Sahakari Khand Udyog Mandal Ltd. v. Commissioner Of Central Excise & Customs .

C.K Thakker, J.— Both these appeals arise out of a common order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, Western Regional Bench at Bombay (hereinafter referred to as “CEGAT”) on 1-6-1999 by which it confirmed the orders-in-original passed by the Assistant Collector, Central Excise, Valsad and affirmed by the Collector of Central Excise (Appeals), Ahmedabad.

2. Before dealing with the points raised by the parties in the present appeals, relevant facts of both the cases may be stated in brief. Civil Appeal No. 6832 of 1999 is filed by M/s Sahakari Khand Udyog Mandal Ltd. (“Mandal” for short). According to the Mandal, it is engaged in manufacturing sugar falling under sub-item (1) of Item 1 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as “the Act”). The appellant Mandal vide its letter dated 14-8-1978 addressed to the Range Forest Officer, Billimora, claimed rebate of Rs 6,92,779.59p. The refund was claimed on the basis of Notification No. 257/76 dated 30-9-1976. The notification was issued by the Government in exercise of the powers under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as “the Rules”). It inter alia provided for exemption from payment of excise duty leviable thereon in excess of average production of sugar of the corresponding period of preceding three years. The notification also provided that such exemption would be on sale of sugar as specified in columns 3 and 4 as levy sugar and free-sale sugar.

3. According to the appellant Mandal, the production of sugar by the Mandal during the preceding three years was as under:

1973-74 1,68,636 quintals 1974-75 1,65,308 quintals 1975-76 1,30,595 quintals

4. Thus, total production of three years was 4,64,539 quintals. The average production of three years for the periods of 1973-74, 1974-75 and 1975-76 was 1,54,846.33 quintals (4,64,539 ÷ 3). Since production of sugar for the year 1976-77 was 2,09,982 quintals, the appellant Mandal was entitled to benefit of exemption from octroi duty for excess production of 55,135.67 quintals. The appellant, therefore, submitted its claim for Rs 6,92,779.59p.

5. The Assistant Collector of Central Excise, by an order dated 29-3-1993, held the claim to be time-barred under Section 11-B of the Act as it was filed after six months. He also held that for an amount of Rs 1348.80p, the claimant was not entitled as the claim related to 48 kg of sugar which was reprocessed sugar and hence not permissible. Regarding the amount of Rs 6,92,779.59p., the Assistant Collector held that to get benefit of exemption, excess sugar was to be sold as levy sugar and free-sale sugar in the ratio of 65:35 respectively. The appellant claimed the amount as under:

Excess production Ratio of percentage Kind of sugar Rate per quintal Total rebate 1. 55,135.67 65% i.e 35,838.18 Levy 4.20 1,50,520.40 2. 55,135.67 35% i.e 19,297.48 Free-sale 28.10 5,42,259.19 Rs 6,92,779.59

6. On going through actual sale by the appellant, however, it was found that out of excess production of 55,135.67 quintals sugar, the Mandal had sold sugar as levy sugar and free-sale sugar as under:

42,133 quintals levy sugar × Rs 4.20 = 1,76,958.60 (rate of rebate) 13,003 quintals free-sale sugar × Rs 28.10 = 3,65,384.30 (rate of rebate) Total Rs 5,42,342.90

7. The claimant, therefore, according to the Assistant Collector, could not have claimed Rs 6,92,779.59p., but only Rs 5,42,342.90p. The Assistant Collector further observed that the claimant had already charged and collected the duty amount from its customers and as such it was not entitled to claim the said amount. He, therefore, transferred the amount to the Consumer Welfare Fund, set up by the Government of India.

8. Being aggrieved by the order passed by the Assistant Collector, the appellant preferred an appeal before the Collector of Central Excise (Appeals), Ahmedabad. Before the Appellate Authority, it was contended that the Assistant Collector had committed an error of law in holding the claim to be barred by time; there was an error on the part of the adjudicating authority in reducing the claim of Rs 1348.80p on the ground that the sugar was reprocessed goods and no rebate could be allowed; the working out of ratio of 65:35 of levy sugar and free-sale sugar had not been correctly applied and the Assistant Collector ought not to have reduced the claim. He also erred in not paying the amount to the Mandal. As the order passed by the Assistant Collector was contrary to law, it was liable to be set aside by ordering the respondent to pay the amount claimed by the appellant Mandal.

9. The Appellate Authority considered the submission regarding the claim of Rs 1348.80p and upheld it observing that in accordance with Notification No. 257/76, the claimant was entitled to the said amount and the order disallowing the claim was not proper and accordingly it was set aside. Regarding the claim being barred by limitation, it was observed that since the sugar year was over on 30-9-1976, the claim was required to be submitted within six months. But the claim was submitted on 14-8-1978, and hence, it was barred by limitation. It was contended by the Mandal that initially the claimant had claimed benefit of Notification No. 36 of 1976 but after the Directorate of Sugar informed the claimant on 19-7-1978 that the claim of the Mandal was liable to be rejected, it filed the present claim on 14-8-1978. The Appellate Authority, however, observed that the Assistant Collector could not go beyond the provision of law and when the time-limit had been prescribed under Section 11-B of the Act, the claim was rightly held to be time-barred.

10. Regarding non-payment of amount to the claimant, the Appellate Authority observed that the Assistant Collector was right in transferring the refund to the Consumer Welfare Fund. The claimant no doubt objected to invoking the doctrine of unjust enrichment under Section 11-B of the Act contending that the rebate was in the nature of incentive to the factories to encourage them to produce more sugar and such rebate was not intended to benefit the consumers. But it was observed that with the amendment of Section 11-B, the new provision would apply to all claims including those filed before the amendment. The Collector also observed that Notification No. 257/76 did not use the word “rebate” but provided for exemption from payment of duty on levy sugar and free-sale sugar at the rate specified in the Table appended thereto. Section 11-B provided for refund of excise duty in certain cases to the applicant under sub-section (2) of Section 11-B of the Act. Since the case in hand was not covered by the said provision as the Mandal had not paid the said amount, the Mandal could not get such amount. He, therefore, dismissed the appeals.

11. The aggrieved appellant approached CEGAT. Before CEGAT, the arguments advanced before the lower authorities were reiterated. CEGAT, however, confirmed the order passed by the Assistant Collector as well as by the Collector. According to CEGAT, the claim was “clearly barred by limitation”. CEGAT also observed that even if the claim was not barred by limitation, it would come within the judgment of this Court in Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536, (1997) 89 ELT 247. The appeal was accordingly dismissed.

12. In Civil Appeal No. 6833 of 1999, the appellant had claimed rebate of Rs 6,44,841 vide its letter dated 1-9-1978 lodged with the Range Forest Officer, Billimora. The rebate was claimed on the basis of Notification No. 108/78 dated 28-4-1978. Under the said notification, a sugar factory was entitled to exemption from excise duty on excess production of sugar for the corresponding period of the preceding three years. The notification also provided that such exemption would be on sale of sugar as specified in columns (3) and (4) as levy sugar and free-sale sugar. According to the Mandal, the production of sugar by the appellant Mandal for the preceding three years was as under:

1975 15,573 quintals 1976 Nil 1977 24,817 quintals Total 40,390 quintals 1978 45,845 quintals

13. According to the appellant, the average of earlier three years came to 13,466.67 quintals and hence the appellant was entitled to rebate on excess production of 32,378.33 quintals. The authority, however, held that since there was “nil” production of sugar by the appellant for one year (1976), as per the policy of the Government, the said year was required to be ignored. The authority, in the circumstances, held that average production of the appellant was 20,195 quintals (40,390 ÷ 2). On that basis, the appellant was entitled to claim rebate on the excess production of 25,650 quintals. The Assistant Collector also observed that ratio of levy sugar and free-sale sugar had to be maintained as 65:35.

14. The appellant ought to have sold levy sugar and free-sale sugar as under:

16,672.50 quintals × Rs 9.60 = Rs 1,60,056.00 8977.50 quintals × Rs 54.00 = Rs 4,84,785.00 Grand total Rs 6,44,841.00

15. The appellant, however, cleared levy sugar and free-sale sugar in the following ratio:

21,261 quintals × Rs 9.60 = Rs 2,04,105.60 4389 quintals × Rs 54.00 = Rs 2,37,006.00 Total = Rs 4,41,111.60

16. The appellant, therefore, could not claim Rs 6,44,841 but only Rs 4,41,111.60p. Taking note of the fact that the sugar factory had “already charged and collected duty amount from the customers to whom the free-sale sugar as well as levy sugar has been released”, the Assistant Collector held that under Section 11-B of the Act, the Mandal could not claim the said amount from the Government. He in the circumstances reduced the claim to Rs 4,44,111.60p. but transferred the amount to the Consumer Welfare Fund set up by the Government of India.

17. Being aggrieved by the said order passed by the Assistant Collector, the appellant preferred an appeal but the appeal was dismissed by the Collector of Customs. The aggrieved appellant then approached CEGAT as already noted earlier. CEGAT also dismissed the appeal. The common orders passed by CEGAT in both the matters have been challenged by the Mandal in the present appeals.

18. We have heard learned counsel for the parties. The learned counsel for the appellant Mandal contended that the authorities below committed an error of law in holding the claim of the appellant as time-barred. He also contended that the authorities were wrong in reducing the claim of the appellant in Civil Appeal No. 6833 of 1999 by improperly interpreting Notification No. 108/78 dated 28-4-1978 and in calculating the average production as per the said notification. According to the learned counsel, production of sugar by the appellant in three years was required to be divided in three years ignoring the fact that there was no production for one year. The appellant in that case would be entitled to benefit of excess production of 32,378.33 quintals and not 25,650 quintals. The counsel vehemently contended that the decision of the authorities on application of the doctrine of unjust enrichment was unwarranted and ill-founded and the ratio laid down in Mafatlal Industries Ltd. (1997) 5 SCC 536, (1997) 89 ELT 247 would not apply. According to the counsel, sub-section (2) of Section 11-B could not be invoked by the authorities and the appellant was entitled to rebate as claimed. It was submitted that the object of granting rebate was to encourage sugar factories to have more and more sugar production and it was intended to be given to factories and not to consumers. It was, therefore, not open to the authorities to take into account extraneous ground for refusing relief to the appellant. The amount hence could not have been diverted to the Consumer Welfare Fund set up by the Government of India but ought to have been given to the claimant. The counsel also submitted that there was an error on the part of the authorities in reducing the claim of the appellant on the ground of actual sale of sugar on quota fixed for levy sugar and free-sale sugar. Sugar was sold according to the policy of the Government and, hence, reduction of rebate was improper. He, therefore, submitted that both the appeals should be allowed with an appropriate direction to the respondent to pay the amount to the appellant Mandal.

19. Learned counsel for the respondent, on the other hand, supported the orders passed by the authorities. According to him, one claim was clearly barred by limitation. A finding of fact has been recorded that the claim was submitted after a period of six months. The authorities were, therefore, right in rejecting the claim. Regarding average production, the counsel submitted that clause 3 of Notification No. 108/78 is clear and it states that the average production for the period in the preceding three sugar years shall be worked out in which the factory has actually worked during the said period. The period for which it had not worked had to be ignored. He also submitted that the calculation of average was as per the policy of the Government and clause 3 of the notification and no grievance could be made against such an action. On merits, the counsel submitted that for claiming benefit of exemption of excess production of sugar, sale of sugar must be as per the policy of the Government for levy sugar and free-sale sugar. From the record, it is clear and a finding has been recorded by the authorities that sale of sugar was not in the ratio of 65:35 for levy sugar and free-sale sugar respectively and, hence, the benefit was calculated on the basis of actual sale of sugar and the action was legal, valid and proper. Regarding the grievance of the appellant of transferring the amount of exemption from octroi duty to the Consumer Welfare Fund, it was submitted that admittedly the appellant has not suffered. The octroi amount has been passed on to the customers and has already been recovered by the appellant. Hence, under sub-section (2) of Section 11-B of the Act, the Mandal cannot claim such amount. But even if it is assumed that Section 11-B has no application, on general principle also, the appellant has no right to claim such amount as it would result in “unjust enrichment” by the appellant. Hence, by not extending the said benefit, the authorities have committed no error of law. He, therefore, submitted that the appeals deserve to be dismissed.

20. Having heard learned counsel for the parties, in our opinion, the appellant is not entitled to any relief. On limitation, it is clear from the record that in Civil Appeal No. 6832 of 1999, the claim was in respect of the production for the year 1976-77. It related to a claim up to 30-9-1977 and the appellant ought to have filed the claim within six months i.e on or before 31-3-1978. Admittedly, the claim was submitted on 14-8-1978. It was, hence, rightly held to be barred by limitation.

21. Regarding average production of sugar for three years in Civil Appeal No. 6833 of 1999, in our opinion, the submission of the learned counsel for the respondent is well founded that the average production of two years had to be considered. Clause 3 of Notification No. 108/78 dated 28-4-1978 reads as under:

“3. Where during the period mentioned in column (1) of the said Table production in any of the preceding three sugar years was nil, the average production shall be determined as under—

The average production for the said period in the preceding three sugar years shall be worked out on the basis of the period or periods in which the factory had actually worked during the said period and the period or periods in which it did not work during the said period shall be ignored while arriving at the average.”

(emphasis supplied)

22. A similar question came up for consideration recently before us in Sidheshwar Sahakari Sakhar Karkhana Ltd. v. Union of India CA No. 5866 of 1999. In that case also, the appellant Karkhana did not produce any sugar for one year. The authorities, therefore, ignored the said year while calculating average production of the Karkhana. A grievance was made by the Karkhana that the action of the authorities was illegal and production of sugar ought to have been divided in three years ignoring non-production of one year. Interpreting the notification and the language used in clause 3 thereof, this Court negatived the contention and held that when there was no production by the Karkhana for one year, the said period was required to be ignored and was rightly ignored by the Government. In our opinion, the ratio laid down in the said case applies to the case in hand also and the action of the respondent cannot be held illegal or contrary to law.

23. It was then contended that the authorities were not right in reducing the amount of rebate on the basis of sale of levy sugar and free-sale sugar. According to the appellant Mandal, sugar was sold by the Mandal, the authorities were made aware of that fact, and nothing was suppressed. When the authorities were aware and yet no objection was taken by them at any time, it was not open to them to reduce the amount on the ground that sale of sugar by the appellant Mandal was not as per so-called policy of the Government of 65 per cent levy sugar and 35 per cent free-sale sugar. Reduction of amount on that ground was illegal and unlawful.

24. We are unable to uphold the argument. In our opinion, both the notifications are abundantly clear. The benefit under the said notifications can be claimed only if sugar is sold in the proportion of 65:35 levy sugar and free-sale sugar respectively. Since the appellant was claiming the benefit of exemption from excise duty, it was obligatory on the appellant Mandal to sell sugar in the ratio of 65:35 as specified in the notifications and unless that condition is fulfilled, the benefit of exemption from duty could not be claimed by it. On the basis of actual sale by the appellant, the respondent had calculated the amount of exemption from excise duty which was in consonance with the notifications and no grievance can be made by the appellant against that decision.

25. It was also argued that the authorities below could not have invoked the provisions of Section 11-B of the Act for denial of the benefit of notifications. Section 11-B was inserted in the Act by the Amendment Act of 1978 (Act 25 of 1978) with effect from 17-11-1980. It provided for refund of duties in certain cases of excess payment. The section was further amended by the Amendment Act of 1991 (Act 14 of 1991) with effect from 19-9-1991.

26. In Union of India v. Jain Spinners Ltd. (1992) 4 SCC 389 and in Union of India v. ITC Ltd. 1993 Supp (4) SCC 326 this Court held that so long as the refund proceedings are pending and not finalised, the amended provisions get attracted and may disentitle the manufacturer from claiming any refund contrary to the amended provisions. To put it differently, the provisions of Section 11-B as amended by the Amendment Act of 1991 would also apply to claims of refund which are pending. It was held that the court is bound to take notice of change in law governing refund and can call upon the manufacturer to furnish evidence to prove that the amount of duty of excise in relation to which refund was claimed was not passed on by him to customers.

27. In Mafatlal Industries Ltd. (1997) 5 SCC 536, (1997) 89 ELT 247 this Court reiterated the law laid down in Jain Spinners Ltd. (1992) 4 SCC 389 and ITC Ltd. 1993 Supp (4) SCC 326 Speaking for the majority, B.P Jeevan Reddy, J. observed that the court should have due regard to the legislative intent evidenced in the Act and must exercise jurisdiction consistent with the provisions of law.

28. The learned counsel for the appellant referred to a decision of this Court in Hindustan Metal Pressing Works v. CCE (2003) 3 SCC 559 and submitted that the principles contained in Section 11-B of the Act would not apply to past cases. It may, however, be stated that in that case, the proceedings were finalised, transaction was over and the amount was refunded to the assessee in 1989. In that fact situation, this Court held that past finalised transactions could not be reopened on the ground that refund was erroneously granted and there was unjust enrichment. The fact situation in the present case is totally different. The amount has been passed on to consumers and the claim is made by the Mandal to refund the amount. The ratio laid down in Hindustan Metal Pressing Works (2003) 3 SCC 559 therefore, does not help the appellant.

29. Finally, it was submitted that the doctrine of “unjust enrichment” has no application. The said doctrine, therefore, could not have been invoked by the authorities for denying the benefit of exemption from payment of excise duty and in refusing to pay the amount to which the appellant was held entitled by diverting it to the Consumer Welfare Fund set up by the Government.

30. We are not impressed by that argument also. In our view, the submission is not well founded and cannot be accepted.

31. Stated simply, “unjust enrichment” means retention of a benefit by a person that is unjust or inequitable. “Unjust enrichment” occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.

32. The doctrine of “unjust enrichment”, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of “unjust enrichment” arises where retention of a benefit is considered contrary to justice or against equity.

33. The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or the doctrine of restitution.

34. In the leading case of Fibrosa v. Fairbairn (1942) 2 All ER 122, 1943 AC 32 Lord Wright stated the principle thus: (All ER p. 135 H)

“[A]ny civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution.”

35. Lord Denning also stated in Nelson v. Larholt (1947) 2 All ER 751, (1948) 1 KB 339: (All ER p. 752 E-F)

“It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution if the justice of the case so requires.”

The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.

36. In Orient Paper Mills Ltd. v. State of Orissa (1962) 1 SCR 549, AIR 1961 SC 1438 this Court did not grant refund to a dealer since he had already passed on the burden to the purchaser. It was observed that it was open to the legislature to make a provision that an amount of illegal tax paid by the persons could be claimed only by them and not by the dealer and such restriction on the right of the dealer to obtain refund could lawfully be imposed in the interests of general public.

37. In Mulamchand v. State of M.P (1968) 3 SCR 214, AIR 1968 SC 1218 a contract was entered into between the plaintiff and the Government for removal of forest produce. The plaintiff deposited an amount of Rs 10,000 and collected forest produce. It, however, turned out that the provisions of Article 299 of the Constitution were not complied with and the contract was void. The plaintiff claimed refund of Rs 10,000.

38. Applying the provision of Section 70 of the Contract Act, 1872 and referring to Fibrosa (1942) 2 All ER 122, 1943 AC 32 and Nelson (1947) 2 All ER 751, (1948) 1 KB 339 this Court said: (SCR p. 223 A-B)

“It is well established that a person who seeks restitution has a duty to account to the defendant for what he has received in the transaction from which his right to restitution arises. In other words, an accounting by the plaintiff is a condition of restitution from the defendant.”

39. In Amar Nath Om Prakash v. State of Punjab (1985) 1 SCC 345, (1985) 2 SCR 72 Section 23-A of the Punjab Agricultural Produce Markets Act, 1961 enabled the market committees to retain the fee levied and collected by them from licensees in excess of the leviable amount if the burden of such fee was passed on by the licensees to purchasers. The validity of the said provision was challenged and refund was claimed. The Court, however, relying on Orient Paper Mills (1962) 1 SCR 549, AIR 1961 SC 1438 held that the consumer public who had borne the ultimate burden were the persons really entitled to refund and since the market committees represented their interests, they were entitled to retain the amount and the licensees who had levied and collected the amount from consumers could not claim the benefit. The Court said:

“The primary purpose of Section 23-A is seen on the face of it; it prevents the refund of licence fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who want to unjustly enrich themselves by obtaining the refund from the market committee, Section 23-A, in truth, recognises the consumer-public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore directs the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by ill-gotten gains, the legislature has devised a procedure to undo the wrong item that has been done by the excessive levy by allowing the committees to retain the amount to be utilised hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted.”

This Court held that the provision gave to the public through market committees what they had taken from the public and due to it. It rendered unto Caesar what was Caesar's.

40. The law laid down in Orient Paper Mills Ltd. (1962) 1 SCR 549, AIR 1961 SC 1438 and Amar Nath Om Prakash (1985) 1 SCC 345, (1985) 2 SCR 72 was quoted with approval by this Court in Mafatlal Industries Ltd. (1997) 5 SCC 536, (1997) 89 ELT 247

41. In Shiv Shankar Dal Mills v. State of Haryana (1980) 2 SCC 437 market fee was collected under the provision which was struck down by this Court in an earlier case. A prayer was, therefore, made by the traders to refund the amount collected from them. This Court held that though collection of market fee from the traders was illegal but traders could demand only such amount that had not passed on to the customers. For that view, the Court referred to Articles 38 and 39 of the Constitution as also discretionary nature of the power under Article 226 of the Constitution. Following Newabganj Sugar Mills Co. Ltd. v. Union of India (1976) 1 SCC 120, (1976) 1 SCR 803 the Court devised a scheme providing for refund of amounts to those from whom illegal collections had been made by traders.

42. In Mafatlal Industries Ltd. (1997) 5 SCC 536, (1997) 89 ELT 247 also, this Court held that refund of tax/duty wrongfully paid can be claimed on the basis of doctrine of equity and a person demanding such restitution must plead and prove that he had paid such tax/duty and had suffered loss/injury. The burden is on the petitioner to prove that the tax/duty paid by him is not passed on to customers or third party and that he is entitled to restitution.

43. A reference may also be made to a recent decision of the Constitution Bench in Godfrey Phillips India Ltd. v. State of U.P (2005) 2 SCC 515 In that case, constitutional validity of the Uttar Pradesh Tax on Luxuries Act, 1995 as also other State Acts was challenged inter alia on the ground of legislative competence of the State Legislatures. The Court allowed the petition and held that the State Legislatures were not competent to impose luxury tax on tobacco and tobacco products and the Acts were declared ultra vires and unconstitutional. In the intervening period, however, tax was collected by the appellants from consumers and also paid to the State Governments. In certain cases, interim relief was obtained by the appellants from this Court against recovery of tax and as alleged by the State Governments, the appellants continued to charge tax from consumers/customers.

44. In the circumstances, speaking through the Constitution Bench, one of us (Ruma Pal, J.), stated:

“[F]ollowing the principles in Somaiya Organics (India) Ltd. v. State of U.P (2001) 5 SCC 519 while striking down the impugned Acts we do not think it appropriate to allow any refund of taxes already paid under the impugned Acts. Bank guarantees if any furnished by the assessees will stand discharged.

It was stated on behalf of the State Governments that after obtaining interim orders from this Court against recovery of luxury tax, the appellants continued to charge such tax from consumers/customers. It is alleged that they did not pay such tax to respective State Governments. It was, therefore, submitted that if the appellants are allowed to retain the amounts collected by them towards luxury tax from consumers, it would amount to ‘unjust enrichment’ by them.

In our opinion, the submission is well founded and deserves to be upheld. If the appellants have collected any amount towards luxury tax from consumers/customers after obtaining interim orders from this Court, they will pay the said amounts to the respective State Governments.”

45. From the above discussion, it is clear that the doctrine of “unjust enrichment” is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11-B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11-B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in the absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner-appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.

46. In the present case, not only no such case has been made out by the appellant Mandal, the position is to the contrary. All the authorities below have expressly recorded a finding that the appellant Mandal has recovered the amount from consumers and as such excise duty is passed on to consumers/customers. In view of specific finding, in our opinion, the conclusion is inescapable that the appellant Mandal is not entitled to claim any amount. Allowing exemption or refund of amount would result in “unjust enrichment” by the appellant which cannot be permitted. In our opinion, therefore, even on that count, orders passed by the authorities and refusal to grant benefit cannot be held arbitrary, unreasonable or inequitable. The said ground also, therefore, has to be rejected.

47. For the foregoing reasons, both the appeals deserve to be dismissed and are accordingly dismissed. There shall be no order as to costs.