Refund of tax collected without authority of law may survive delay, but repayment depends on unjust enrichment and passing-on proof.

Refund of tax collected without authority of law was not defeated merely by laches where the claim was bona fide and no overriding third-party rights had intervened. The Tribunal also held that a writ refund claim under article 226, read with article 265 and section 72 of the Contract Act, remains subject to unjust enrichment: although the unsustainable levy was quashed and refund was entitled in principle, actual repayment required a factual inquiry on whether the tax burden had been passed on to others. The matter was remitted for that limited determination before refund could be granted.

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Issues: (i) whether the petitions for refund of purchase tax paid under a mistaken view of law could be rejected on the ground of laches and delay; (ii) whether the assessee was entitled to refund of tax collected without authority of law, and whether such refund depended on proof that the tax burden had not been passed on to others.

Issue (i): Whether the petitions for refund of purchase tax paid under a mistaken view of law could be rejected on the ground of laches and delay.

Analysis: The claim arose after the legal position on taxability of construction materials was clarified by the High Court, and the Tribunal applied the principles governing delay in writ refund claims. It held that delay is not a rigid bar in every case and must be judged on the facts, including whether rights of third parties have intervened and whether the claim is otherwise bona fide. The Tribunal also noted that where tax is said to have been collected without authority of law, the plea of laches cannot automatically defeat relief.

Conclusion: The petitions were not barred by laches.

Issue (ii): Whether the assessee was entitled to refund of tax collected without authority of law, and whether such refund depended on proof that the tax burden had not been passed on to others.

Analysis: The Tribunal applied the principles in refund jurisprudence under article 226 of the Constitution of India, article 265 of the Constitution of India, and section 72 of the Contract Act, 1872, including the rule against unjust enrichment. It accepted that the assessment orders were liable to be quashed because the levy under section 7-A was found unsustainable on the basis of the later legal declaration, but it also held that actual refund could be ordered only after examining whether the assessee had passed on the incidence of tax. That factual inquiry had to be made by the assessing authority before refund was directed.

Conclusion: The assessee was held entitled to refund in principle, but the grant of refund was made conditional on proof that the tax burden had not been passed on, and the matter was sent back for that determination.

Final Conclusion: The impugned assessments were quashed, the refund claim was upheld in principle, and the matter was remitted for a limited factual inquiry on passing on of the tax burden before refund could be granted.

Ratio Decidendi: In a refund claim based on tax collected without authority of law, writ relief is not barred merely by delay if the claim is otherwise bona fide, but actual refund cannot be ordered without examining unjust enrichment and whether the incidence of tax was passed on.

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