TMI Blog1987 (4) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... industry came into being when yarn was arranged or assembled to form a warpsheet. Further, according to the petitioner, nylon and rayon yarn are liable to a duty of Central Excise under the Central Excises and Salt Act, 1944 (hereinafter referred to as the said Act). According to the petitioner, warpsheets being yarn and not any other commodity were not further excisable. Despite the aforesaid contention the excise authorities in West Bengal demanded Excise duty on such warpsheet on the ground that a nylon or rayon tyrecord warpsheet was a separate item of manufacture and liable to Central Excise under Item No. 68 of the First Schedule to the said Act. There is no dispute that for this period 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne the burden of the same but distributed it to its customers, no such return should be directed because that would amount to unjust enrichment by the writ petitioner. In support of this contention the following decision was relied on State of Madhya Pradesh v. Vyankatlal and Another reported in A.I.R. 1985 S.C. 901. It was submitted that, in any event, the Court shall not be inclined to direct such refund to the petitioners but that such refund should be directed in favour of the persons who had ultimately borne the burden. It was also sought to be contended in support of the Appeal that the claim of the petitioner is barred by delay and latches. The payment was made long time back between 24th March, 1975 and 28th June, 1976, whereas this writ petition was moved in August, 1984. ARGUMENTS :- On behalf of the Respondents : 5. Mr. Ginwalla appearing for the respondents at first referred to the decision of the Supreme Court in the case of Shiv Shankar Dal Mills, Etc. v. State of Haryana, reported in A.I.R. 1980 S.C. 1037 where certain directions were given for similar ground of "enrichment". On the question of delay he has referred to the facts of the case. Afterwards Mr. Gin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destination. The supply price was a little higher than the ex-factory price. The difference between the supply price and the ex-factory price was to be credited to Madhya Bharat Government Sugar Fund. The appellant made several demands on the respondents, the proprietors of the Jaora Sugar Mills, to credit such difference in the account of Madhya Bharat Government Sugar Fund and the respondents ultimately deposited Rs. 50,000/- under protest. On the 10th September, 1953 the respondents instituted a suit in the Court of Fifth Additional District Judge, Indore against the erstwhile State of Madhya Bharat for the refund of the sum of Rs. 50,000/- which the respondents had deposited towards Sugar Fund and Rs. 10,000/- towards interest at the rate of the aforesaid sum of Rs. 50,000/-. The suit continued against the newly formed State of Madhya Pradesh as provided by law. The Trial Court decided all the issues against the plaintiffs and consequently dismissed the suit. On appeal by the plaintiffs, the High Court set aside the judgment and decree of the Trial Court and decreed the suit for refund of Rs. 50,000/- deposited by the plaintiffs under protest and Rs. 10,000/- as interest thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the refund from the market committee. Section 23A 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 that has been done by the excessive levy by allowing to committees to retain the amount to be utilised hereinafter for the benefit of the very persons for whose benefit the marketing legislation was enacted." [para 13] 8. Under these circumstances the Supreme Court held as follows :- "The principles laid down in the aforesaid cases were based on the specific provisions in those a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, on the negative plea of 'alternative remedy' since the root principle of law married to justice is ubi jus ibi remedium. However the Supreme Court pointed out as follows :- "Another point. In our jurisdiction, social justice is a pervasive presence; and so, save in special situations it is fair to be guided by the strategy of equity by asking those who claim the service of the judicial process to embrace the basic rule of distributive justice, while moulding the relief by consenting to restore little sums, taken in little transactions, from little persons, to whom they belong." 10. It was further pointed out by the Supreme Court that the procedure adopted in the - Nawabganj Sugar Mills case might usually be adopted to the case before the Supreme Court. It was observed that Article 226 grants an extraordinary remedy which is essentially discretionary, although founded on legal injury. It was held that it was perfectly open for the Court exercising this flexible power to pass such order such as public interest dictates and equity projects. Accordingly the following directions were given :- "I. Subject to the directions given below, all the sums collected by the various marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be open to such parties to pursue their remedies for recovery for any sums that may be due to them. VIII. Eash State Marketing Board will deposit within 10 days from today a sum of Rs. 5,000/- before the Registrar for the preliminary expenses of publicity and other incidentals for the implementation of the directions given above. Any unexpended amount, at the end of one year, will be repaid to the respective State Marketing Board. IX. We further direct that the unclaimed amounts if any, shall be permitted to be used by the respective Marketing Committees for the purposes falling within the statute as interpreted by this Court in C.A. No. 1083/77." [para 6] 11. We shall now deal with the cases cited by Mr. Ginwalla appearing on behalf of the respondent. In the case of Khardah Company Ltd. v. Union of India, (ibid) it was held by a Division Bench of this Court that excess duty not paid through any inadvertance, error or misconstruction but under compulsion due to the assessing authorities demanding the higher rate of duty pending finalisation of the classification by the Government itself, was liable to refund being unauthorised in law, Rule 11 of the Central Excise Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasers and this fact does not alter the real nature of the tax which by express provision of law is cast upon the sellers". In the case of M/s. Chotabhai v. Union of India - A.I.R. 1962 S.C. 1006 the position in law in the case of excise levy was held to be the same. If the liability imposed is of the assessee alone and if the assesses is liable to pay irrespective of whether he can pass on the liability to his customers, for the very same reason he can demand refund of all unauthorised levy irrespective of whether he had actually borne the burden himself or not, unless the statute provides it otherwise. The answer to the objection raised by Mr. Banerjee is to be found in the observations of the Supreme Court in the case of D. Cawasji and Company v. State of Mysore - A.I.R. 1975 S.C. 813 = 1978 ELT (J 154) relied on by the Bombay High Court in its later decision, which though obiter appear to enunciate the true legal principle which follows from their earlier decisions referred to hereinbefore." [para 22] "However, it appears to be the consistent view of all Courts that all realisations made by the Government without authority of law must be re-imbursed. Supreme Court has recogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence is not available in the instant case but it may be presumed that though as a matter of law Excise duty is payable by the manufacturer as a matter of fact it is passed on to the consumers. But that in my opinion is no ground to invoke the theory of unjust enrichment. If unjust enrichment is not to be permitted to a litigant, it should not also be permitted to the State. The State has no right to collect unauthorised tax or illegal tax. Good fiscal administration enjoins that all lawful taxes should be properly collected and taxes which are not due if realised by the State should be refunded. Such fiscal administration alone ensures the atmosphere of tax compliance. But a question of limitation also arises in this case, quite apart from the question of Rule 11 which in my opinion is not applicable, in the facts and circumstances under which the claim for refund has arisen as was pointed out by the Division Bench of the Patna High Court in the case of Rohtas Industries v. Union of India - A.I.R. 1967 Patna 363." [para 33] 13. The third case relied upon by Mr. Ginwalla was the case of I.T.C. Ltd. v. M..K. Chipkar and Others (ibid) - 1985 (22) ELT 334 (Bom.). It is a Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned third Judge P.S. Shah. 14. On the question of unjust enrichment Shah, J. went in details into the facts of the case and held that as I.T.C. had an integrated price for its product which included Excise duty' payable in toto and not the specific amount of excise, it was not possible to uphold the contention of the Department that it would amount to unjust enrichment if refund was directed in its favour. In our opinion, having regard to such finding it was not necessary for the learned third Judge further to go into the broader question of law as to whether the principle of unjust enrichment by the assessee can at all be raised in respect of Excise duty collected by the Department without the authority of law. However, the learned Judge chose to go into the merits of such obstruct question of law and held ultimately that there was considerable substance in the contention urged by and on behalf of I.T.C. that the theory of "unjust enrichment" cannot be invoked in case of claim of excise refund recovered from the manufacturer without the authority of law. Accordingly Shah, J. concurred with the views of Lentin, J. and concurred with the final order proposed by Lentin, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into consideration by the learned third Judge of the Bombay High Court while delivering his judgment. We should point out further, as we have said earlier, in that case it was not necessary for the learned third Judge to go into the general question as to whether in the case of Excise duty, the principle of unjust enrichment applied or not, having regard to his finding that there being an integrated system or price, the question of unjust enrichment could not and did not arise. In the light of such finding it was not necessary for the learned third Judge to go into the broader principle of law in question. In any event, in our opinion though the State of M.P. v. Vyankatlal (ibid) was not a case of Excise duty, there is no reason why the principles laid down therein would not be equally applicable in respect of Excise duty also. Accordingly, we are unable to agree with the finding of the learned third Judge in the Bombay decision, which was merely an obiter dictum. 17. So far as the decision in Khardah Co. v. Union of India (ibid) -[1983 ELT 2159], is concerned, it may be pointed out that this case did not and could not consider the decision of the Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing directions :- I. The appellants are directed to refund the sum of Rs. 1,57,251.96 P. collected by them from the respondents in the following manner and subject to the following directions. Such sums are to be paid to the Receiver/Special Officer appointed by us by this order within a period of two months form this date. The Receiver/Special Officer shall hold the said amount subject to further order of this Court and shall deal with the same in the following manner :- We direct the amount to be deposited with the Receiver because if it is deposited with the Registrar, Original Side of this Court, that would involve deduction of some amount on account of commission. II. A statement of the amounts collected as Excise duty shall be prepared by the respondent giving all particulars including the names of the purchasers. A similar statement shall be prepared by the purchasers of the respondent. It is made clear that this relates to the goods in respect of which payments have been made between 24th March, 1975 and 9th May, 1975 being ad valorem duty amounting to Rs. 1,05,114.94 P. and payments made between 10th May, 1975 and 28th June, 1976 being Rs. 52,137.01 P. referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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