Declared goods taxed twice cannot be recovered from the buyer, and refund is not barred by unjust enrichment.

Declared goods such as iron and steel could not be subjected to tax at a second stage once they had already suffered tax on an earlier sale, and a dealer could not lawfully pass on a tax burden that was not payable on that turnover. On that basis, the tax recovered from the purchaser on resale was illegal and refundable. The doctrine of unjust enrichment did not defeat the claim because the raw material was consumed in manufacturing and was not sold as such, so the retained amount remained recoverable with interest.

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Issues: (i) Whether tax collected on resale of iron and steel, being declared goods already subjected to tax at the earlier stage, was recoverable from the purchaser and refundable to the petitioner. (ii) Whether the doctrine of unjust enrichment barred refund of the collected tax.

Issue (i): Whether tax collected on resale of iron and steel, being declared goods already subjected to tax at the earlier stage, was recoverable from the purchaser and refundable to the petitioner.

Analysis: Iron and steel were treated as declared goods. The statutory scheme restricted tax on such goods so that it could not exceed the prescribed rate and could not be levied at more than one stage. Since the goods had already suffered tax when sold by Steel Authority of India Ltd. to the respondents, the respondents could not lawfully recover tax again from the petitioner on the same goods. Section 8-A(2)(b) of the U.P. Trade Tax Act, 1948 permitted recovery only of tax payable by the selling dealer, and where no tax was payable on that turnover, the dealer could not pass on the burden to the buyer.

Conclusion: The collection of tax from the petitioner was illegal and the petitioner was entitled to refund.

Issue (ii): Whether the doctrine of unjust enrichment barred refund of the collected tax.

Analysis: The raw material purchased by the petitioner was consumed in manufacturing and was not sold as such. On that footing, the refund claim was not defeated by unjust enrichment. The amounts had been retained by the respondents and the petitioner remained entitled to restitution of the tax illegally collected.

Conclusion: The doctrine of unjust enrichment did not apply, and refund with interest was warranted in favour of the petitioner.

Final Conclusion: The petitioner succeeded in obtaining refund of the tax illegally recovered on the resale of declared goods, together with interest, and the writ petition was allowed.

Ratio Decidendi: Tax on declared goods cannot be recovered at a second stage when the goods have already suffered tax earlier, and a dealer cannot pass on tax that is not legally payable on the turnover.

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