{"id":243481,"date":"2021-02-06T13:25:16","date_gmt":"2021-02-06T07:55:16","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=243481"},"modified":"2021-02-06T13:33:54","modified_gmt":"2021-02-06T08:03:54","slug":"restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/","title":{"rendered":"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis"},"content":{"rendered":"

I. Introduction<\/span><\/h3>\n

The recovery of taxes collected under a law which is ultra vires, <\/em>or on the basis of an incorrect interpretation of law, is a highly debated topic in several jurisdictions. Requests for restitution or refund of such taxes have been deliberated by Courts on the basis of considerations which include mistake of law, chaos in public finances, unjust enrichment and refund being the discretion of the Revenue Department. Restitution claims are also thwarted by enactment of validating laws. At the core of this dispute lie the principles of fairness of the administration, and justice to the affected citizen who was made to pay taxes which were not legally payable. This article examines the legal position in India and other jurisdictions.<\/p>\n

II. Illegal Taxes and Ultra vires Taxes<\/span><\/h3>\n

The power to levy taxes[1]<\/a> at the hands of monarchs was not limited. The importance of the power to levy is underscored by the fact that the Bill of Rights, 1689, provided that the Crown should not levy any tax without the consent of Parliament.[2]<\/a> The written Constitutions across the world also define taxing powers clearly so that the State will not exceed its power and the subjects will know their obligations.[3]<\/a><\/p>\n

The demand for payment of taxes could be tainted in two ways viz.<\/em> (a) the demand is made without any authority, or in other words, the levy was ultra vires,<\/em> or (b) the tax demanded is based on an incorrect interpretation of law. In the former case, there was no authority to demand tax to begin with, and the authority claimed is void ab initio<\/em>. In the latter, the authority is valid, but the interpretation placed on the relevant provision of law for demanding the tax is incorrect, and thus the tax was found to not be payable by the subject from whom it was demanded.<\/p>\n

III. Restitution or Refund of Illegal Taxes and Ultra vires Taxes<\/span><\/h4>\n

Simple logical reasoning demands that any tax collected without authority or by a wrong interpretation of the relevant provision of law should be returned to the tax payer.[4]<\/a> The Government has no right over such taxes. Only when a tax payer chooses to challenge a levy or demand for tax and succeeds, and is determined to take the next logical step of making the demand for refund, will he realise the barriers denying him of the chance to get his refund. Sometimes, the legislature also decides to throw in its weight by enacting validating laws, complicating the claim for refund. Some of the grounds on which such claims for refund could be denied are (a) payments made under a mistake of law on the part of the payer, (b) tax liability passed on, (c) chaos in public finances, and (d) the validating law has validated collection of the taxes.<\/p>\n

There are rules regarding taxes. The Bilbie Rule or the \u201cmistake of law\u201d rule was propounded in Bilbie v. Lumley<\/em>[5]<\/a> wherein the Court held that payments made under mistake of law are not recoverable. The Court based this proposition on the basis that every citizen is expected to be aware of his legal obligations, otherwise there is no saying to what extent the excuse of ignorance may be carried. This rule obtained almost universal recognition in that it was followed in Australia, Canada, New Zealand and many American States.[6]<\/a> Several authors have criticised this rule as unprincipled and unfair.[7]<\/a> Later the Bilbie Rule was abandoned in the United Kingdom, Canada and Australia.<\/p>\n

In USA, the Supreme Court has held that a State must provide procedural safeguards against an unlawful tax exaction because such exaction constitutes a deprivation of property under the Due Process Clause.[8]<\/a><\/p>\n

In Air Canada <\/em>v. R. (British Columbia),<\/em>[9]<\/a> La Forest, J. rejected the mistake of law argument to deny the restitution. According to him, the rule was rejected as having been constructed on inadequate foundations as lacking in clarity and resulting in undue harshness.\u00a0 The development of the law of restitution had rendered otiose the distinction between mistakes of fact and mistakes of law.[10]<\/a><\/p>\n

In Woolwich Building Society v. IRC,[11]<\/strong><\/a> <\/em>Lord Goff, speaking for the House of Lords, rejected the mistake of law argument to deny the restitution and held that \u201cIn the end, logic appears to demand that the right of recovery should require neither mistake or compulsion, and that the simple fact that the tax was exacted unlawfully should prima facie be enough to require its repayment.<\/em>\u201d<\/p>\n

\u00adThe High Court of Australia also rejected the mistake of law rule in Commissioner of State Revenue (Victoria) v. Royal Insurance Australia Ltd<\/em>.[12]<\/strong><\/em><\/a><\/p>\n

In Mafatlal Industries Ltd v. Union of India,[13]<\/strong><\/a> <\/em>the Supreme Court of India referred to the above judgments mainly for the purpose of dealing with the claim for restitution under Section 72 of the Contract Act, 1872. The distinction between the payments made under the \u201cmistake of law\u201d and \u201cmistake of fact\u201d was not applied in Indian Law.[14]<\/a><\/p>\n

The \u201cpassed on\u201d defence is sometimes called \u2018unjust enrichment\u201d or \u201cwindfall gain\u201d. It must be understood that if the illegal tax or ultra vires <\/em>tax collected is retained by the government, it is \u201cunjust enrichment\u201d on the part of the government. However, the phrase \u201cunjust enrichment\u201d is used in these discussions to indicate that if the assessee has shifted the economic burden to his customers, then granting refund would result in \u201cunjust enrichment\u201d at the hands of the assessee. Sometimes, it is described as \u201cwindfall gain\u201d to the assessee as he has already \u201cpassed on\u201d the tax burden to others.<\/p>\n

In Air Canada[15]<\/strong><\/a><\/em>, the airline argued that the \u201cpassed on\u201d defence should be available only if it is shown that the tax was specifically charged to other identified parties, making them true tax payers. However, the majority held that even if the airlines could demonstrate that it did not pass on the tax, it would still be denied the recovery as it would create \u201cfiscal chaos\u201d. In his dissenting opinion, Wilson, J. rejected the \u201cpassed on\u201d argument as a defence and held that merely because the person unjustly enriched is a government authority, different rules cannot be made for restitution.[16]<\/a><\/p>\n

In Australia, the legislature enacted the Franchise Fees Windfall Tax (Imposition) Act, 1997 to tax the receipt at the hands of the taxpayer who were entitled to receive refund from the Government after the judgment in Ha <\/em>v. State of New South Wales.[17]<\/strong><\/a> <\/em>The windfall tax rate was 100% of the taxable amount. This rendered the refund claim virtually nugatory.[18]<\/a> However, in Royal Insurance<\/em>[19]<\/a> the Australian High Court rejected the \u201cpassed on\u201d argument. Mason, C.J. held that \u201cAs between the plaintiff and the defendant, the plaintiff having paid away its money by mistake in circumstances in which the defendant has no title to retain the moneys, the plaintiff has the superior claim. The plaintiff\u2019s inability to distribute the proceeds to those who recoup the plaintiff was \u2026 an immaterial consideration \u2026.<\/em>\u201d[20]<\/a><\/p>\n

In Mafatlal Industries[21]<\/strong><\/a>, <\/em>the Supreme Court upheld the validity of certain amendments made to the Central Excises and Salt Act, 1944 by which it was provided that refund of excise duty would be denied if the assessee had \u201cpassed on\u201d such duty to any other person. By majority, the Court held that the requirement of \u201cunjust enrichment\u201d would apply to assessments \u201cincorrectly made\u201d and excess duty demanded, and also to erroneous assessments demanding duty on transactions that are not dutiable under the Act. The Court rejected the contention that the amendment was a mere device to retain illegally collected taxes. Sen, J. disagreed with the majority and held that the manufacturer from whom the duty was collected is entitled to receive the refund. Sen, J. agreed with the views of Mason, C.J. in Royal Insurance<\/em>.[22]<\/a> Prior to Mafatlal Industries[23]<\/strong><\/a><\/em>, the Court allowed refund without regard to unjust enrichment.[24]<\/a> The minority judgment in Mafatlal Industries[25]<\/strong><\/a>,<\/em> and many judgments prior to Mafatlal Industries<\/em> are in line with the principles generally accepted in other jurisdictions and also have sound basis. In light of them, the majority view in Mafatlal Industries[26]<\/strong><\/a><\/em> requires reconsideration.<\/p>\n

The proposition of chaos in public finances was developed in Coleman <\/em>v. Inland Gas Corp.,[27]<\/strong><\/a><\/em> in which the Court observed that \u201cWhen the income is collected it is allocated to different funds\u2026\u2026. no tax payer should have the right to disrupt the government by demanding a refund of his money, whether paid legally or otherwise \u2026.<\/em>\u201d The majority in Air Canada[28]<\/strong><\/a><\/em> rejected the chaos argument. In Ha[29]<\/strong><\/a><\/em>, Brennan, C.J. rejected the chaos argument stating that the Court was conscious of the implications of its judgment over the revenues of the States. He also rejected the plea for overruling the previous cases prospectively and also to postpone the effect of the judgment in Ha[30]<\/strong><\/a><\/em> by 12 months. Lord Goff in Woolwich[31]<\/strong><\/a><\/em> agreed with the views of Wilson, J. in Air Canada[32]<\/strong><\/a><\/em> that \u201cWhy should the individual taxpayer as opposed to taxpayers as a whole, bear the burden of Government\u2019s mistake?<\/em>\u201d and held that taxes and levies paid pursuant to an ultra vires<\/em> demand is prima facie<\/em> recoverable as of right. Lord Keith, in his dissenting judgment in Woolwich[33]<\/strong><\/a><\/em> expressed a similar view stating that when the plaintiff pays under protest, the defendant accepts the payment with the full knowledge that it may have to be repaid if the action resulted in favour of the plaintiff. In Mafatlal<\/em> Industries[34]<\/strong><\/a> <\/em>it was stated that the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration, and that in case of large claims, it may well result in financial chaos in the administration of the affairs of the State. If a levy is held to be invalid for any defect other than the power to impose such a levy, the defect can be cured by making an amendment, or enacting a new law curing the defect pointed out by the Courts. At the time of curing the defect, sometimes, the legislature also gives retrospective effect to such amendments, and provide that any levy collected prior to such an amendment, or the new law, would be treated as the levy charged and collected under the amended or new law, thus validating the levy collected earlier.[35]<\/a> Instead of curing the defect, if the amendment or the new law only seeks to invalidate the judgment which rendered the levy invalid, and provides for retention of the levies collected earlier, such a law will be invalid.[36]<\/a> In Rai Ramakrishna <\/em>v. State of Bihar,[37]<\/strong><\/a> <\/em>the Supreme Court upheld the validating law. The Court also allowed collection of the past dues by reason of the retrospective effect given to the validating law.[38]<\/a> The Supreme Court also adopted prospective overruling[39]<\/a> in some cases and held that any taxes paid till its judgment would not be refunded.[40]<\/a> Validating laws are used by the legislature at the instance of the executive to defeat lawful claims of the tax payers, treating them as adversaries even after the tax payers had succeeded in Court. The time has come for the Courts to consider excluding such successful litigants from the effect of validating and retrospective levies.<\/p>\n

IV. Conclusion and Suggestions<\/span><\/h4>\n

As rightly observed by Lord Goff in Woolwich[41]<\/strong><\/a><\/em>, the tax payers are entitled, as a matter of right, to restitution of the taxes paid by them which are not due or payable. When a tax payer challenges a levy, he is acting in accordance with law and asking the Courts to determine if the levy is valid or not. In pursuing the litigation, the tax payer expends a substantial amount of money and effort. The government is also aware of the challenge to the levy and, like the tax payer, it also seeks legal advice and decides whether to contest the litigation or concede. If the Court grants the relief in favour of the tax payer, the least that he can expect from both the government and the Court is that he is granted restitution by refund of the taxes paid by him. Seeking restitution is not illegal. It is also not unfair. Denial of restitution would act as a disincentive to a potential litigant challenging the illegal levy. The tax payer is not interested in just settlement of jurisprudence. Exercise of executive or legislative power to deny such refund and restitution is unfair, particularly in the democratic set up where the executive and legislature are expected to act within their respective sphere for the benefit of the subjects and. The last layer of protection in our Constitution, the Courts, are expected to play a more constructive role in protecting the rights of citizens and they should bear in mind that managing the finances is the role of the executive and not the Courts.<\/p>\n

\n

*<\/a>Research Scholar, VIT School of Law, VIT Chennai-600 127.<\/span><\/p>\n

*<\/a>*Associate Professor & Head of the Department, VIT School of Law, VIT Chennai – 600 127.<\/span><\/p>\n

[1]<\/a>Tax is a compulsory extraction of levy by a governmental authority from its subjects in order to support the activities of the government. Unlike fees or charges, in which there is a necessity of quid pro quo<\/em>, taxes do not require anything in return.<\/p>\n

[2]<\/a>\u201c<\/em>An Act Declaring the Rights and Liberties of the Subject and Settling the Succession of the Crown\u201d, available at https:\/\/avalon.law.yale.edu\/17th_century\/england.asp<\/a> last accessed on 2-1-2020.<\/p>\n

[3]<\/a>See illustratively, <\/em>Constitution of India, Commonwealth of Australia Constitution Act, Constitution of the United States of America.<\/p>\n

[4]<\/a> See State of Kerala <\/em>v. K.P.Govindan<\/em>, (1975) 1 SCC 281<\/a>, where the Supreme Court upheld the order passed by the High Court granting refund of the illegally collected charges. See also CST <\/em>v. Auraiya Chamber of Commerce<\/em>, (1986) 3 SCC 50<\/a>.<\/p>\n

[5]<\/a> (1802) 2 East 469 : 102 ER 448<\/p>\n

[6]<\/a>G.E. Palmer, The Law of Restitution<\/em>, Vol. 1 (Boston: Little Brown, 1978), cited in Frederic Bachand, \u201cRestitution of Unlawfully Levied Taxes: Survey and Comparative Analysis of Developments in Canada, Australia, And England\u201d, 38 Alta L Rev 960 (2001).<\/p>\n

[7]<\/a>Id<\/em>., fn. 38.<\/p>\n

[8]<\/a>McKesson Corp. \u00a0v. \u00a0\u00a0Deptt. of Business Regulation of Florida, 1990 SCC OnLine US SC 92<\/a>: 110 L Ed 2d 17: 496 US 18 (1989).<\/p>\n

[9]<\/a> 1989 SCC OnLine Can SC 47<\/a> : [1989] 1 SCR 1161 at p. 1201<\/p>\n

[10]<\/a>Id.<\/em><\/p>\n

[11]<\/a> 1993 AC 70 : (1992) 3 WLR 366 : [1992] BTC 472 (HL)<\/a><\/p>\n

[12]<\/a>(1994) 126 ALR 1<\/p>\n

[13]<\/a>(1997) 5 SCC 536\u00a0 <\/a><\/p>\n

[14]<\/a>In Salonah Tea Co. Ltd. \u00a0<\/em>v. Supt. Of Taxes,<\/em> (1988) 1 SCC 401<\/a>,\u00a0 the Supreme Court allowed refund of the taxes illegally collected stating that the State has a concomitant duty to refund. Followed in Union of India v ITC Ltd.<\/em>, 1993 Supp (4) SCC 326<\/a><\/p>\n

[15]<\/a>Supra Note 9.<\/p>\n

[16]<\/a>In Kingstreet Investments Ltd<\/em>. v. Province of New Brunswick<\/em>, 2007 SCC OnLine Can SC 1<\/a> : [2007] 1 SCR 3, the Supreme Court of Canada approved Wilson, J.\u2019s arguments and rejected the observations of La Forest, J.<\/p>\n

[17]<\/a>1997 HCA 34. In this decision, of the provisions of the Business Franchise Licences (Tobacco) Act, 1987 (NSW) were held to be invalid as imposing a duty or duties of excise within the meaning of Section 90 of the Constitution of Australia.<\/p>\n

[18]<\/a>See Margaret Brook, \u201cRestitution of Invalid Taxes, Principles and Policies\u201d, 5 Deakin L Rev 127 (2000). When the legislature passed a law prohibiting recovery, it was held to be invalid in Commr. \u00a0of Motor Transport v. Anthill Ranger & Co. Pty. Ltd.<\/em>, (1956) 94 CLR 177. However, if the prescribed a limitation period for seeking restitution, it was held to be valid in Burmah Construction Co. v. State of Orissa<\/em>, 1962 Supp (1) SCR 242<\/a>.<\/p>\n

[19]<\/a> Supra Note 12.<\/p>\n

[20]<\/a>Ibid. See<\/em> Peter Butler, \u201cRestitution of Overpaid Taxes, Windfall Gains, and Unjust Enrichment: Commissioner of State Revenue v. Royal Insurance Australia Ltd.\u201d 18 U. Queensland LJ 318 (1994-95)<\/p>\n

[21]<\/a>Supra Note 13.<\/p>\n

[22]<\/a> Supra Note 12.<\/p>\n

[23]<\/a> Supra Note 13.<\/p>\n

[24]<\/a>Sales Tax Officer, Banaras<\/em> v. Kanhaiya Lal Mukundlal Saraf<\/em>, 1959 SCR 1350<\/a>; State of Kerala v. Aluminium Industries Ltd.<\/em>, (1965) 16 STC 689<\/a>.<\/p>\n

[25]<\/a> Supra Note 13.<\/p>\n

[26]<\/a> Ibid.<\/p>\n

[27]<\/a>21 SW 2d 1030 (1929) as cited in Air Canada, <\/em>1989 SCC OnLine Can SC 47<\/a>.<\/p>\n

[28]<\/a> Supra Note 9.<\/p>\n

[29]<\/a>1997 HCA 34.<\/p>\n

[30]<\/a> Ibid.<\/p>\n

[31]<\/a> Supra Note 11.<\/p>\n

[32]<\/a> Supra Note 9.<\/p>\n

[33]<\/a>Supra Note 11.<\/p>\n

[34]<\/a> Supra Note 13.<\/p>\n

[35]<\/a>See the dissenting opinion of Wilson, J. in Air Canada, <\/em>1989 SCC OnLine Can SC 47<\/a> on the effect of retroactive tax.<\/p>\n

[36]<\/a>D. Cawasji & Co. v. State of Mysore<\/em>, 1984 Supp SCC 490. See Shri Prithvi Cotton Mills Ltd. <\/em>v. Broach Borough Municipality<\/em>, (1969) 2 SCC 283<\/a>, where the validating law was held to be valid as the law cured the defect pointed out by the Court, and it was within the competence of the legislature.<\/p>\n

[37]<\/a>(1964) 1 SCR 897<\/a><\/p>\n

[38]<\/a> The reason given for approving the retrospective effect in Rai Ramakrishna,<\/em> (1964) 1 SCR 897<\/a> is disputable and it is not within the scope of this article.<\/p>\n

[39]<\/a>See Somaiya Organics (India) Ltd. <\/em>v. \u00a0State of U.P., <\/em>(2001) 5 SCC 519<\/a>.\u00a0 \u00a0Application of prospective overruling, particularly in tax matters, raises various jurisprudential questions which are not within the scope of this article. A casual survey of the number of validating and retrospective enactments made in India shows that this power is not used responsibly.<\/p>\n

[40]<\/a>Synthetics and Chemicals Ltd. <\/em>v. State of U.P<\/em>., (1990) 1 SCC 109<\/a>.\u00a0 \u00a0 The State Government understood that this would mean that it could collect any dues for the past period and that resulted in a fresh round litigation. Finally, in Somaiya Organics (India) Ltd. v. State of U.P<\/em>., (2001) 5 SCC 519<\/a>, the Court held that the Government cannot collect any past unpaid dues after its judgment declaring the levy to be illegal. See also Belsund Sugar Co. Ltd. <\/em>v. State of Bihar<\/em>, (1999) 9 SCC 620<\/a>.<\/p>\n

[41]<\/a> Supra Note 11.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Shanmuga Sundaram* & Dr. P. R. L. Rajavenkatesan**<\/p>\n","protected":false},"author":8808,"featured_media":243484,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[42503,1191],"tags":[45078,43642,45079],"class_list":["post-243481","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-analysis","category-op-ed","tag-illegal-taxes","tag-taxes","tag-ultra-vires-taxes"],"yoast_head":"\nRestitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis\" \/>\n<meta property=\"og:description\" content=\"by Shanmuga Sundaram* & Dr. P. R. L. Rajavenkatesan**\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/\" \/>\n<meta property=\"og:site_name\" content=\"SCC Times\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/scc.online\/\" \/>\n<meta property=\"article:published_time\" content=\"2021-02-06T07:55:16+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-02-06T08:03:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1331\" \/>\n\t<meta property=\"og:image:height\" content=\"888\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Bhumika Indulia\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Bhumika Indulia\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"14 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/\",\"url\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/\",\"name\":\"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis | SCC Times\",\"isPartOf\":{\"@id\":\"https:\/\/www.scconline.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg\",\"datePublished\":\"2021-02-06T07:55:16+00:00\",\"dateModified\":\"2021-02-06T08:03:54+00:00\",\"author\":{\"@id\":\"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/919ec47cc1b871b362af05740398033a\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage\",\"url\":\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg\",\"contentUrl\":\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg\",\"width\":1331,\"height\":888},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.scconline.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.scconline.com\/blog\/#website\",\"url\":\"https:\/\/www.scconline.com\/blog\/\",\"name\":\"SCC Times\",\"description\":\"Bringing you the Best Analytical Legal News\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.scconline.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/919ec47cc1b871b362af05740398033a\",\"name\":\"Bhumika Indulia\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/04\/Me-150x150.jpg\",\"contentUrl\":\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/04\/Me-150x150.jpg\",\"caption\":\"Bhumika Indulia\"},\"url\":\"https:\/\/www.scconline.com\/blog\/post\/author\/editor_1\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis | SCC Times","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/","og_locale":"en_US","og_type":"article","og_title":"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis","og_description":"by Shanmuga Sundaram* & Dr. P. R. L. Rajavenkatesan**","og_url":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/","og_site_name":"SCC Times","article_publisher":"https:\/\/www.facebook.com\/scc.online\/","article_published_time":"2021-02-06T07:55:16+00:00","article_modified_time":"2021-02-06T08:03:54+00:00","og_image":[{"width":1331,"height":888,"url":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg","type":"image\/jpeg"}],"author":"Bhumika Indulia","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Bhumika Indulia","Est. reading time":"14 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/","url":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/","name":"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis | SCC Times","isPartOf":{"@id":"https:\/\/www.scconline.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage"},"image":{"@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage"},"thumbnailUrl":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg","datePublished":"2021-02-06T07:55:16+00:00","dateModified":"2021-02-06T08:03:54+00:00","author":{"@id":"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/919ec47cc1b871b362af05740398033a"},"breadcrumb":{"@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#primaryimage","url":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg","contentUrl":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg","width":1331,"height":888},{"@type":"BreadcrumbList","@id":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/06\/restitution-of-illegal-taxes-and-ultra-vires-taxes-an-analysis\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.scconline.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Restitution of Illegal Taxes and Ultra Vires Taxes \u2013 An Analysis"}]},{"@type":"WebSite","@id":"https:\/\/www.scconline.com\/blog\/#website","url":"https:\/\/www.scconline.com\/blog\/","name":"SCC Times","description":"Bringing you the Best Analytical Legal News","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.scconline.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/919ec47cc1b871b362af05740398033a","name":"Bhumika Indulia","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.scconline.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/04\/Me-150x150.jpg","contentUrl":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/04\/Me-150x150.jpg","caption":"Bhumika Indulia"},"url":"https:\/\/www.scconline.com\/blog\/post\/author\/editor_1\/"}]}},"jetpack_featured_media_url":"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/taxes-1.jpg","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":94201,"url":"https:\/\/www.scconline.com\/blog\/post\/2016\/12\/26\/state-legislatures-are-competent-to-levy-taxes-on-mobile-towers\/","url_meta":{"origin":243481,"position":0},"title":"State Legislatures are competent to levy taxes on mobile towers","author":"Saba","date":"December 26, 2016","format":false,"excerpt":"Supreme Court: While relying upon Anant Mills Co. Ltd. v. State of Gujarat, (1975) 2 SCC\u00a0175, the Division Bench of Rajan Gogoi, Prafulla C. Pant, JJ. held that State Legislatures\u2019\u00a0competency to enact laws to impose taxes on lands and buildings, by virtue of Entry 49, List II of\u00a0the Seventh Schedule\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":283981,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/02\/15\/additional-special-road-tax-not-manifestly-unjust-supreme-court-upholds-validity-of-section-3a-3-himachal-pradesh-motor-vehicles-taxation-act-1972-legal-research-legal-news-updates\/","url_meta":{"origin":243481,"position":1},"title":"‘Additional Special Road Tax not manifestly unjust’; Supreme Court upholds validity of Section 3A (3) of Himachal Pradesh Motor Vehicles Taxation Act, 1972","author":"Editor","date":"February 15, 2023","format":false,"excerpt":"The State of Himachal Pradesh had appealed against the High Court's decision which held Section 3A (3) of Himachal Pradesh Motor Vehicles Taxation Act, 1972 as ultra vires of the powers conferred upon the State Government under the Constitution of India. The Supreme Court set aside the said judgment of\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"\u2018Additional Special Road Tax not manifestly unjust\u2019; Supreme Court upholds validity of Section 3A (3) of Himachal Pradesh Motor Vehicles Taxation Act, 1972","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-112.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":32401,"url":"https:\/\/www.scconline.com\/blog\/post\/2016\/01\/12\/revision-of-monetary-limit-for-filing-departmental-appeals-in-income-tax-matters\/","url_meta":{"origin":243481,"position":2},"title":"Revision of Monetary limit for filing Departmental appeals in income tax matters","author":"Sucheta","date":"January 12, 2016","format":false,"excerpt":"Central Board of Direct Taxes via a circular dated January 10th, 2015, as a measure for reducing litigation has revised the monetary limits for filing departmental appeals (in income tax matters). These Instructions will apply retrospectively to pending appeals and appeals to be filed in High Courts\/Tribunals. It has been\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":286675,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/03\/10\/compensatory-taxes-are-dead-long-live-compensatory-taxes\/","url_meta":{"origin":243481,"position":3},"title":"Compensatory Taxes are Dead: Long Live Compensatory Taxes","author":"Bhumika Indulia","date":"March 10, 2023","format":false,"excerpt":"by Tarun Jain\u2020 Cite as: 2023 SCC OnLine Blog Exp 20","rel":"","context":"In "Experts Corner"","block_context":{"text":"Experts Corner","link":"https:\/\/www.scconline.com\/blog\/post\/category\/experts_corner\/"},"img":{"alt_text":"Compensatory Taxes are Dead: Long Live Compensatory Taxes","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-3.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-3.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-3.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-3.png?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":224970,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/02\/03\/ebcs-indirect-taxes-gst-other-indirect-taxes-edition-2019-is-out-now-get-your-copy-soon\/","url_meta":{"origin":243481,"position":4},"title":"EBC’s — Indirect Taxes (GST & Other Indirect Taxes) [Edition 2019] — is out now! [Get your copy soon!]","author":"Bhumika Indulia","date":"February 3, 2020","format":false,"excerpt":"by Jaya Vasudevan Suseela","rel":"","context":"In "New releases"","block_context":{"text":"New releases","link":"https:\/\/www.scconline.com\/blog\/post\/category\/news\/book-releases\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/02\/vasudevan_indirect_taxation_1_2019.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/02\/vasudevan_indirect_taxation_1_2019.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/02\/vasudevan_indirect_taxation_1_2019.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/02\/vasudevan_indirect_taxation_1_2019.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/02\/vasudevan_indirect_taxation_1_2019.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":265151,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/04\/07\/karnataka-government-extends-period-of-payment-of-taxes-vide-motor-vehicles-taxation-amendment-act-2022\/","url_meta":{"origin":243481,"position":5},"title":"Karnataka Government extends period of payment of taxes on motor vehicles vide Motor Vehicles Taxation (Amendment) Act, 2022","author":"Prachi Bhardwaj","date":"April 7, 2022","format":false,"excerpt":"On 31st March, 2022, Karnataka Government passed Motor Vehicles Taxation (Amendment) Act, 2022. This act seeks to amend Karnataka Motor Vehicles Taxation Act, 1957 (Act) to extend the period of payment of taxes. This act is applicable from 1st April, 2022. Key Points: The tax levied on all motor vehicles\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-160.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-160.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-160.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-160.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-160.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/243481","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=243481"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/243481\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/243484"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=243481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=243481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=243481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}