1991 (12) TMI 69 - HC - Central Excise

Refund - Unjust enrichment - Meaning of - Indirect taxes collected without authority of law - Interpretation of statute - Discrimination

Issues Involved:

1. Refund of excise duty paid under mistake of law.
2. Limitation period for claiming refund under Section 11B of the Central Excises and Salt Act, 1944.
3. Court's power under Article 226 of the Constitution of India to grant refund beyond the limitation period.
4. Requirement to prove loss or injury for restitution under Section 72 of the Indian Contract Act.
5. Principle of unjust enrichment and its applicability.
6. Verification of conditions for exemption under Notification No. 208 of 1969.

Detailed Analysis:

1. Refund of Excise Duty Paid Under Mistake of Law:

The petitioner claimed a refund of Rs. 15,32,134.08 for excise duty paid from July 1, 1982, to January 27, 1985, arguing that the duty was paid under a mistake of law. The petitioner contended that the products should have been classified under Tariff Item No. 15AA instead of Tariff Item No. 68. The Chemical Analyser's report in November 1985 confirmed the products fell under Tariff Item No. 15AA, making them liable for a different rate of excise duty. The petitioner applied for reclassification and refund based on this reclassification.

2. Limitation Period for Claiming Refund under Section 11B of the Central Excises and Salt Act, 1944:

The Assistant Collector allowed the refund claim for Rs. 2,08,434.00 for the period from July 3, 1985, to December 13, 1985, but rejected the claim for the period from January 28, 1985, to July 2, 1985, citing the limitation period under Section 11B of the Act. The petitioner argued that approaching the authorities for refund beyond the six-month limitation period would be futile, referencing the Supreme Court's decisions in Miles India Limited and Doaba Co-op. Sugar Mills, which held that claims for refunds must adhere to the statutory limitation period.

3. Court's Power under Article 226 of the Constitution of India to Grant Refund Beyond the Limitation Period:

The petitioner urged the High Court to exercise its power under Article 226 to direct the refund of excise duty beyond the limitation period, citing various High Court decisions where such discretion was exercised. However, the Court held that Article 226 provides an extraordinary remedy for enforcing fundamental rights and legal duties, and the petitioner must prove a legal right to claim the refund. The Court emphasized that the petitioner had not demonstrated any legal right to the refund or any corresponding duty on the State to refund the amount.

4. Requirement to Prove Loss or Injury for Restitution under Section 72 of the Indian Contract Act:

The Court referred to the provisions of Section 72 of the Indian Contract Act, which deals with liability for money paid under mistake or coercion. It cited previous judgments that required the claimant to prove loss or injury to claim restitution. The Court noted that the petitioner had not pleaded or proved any loss or injury suffered, nor had it shown that the burden of tax was not passed on to others.

5. Principle of Unjust Enrichment and Its Applicability:

The Court discussed the principle of unjust enrichment, which requires proving that the defendant was enriched at the plaintiff's expense and that retaining the enrichment would be unjust. The Court found no evidence that the petitioner had suffered any injury or that the State had been enriched at the petitioner's expense. The Court also noted that the petitioner had not established that retaining the tax amount by the State would be unjust.

6. Verification of Conditions for Exemption under Notification No. 208 of 1969:

The petitioner claimed entitlement to exemption under Notification No. 208 of 1969, which required specific conditions to be met. The Court held that without prior verification and satisfaction of these conditions before the removal of goods, the petitioner could not claim the exemption. The Court referenced the Supreme Court's decision in Indian Aluminium Company Limited, which emphasized the necessity of filing declarations for verification purposes. The Court concluded that the petitioner's failure to satisfy these conditions disentitled it from claiming the exemption.

Conclusion:

The High Court rejected the petition, holding that the petitioner had not established any legal right to claim the refund, had not proved any loss or injury, and had not met the conditions for exemption. The Court emphasized that exercising discretion under Article 226 to grant the refund would be contrary to constitutional principles and would unjustly enrich the petitioner. The rule was discharged, and the petition was dismissed.

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