Unjust enrichment in sales tax refunds turns on whether the tax burden was actually passed on to buyers.

Refund claims under the doctrine of unjust enrichment were to be tested only on whether the sales tax burden had been passed on. The record showed credit notes issued to dealers and distributors, stated to be inclusive of sales tax, and supported by books and documents that had already underpinned the earlier assessment orders allowing the discounts and refunds. The Joint Commissioner exceeded the limited remit by re-examining the authenticity of the credit notes and the discount scheme instead of deciding the transfer of tax incidence, and the verification material was not properly confronted to the petitioner. The documents supported the conclusion that the tax burden had not been shifted to buyers, and refund was therefore due.

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Issues: Whether the refund claims were liable to be rejected on the ground that the petitioner had passed on the sales tax burden to its distributors and dealers, attracting the doctrine of unjust enrichment.

Analysis: The refund was confined by the earlier direction to the single question whether the petitioner had passed on the tax burden. The record showed that the petitioner had issued credit notes to dealers and distributors, the credit notes stated that they were inclusive of sales tax, and the supporting books and documents had already formed the basis of the earlier assessment orders allowing the discounts and resulting refunds. The Joint Commissioner exceeded the limited remit by re-examining the authenticity of the credit notes and the discount scheme itself instead of deciding only whether the tax burden had in fact been passed on. The verification relied upon in the impugned order was not properly confronted to the petitioner, and the documents on record supported the conclusion that the tax incidence had not been shifted to the buyers.

Conclusion: The petitioner had not passed on the sales tax burden to its distributors and dealers, and was entitled to refund of the tax amounts.

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