Customs Duty Paid by Mistake - No limitation?
DUE to mistake in classification an importer paid Customs Duty of Rs. 3.6 crores, when he was not liable to pay any duty. He realised the mistake after three years. No problem, ruled the Calcutta High Court.
A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of Rs.360.46 lakhs was paid by mistake by the petitioner to the government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it .
The High Court directed the Customs Department to refund the amount within 12 weeks.
Will the Customs Department refund nearly four crores? Matter may soon reach the Supreme Court.
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