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1998 Supreme(All) 1393
IN THE HIGH COURT OF ALLAHABAD
BEFORE THE HONble M. KATJU, J. , THE HONble S. L. SARAF, J.
VAM ORGANIC CHEMICALS LIMITED - Appellant
Versus
STATE OF UTTAR PRADESH - Respondents
CIVIL MISC. WRIT PETITION 679 Of 1992
Decided On : 12/10/1998
RAJESH KUMAR AGRAWAL
The principle of unjust enrichment can be extended to cases where the goods sold are not the original goods but manufactured from the original goods.
Headnote:
PURCHASE TAX - REFUND - UNJUST ENRICHMENT - PRINCIPLE EXTENDED TO CASES WHERE GOODS SOLD ARE NOT ORIGINAL GOODS BUT MANUFACTURED FROM ORIGINAL GOODS - REFUND GRANTED.
Fact of the Case:
Petitioner, Vam Organic Chemicals Ltd., sought a refund of purchase tax deposited under protest for the period 1986-87 to 1992-93. The Division Bench of the Allahabad High Court had earlier directed the petitioner to make a proper application for the refund, which was rejected by the authorities.
Finding of the Court:
The court held that the principle of unjust enrichment, as laid down by the Supreme Court in Mafatlal Industries Ltd. Etc. Etc. vs. Union of India Etc. Etc., can be extended to cases where the goods sold are not the original goods but manufactured from the original goods.
Issues: Whether the principle of unjust enrichment can be extended to cases where the goods sold are not the original goods but manufactured from the original goods.
Ratio Decidendi: The court relied on the Supreme Court's decision in Bhadrachalam Paperboards Ltd. and another vs. The Government of Andhra Pradesh and others, where the court held that the principle of unjust enrichment is not applicable to cases where the goods have not been sold as such and are instead captively consumed for manufacturing some other goods, and what is sold is the new products.
Final Decision: The court allowed the petitioner's application and directed the authorities to refund the amount within three months.
( 2 ) THIS is an application praying for refund of a certain amount being the amount of purchase tax deposited by the petitioner under protest for the period 1986-87 to 1992-93. This petition had earlier been heard and decided by a Division Bench of this court consisting of Honble Om Prakash J. and Honble S. L. Saraf ,jj, Since then honble Om Prakash J. has been transferred as Chief Justice if kerala, hence this application has been transferred to this court on nomination by Honble Chief Justice.
( 3 ) THE decision of the Division Bench is reported in 1997 U. P. T. C. 624 Vam Organic Chemicals Ltd. and another vs. State of U. P. and others. the controversy is regarding paragraph 18 of the aforesaid judgement which reads:
"so far as the refund of the amount of Rs. 1,02,34,845. 52 paise is concerned the petitioner company may make a proper application for the refund thereof to respondent No. 2 who will consider the same in the light of the observations made hereinabove. "
( 4 ) THE petitioner made an application for refund in the light of the above observation of the Division Bench and the said application has been rejected by order dated 5. 3. 1998,hence this application. The short question in this case is whether the principle of unjust enrichment Lald down by the Supreme Court in Mafatlal Industries ltd. Etc. Etc. vs. Union of India Etc. Etc. (1996 (11) Judgement today (S. C.) 283, can be commodity but a different commodity for which the original commodity is used as raw materials. In the present case the petitioner has alleged, and it is not disputed, that the petitioner captively consumed the industrial alcohol for manufacturing certain chemicals and hence what was sold by the petitioner was not alcohol but chemicals, which is a totally different commodity. The question , therefore, is whether the petitioner is entitled to refund?
( 5 ) LEARNED Additional Advocate - General has relied upon a division Bench decision of the Court in the case of Somaiya organics (India) Ltd. And another vs. The State of U. P. and another (Writ Petition No. 487 of 1997 decided on 24th August, 1990 ).
( 6 ) HE has Lald emphasis on the following observation:
"be that as it may, even if we assume, for the sake of argument that the said distillery is owned by the Somaiya Organics and that therefore, no sale can be envisaged between two factories owned by the same legal person, even so we are not inclined to direct refund of the purchase tax collected from the petitioner in exercise of our discretionary jurisdiction under Article 226 of the Constitution, in as much as we presume that the burden of the tax has been passed by the petitioner to the consumers. No statement is made petitioner to the petitioner that the amount of purchase tax was not included in the sale price of the product of the petitioner or that it was not collected from purchasers/consumers. "
( 7 ) THIS observation does go to support the contention of the learned additional Advocate General that the applicant must make a categorical assertion that the amount of purchase tax is not included in the price of goods sold by the petitioner.
( 8 ) LEARNED Additional Advocate -General also relied on an the observation of the Supreme Court in the case of Mafatlala Industries ltd. (Supra) in paragraph 110 (iii ).
( 9 ) HOWEVER, learned counsel for the applicant has relied on paragraph 9 of the decision of the Supreme Court in the case of bhadrachalam Paperboards Ltd. and another vs. The Government of andhra Pradesh and others Judgement Today 1998 (5) S. C. 314. in that decision the Supreme Court observed:
"we find that the High Court was not right in so presuming in the light of the case put forward by the Government pleader as extracted above. The appellants have reimbursed as tax liability which was on the Forest Department and the appellants have consumed the goods for manufacturing paperboards, etc. Therefore, the question fo appellants passing on t
