1987 Supreme(Cal) 134

High Court Of Calcutta
Bimal Chandra Basak, Satya Brata Mitra
ASSISTANT COLLECTOR OF CENTRAL EXCISE - Appellant
Versus
MADURA COATS LTD. - Respondent
Matter 1035  Of  1984
Decided On : 04/29/1987

The principle of "unjust enrichment" by the assessee can be invoked in case of Excise duty also.

Headnote:

EXCISE - REFUND - EXCISE DUTY COLLECTED BY THE DEPARTMENT WITHOUT AUTHORITY OF LAW - WHETHER THE PRINCIPLE OF UNJUST ENRICHMENT BY THE ASSESSEE CAN BE INVOKED - WHETHER THE ASSESSEE IS ENTITLED TO REFUND OF EXCISE DUTY COLLECTED BY THE DEPARTMENT WITHOUT AUTHORITY OF LAW.

Fact of the Case:

The writ petitioner at all relevant time carried on the business of the manufacture, inter alia, of cotton and blended yarns at factories at Madurai and Serampore. The petitioner paid ad valorem duty amounting to Rs. 1,05,114. 94. Between 10th March, 1975 and 28th June, 1976 the petitioner paid duty amounting to Rs. 52,132. 67 P. Further, the admitted position is that all the duty paid as aforesaid was paid under protest. Under these circumstances, on the 31st May, 1976 the petitioner moved this Court under the provisions of Article 226 of the Constitution of India against the same. A rule was issued and it was numbered C. R. No. 7883 (W) of 1976 wherein under the interim order made, the petitioner deposited the amount of duty claimed by the excise authorities in an account with the State Bank of India. The said Rule was made absolute by G. N. Roy; J. by an order dated 1st September, 1978. [1980 ELT 582 (Cal.)] It was held that no duty of excise was to be levied on tyrecord warpsheets. The appellant preferred an appeal before a Division Bench of this Court against the said judgment (Appeal No. A. O. No. 275 of 1979 ). This was ultimately dismissed by a judgment and order dated 28th February, 1980. The Special leave petition under Article 136 of the Constitution of India preferred by the Excise authorities was dismissed by a judgment and order dated 11th April, 1983. The petitioners applied for refund of the said duty being a total sum of Rs. 1,57,251. 96 P. which was refused by the Excise authorities. On such refusal being made, this writ petition was filed for directing refund to the petitioner of the said sum of Rs. 1,57,251. 95 P. forthwith with interest on the said sum at the appropriate bank rate with effect from 1st September, 1979.

Finding of the Court:

The principles of "unjust enrichment" is to be applied not only against the Deptt. only but against the assessee also e. g. where though assessee had paid the fee or duties initially, but he had passed the burden to his purchaser and he himself has not suffered any loss or prejudice in fact. As decided in Dal Mill's case, the course of action taken wherein, has been affirmed by the recent Supreme Court decision in the case of State of M. P. v. Vyankatlal, merely because the assessee has paid the money, that by itself is no ground for directing payment to the assessee, if in fact the assessee has not paid out of his own pocket but ultimately passed it on to its purchaser.

Issues: Whether the principle of unjust enrichment by the assessee can be invoked in case of Excise duty. Whether the assessee is entitled to refund of Excise duty collected by the Department without authority of law.

Ratio Decidendi: The principle of "unjust enrichment" by the assessee can be invoked in case of Excise duty also. Excise duty is an indirect tax and generally it is passed to the buyer. The law is well settled that in a case where collection of duty or tax is ultimately found to be illegal and without jurisdiction, the Government cannot hold on to the same and the Government is bound to refund the same. Otherwise it would amount to "unjust enrichment" by the Deptt. However, the principles of "unjust enrichment" is to be applied not only against the Deptt. only but against the assessee also e. g. where though assessee had paid the fee or duties initially, but he had passed the burden to his purchaser and he himself has not suffered any loss or prejudice in fact. As decided in Dal Mill's case, the course of action taken wherein, has been affirmed by the recent Supreme Court decision in the case of State of M. P. v. Vyankatlal, merely because the assessee has paid the money, that by itself is no ground for directing payment to the assessee, if in fact the assessee has not paid out of his own pocket but ultimately passed it on to its purchaser.

Final Decision: The appeal is disposed of accordingly. Interim order if any is vacated. There will be no order as to costs. Liberty to apply.