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Citation(1958) 09 SC CK 0010
Date of Judgment28.09.1958
CourtSupreme Court of India
Case TypeCivil Appeal No. 87 OF 1957
ApplicationSales Tax Officer, Banaras 
RespondentKanhaiya Lal Mukundlal Saraf 
BenchSudhi Ranjan Das, K.Subbarao, KN Wanchoo, Bhagwati, B.P.Sinha
Referred Contract Act, 1872- sec 11, sec 20, sec21, sec 22, sec 32


Respondent paid sales tax for subsequent years 1949-51. In 1952,  the Allahabad High Court passed a judgement in a case that a collection of particular transaction-type sales tax was out of the hands of the tax office. After this judgment, Kanhaiya Lal asked for a refund of the sales tax amount he had paid to the office. He filed a writ petition under Article 226 of the constitution in order to extract the money. When the hearing took place, the court held that the petitioner was not entitled for a refund. The Sales Tax Office argued that Kanhaiya Lal has committed a mistake of law by paying the money. It was also said that money was not retained and spent. 

The plaintiff claimed refund under section 72 of the sales tax levied by the defendant for further transactions carried out earlier, after the collection of tax on such transactions was declared illegal, alleging that such levy The mistake was made under the law.


Whether a mistake of law is part of Section 72 of Indian Contract Act ?


Appellant argued that respondent should have compliance to the procedure given in the U.P Sales Tax Act. The respondent should have pursued avenues as fillinf appeal or seeking revisions against assessment order. They argued that payments were made willingly without any objections 

It was argued that since the government had not retained the received funds and had already spent them. The respondent should be allowed to recover that amount. The further argued the filing of writ petition was inappropriate as respondent has made the claim due to misunderstanding of law, making them non-refundable. 

The respondent argued that they are excluded from paying the sales tax in the question due to specific provisions under relevant sales tax laws. The respondent claimed that the sales tax officer incorrectly assessed the tax liability. Certain arguments were added erroneously included in the tax assessment or there were errors in calculating the tax amount. Tax got levy multiple times on the same transaction, the respondent argued that this is unfair and unlawful. 

The respondent also challenged the constitutionality of the sales tax law, it violates the fundamental right or principle guaranteed by the constitution.


Jury stated that according to section 72 of the Indian Contract Act ‘ a person to whom money has been paid, anything delivered by mistake or under coercion, or who obtains such payments or delivery by fraud or by the exercise of undue influence, must return or repay it. Here mistake means both mistake of fact and mistake of law. Therefore money has to be returned by the party who has been paid by any other party even by mistake of fact or mistake of law.

It was held that if the amount is due then paying for that amount is obviously not a mistake. However, thinking money is due when it is not due is called a mistake. It held that if a money is paid by one party to the other party it should be returned if money is not due by any contract.






This case analysis is written by Bhaavya Mishra of Vikramajit Singh Sanatan Dharma College, Intern at Legal Vidhiya.

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