Refund claims must be reconsidered when unjust enrichment is a factual issue and prior directions are ignored

An administrative refund rejection was found unsustainable because it ignored an earlier binding direction requiring reconsideration of the claim in light of the industrial policy and the doctrine of unjust enrichment. The authority had wrongly treated the unit as ineligible on the basis of a pioneer-unit premise, instead of examining whether the tax burden had been passed on to dealers. As unjust enrichment was a factual issue requiring scrutiny of relevant documents, it could not be finally decided in writ proceedings. The order was set aside in effect and the refund application was directed to be reconsidered afresh after giving the petitioner an opportunity to place material.

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Issues: Whether the impugned order rejecting the petitioner's claim under the industrial policy and refund application suffered from non-application of mind and whether the refund claim had to be reconsidered in the light of the earlier binding direction and the doctrine of unjust enrichment.

Analysis: The earlier decision had already held that continuing units covered by the 1980 policy were entitled to the sales tax incentives under the 1989 policy, but it had also made refund conditional upon the petitioner establishing that the tax collected from dealers would not result in unjust enrichment. The question whether the burden of tax had in fact been passed on was treated as one of fact requiring scrutiny of relevant documents. The impugned administrative order did not address that direction and instead rejected the claim on an erroneous premise that the unit was not eligible as a pioneer unit. The Court held that the authorities had failed to apply their mind to the earlier direction and that the factual issue of unjust enrichment could not be finally adjudicated in writ proceedings.

Conclusion: The impugned order was set aside in effect, and the refund application was directed to be reconsidered afresh by the authorities after granting opportunity to the petitioner and examining the relevant material.

Ratio Decidendi: Where a refund claim depends on the factual issue of unjust enrichment and an earlier binding direction requires such issue to be examined on evidence, the administrative authority must consider the matter afresh in accordance with that direction and cannot reject the claim on an irrelevant or incomplete premise.

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