Clackmannanshire Council will have to foot a bill of about £300,000 to refund charges for elderly care services which should have been free.
Council officials said the authority had to act over the charges
The local authority said it had been misinformed by ministers over whether it should charge for meal preparation, and would now look to be reimbursed.
However, the Scottish Executive said councils had been provided with adequate funding to deliver free care.
Clackmannanshire has not budgeted to meet the costs.
It now faces having to dip into cash reserves to pay the bill.
The council claims that executive guidance in 2002 stated that local authorities could charge for meal preparation tasks for older people at home.
The council, which stopped charging in 2004 following subsequent guidance, had held off on a decision over refunds while local authority umbrella group Cosla pursued the matter through the civil courts.
But the council said that, as the matter had not been resolved, it would give back the money itself - while claiming the costs back from ministers.
Clackmannanshire councillor Sam Ovens said: "The mistake was the executive's to begin with and while we sympathise with those affected, it's not fair that the rest of our taxpayers are left to pick up the pieces.
"Misinformation from the executive has effectively cost the council around £300,000."
An executive spokeswoman said variations in local authorities' interpretations of free personal care legislation were "ultimately a matter for them".
"We have provided local authorities with adequate resources to deliver the free personal and nursing care policy, which has been implemented successfully," she said.
"It is up to each local authority to decide how to spend their allocation of block grant based on their local needs and priorities."