellable to make repayment of the amount
inadvertently paid by the petitioner.
6. The 2nd respondent filed a statement in the writ
petition as directed by this Court. The 2 nd respondent stated
that Ext.P9 order is appealable before the CESTAT. The
petitioner has not impleaded necessary parties. The 2 nd
respondent further submitted that Light Dues are not customs
revenue though it is collected by the Customs authorities. The
Customs authorities collect Light Dues on behalf of DGLL and
the amounts will be transferred to DGLL. Therefore, refund
cannot be granted by the Customs authorities.
7. The petitioner thereupon impleaded the DGLL as
additional 3rd respondent. The additional 3rd respondent stated
that a claim for refund has to be presented in ILH-Form 10 in
duplicate, to the officer of the Customs. Repayment can be
WP(C) No.17924/2020
made only with the special authority of Ministry of Surface
Transport. Under Section 19 of the Lighthouse Act, 1927, the
time limit for refund claim of excess payment is six months.
Hence, the decision made by the Customs authorities is in
accordance with the provisions of the Lighthouse Act, 1927.
The Director General of Lighthouses and Lightships does not
have any role on the subject. The additional 3 rd respondent
stated that the petitioner is not legally entitled to any relief.
8. I have heard Sri. Joy Thattil Ittoop, counsel for the
petitioner, Sri. Sreelal N. Warriar, learned Standing Counsel
for the 2nd respondent and Sri. K.R. Rajkumar, Central
Government Counsel appearing for the additional 3 rd
respondent.
9. There is no dispute that the amount payable by the
petitioner towards Light Dues in respect of the vessel MV
Cape Chronos arrived at the Cochin Port Trust on 09.05.2016,
is ₹6,33,144/-. It is also not disputed that the petitioner has
made two payments towards the same Light Dues on
09.05.2016. However, the application filed by the petitioner
WP(C) No.17924/2020
for refund was rejected by the Assistant Commissioner of
Customs, on the ground of limitation. The appeal was also
rejected on the same ground. The question to be considered
is whether the delay will spoil the right of the petitioner for
refund of dual payment/duplicate payment.
10. Section 19 of the Lighthouse Act, 1927 provides
that where Light Dues have been paid in respect of any ship in
excess of the amount payable under this Act, no claim for
refund of such excess payment shall be admissible, unless it
is made within six months from the date of each payment. It is
relying on the said period of limitation prescribed that the
Assistant Commissioner of Customs has rejected the
application preferred by the petitioner.
11. The issue therefore is whether Section 19 of the
Lighthouse Act, 1927 would apply to the case of the petitioner.
The Act, 1927 was promulgated for the purpose of effective
management of Lighthouses by the Central Government.
Section 9 of the Act, 1927 enables the additional 3 rd
respondent to levy Light Dues in respect of every ship arriving
WP(C) No.17924/2020
at or departing from any Port in India, for the purpose of
providing and maintaining lighthouses for the benefit of ships
voyaging to or from India or between Ports in India.
12. Section 10 of the Act enables the Central
Government to prescribe rates of Light Dues by notification in
the official gazette. Section 10(2) of the Act 1927 specifically
provides that if Light Dues have been paid in accordance with
the provisions of this Act in respect of any ship, no further
dues shall become payable in respect of that ship for a period
of 30 days from the date on which the dues so paid became
payable.
13. Section 12 of the Act, 1927 would make it clear that
the levy of Light Dues is dependent on the tonnage of a ship
or vessel. Sub-section (2) of Section 12 provides for method
of ascertaining the tonnage of any ship for the purpose of
levying Light Dues. Section 19 provides that where Light
Dues have been paid in excess of the amount payable under
this Act, no claim for refund of such excess payment shall be
admissible unless it is made within six months.
WP(C) No.17924/2020
14. It is therefore evident that Light Dues are directly
related to tonnage of the ship/vessel and excess payment can
occur when payment of Light Dues is made disproportionately
disregarding the tonnage of the ship. Shipping companies and
shipping agents are expected to measure the tonnage of the
ship/vessel correctly and pay Light Dues with due regard to
notified rates. Excess payment of Light Dues may occur if the
shipping companies/agents cause mistake in the tonnage of
the ship or in respect of notified rates. It is for the refund of
such excess payment effected by the shipping
companies/shipping agents without regard to the tonnage of
the ship or rate of Light Dues, that a period of limitation has
been prescribed under Section 19.
15. The Supreme Court had held in the judgment in
Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf [AIR
1959 SC 135] that refund of sales tax paid under a mistake of
law could be claimed based on Section 72 of the Indian
Contract Act, 1872. The court examined the scope of Section
72 and held that a person who pays money either under a
WP(C) No.17924/2020
mistake of law or of fact, is entitled to recover the amount so
paid, and the party receiving the same is bound to repay or
return it irrespective of any consideration whether the money
had been paid voluntarily, subject however to questions of
estoppel, waiver, limitation or the like. That was a case where
the levy was made under a law which was subsequently held
to be unconstitutional and the Apex Court held that as far
Section 72 was concerned, there was no distinction between a
tax liability and any other liability and, therefore tax paid under
a mistake of law under the enactment in question could be got
refunded.
16. The principle of this decision was applied by the
Hon'ble Apex Court in State of Kerala v. Aluminium
Industries Ltd. [(1965) 16 STC 689]. A levy was made in
violation of Article 286(1)(a) of the Constitution and the
assessee claimed refund of the amount on discovery of the
mistake. The assessee had not raised the question of non
liability at the time the assessment was completed and the
mistake was on the part of both the assessee and the
WP(C) No.17924/2020
assessing authority. Subsequently, the assessee discovered
the mistake, and made the claim for refund which was allowed
by this Court in a petition filed under Article 226 of the
Constitution. The Supreme Court observed that such payment
was within the scope of Section 72 of the Contract Act and the
claim for refund was to be entertained if it was made within
three years from the date on which the mistake became
known to the assessee who made payment by mistake. The
Court went on to observe that it was the duty of the State to
investigate the facts when the mistake was brought to its
notice and to make refund if the mistake was proved and the
claim was made within the period of limitation, under Article 96
of the Limitation Act, 1908.
17. In Commissioner of Sales Tax v. Auraiya
Chamber of Commerce [AIR 1986 SC 1556], the Hon'ble
Apex Court held that when tax is collected without the
authority of law, the State has no right to the money and that it
was refundable to the assessee. The same position has been
reiterated in the decisions of the Apex Court in Shri Vallabh
WP(C) No.17924/2020
Glass Works Ltd. v. Union of India [AIR 1984 SC 971] and
in Salonah Tea Company Ltd. v. Superintendent of Taxes
[AIR 1990 SC 772]. In the latter case, the Court ordered
refund in an appeal arising out of an application under Article
226 of the Constitution of India, filed within the period of
limitation. In Sri Ravi Oil Mills v. Commercial Tax Officer
[(1990) 77 STC 7], the Hon'ble Apex Court in a similar
situation, where an assessee paid tax under a mistake of law
and the mistake came to his knowledge years later. The
assessee's approach to the High Court was unsuccessful and
the High Court dismissed the writ petition on the ground that a
suit for refund was time barred. The Hon'ble Apex Court set
aside the order of the High Court and directed refund, holding
that in the absence of any denial or controversy, as to the date
on which the assessee came to know of the mistake on his
part and the excess payment, he was entitled to refund of the
amount collected illegally.
18. In Mahabir Kishore v. State of Madhya Pradesh
[AIR 1990 SC 315], the Hon'ble Apex Court considered the
WP(C) No.17924/2020
starting point of the period of limitation of three years for a
proceeding of this nature. The Hon'ble Apex Court held that
when money is paid under a mistake of law, the period of
limitation for recovery of the amount does not begin to run
until the date on which the plaintiff discovers the mistake or
could with reasonable diligence have discovered the mistake.
Article 113 of the Schedule to the Limitation Act, 1963 and
the provisions of section 17(1)(c) of that Act apply in such
cases.
19. The dual payment made by the petitioner in this writ
petition cannot be described as excess payment, in the sense
contemplated by Section 19 of the Lighthouse Act, 1927.
What is effected by the petitioner is a dual payment or
duplicate payment. The petitioner was forced to make such
dual payment due to the failure of the web portal system to
generate a receipt, when the petitioner made the first payment
through the web portal. This Court is of the view that Section
19 is not intended to operate in such circumstances. If
Section 19 does not apply to the dual payment made by the
WP(C) No.17924/2020
petitioner, then there is no question of a period of limitation
under the Customs Act for making an application for refund of
the dual payment.
20. The State and its authorities are not expected to act
in a Shylochian manner and squeeze money from its citizens.
Levy of any tax/dues should have the authority of law. If the
petitioner calculated Light Dues in respect of the Vessel
correctly and remitted the correct amount, then Section 19 of
the Act, 1927 cannot be resorted to withhold an erroneous
double payment or dual payment made by a citizen due to a
system error or failure.
21. The State is not expected to get itself unduly
enriched by erroneous or forced or inadvertent payments of
money made by its citizens. The State is not expected to
bring in defence of limitation in respect of such payments
resulting in unjust enrichment. The claim of the petitioner for
refund of the dual payment, in the circumstances, would not
fall within the ambit of Section 19 of the Customs Act. Exts.P5
and P9 orders are therefore otiose.
WP(C) No.17924/2020
In the circumstances, the writ petition is allowed.
The 2nd respondent and additional 3rd respondent are directed
to refund to the petitioner the dual payment made, within a
period of one month.
Sd/-
N. NAGARESH, JUDGE
aks/11.01.2021
WP(C) No.17924/2020
APPENDIX
PETITIONERS' EXHIBITS:
EXHIBIT P1 THE TRUE COPY OF THE RECEIPT DATED
O9.05.2016 FOR RS 6,33,144/- GENERATED
BY THE WEB-PORTAL OF DIRECTORATE
GENERAL OF LIGHTHOUSES AND LIGHTSHIPS
AND RECEIVED BY THE PETITIONER ON
10.5.2020
EXHIBIT P2 THE TRUE COPY OF THE RECEIPT NO.145952
DATED 9.5.2016 FOR RS 6,33,144/-
ISSUED BY ADMINISTRATIVE OFFICER,
CUSTOMS HOUSE, COCHIN TO THE
PETITIONER
EXHIBIT P3 THE TRUE COPY OF THE LETTER DATED
31.5.2018 FILED BY THE PETITIONER
BEFORE THE 2ND RESPONDENT
EXHIBIT P4 THE TRUE COPY OF THE ACKNOWLEDGEMENT
DATED 31.5.2018 ISSUED BY THE 2ND
RESPONDENT
EXHIBIT P5 THE TRUE COPY OF THE ORDER DATED
5.10.2018 PASSED BY THE ASSISTANT
COMMISSIONER OF CUSTOMS (REFUNDS)
EXHIBIT P6 THE TRUE COPY OF THE APPLICATION DATED
12.10.2018 ISSUED BY THE PETITIONER TO
THE COMMISSIONER OF CUSTOMS (APPEALS)
EXHIBIT P7 THE TRUE COPY OF THE ACKNOWLEDGEMENT
DATED 15.10.2018 ISSUED BY THE
COMMISSIONER OF CUSTOMS (APPEALS) TO
THE PETITIONER
EXHIBIT P8 THE TRUE COPY OF THE WRITTEN
SUBMISSION FILED BY THE PETITIONER
BEFORE THE COMMISSIONER OF CUSTOMS
(APPEALS)
EXHIBIT P9 THE TRUE COPY OF THE ORDER DATED
29.7.2020 PASSED BY THE COMMISSIONER
OF CUSTOMS (APPEALS)
SR
