Indirect tax refund barred by unjust enrichment where the dealer passed the burden to purchasers and sought recovery from the State.

Refund of excess indirect tax is not automatic when a forfeiture or assessment order is set aside; the claimant must prove that the tax burden was not passed on and that the loss was actually borne by him. Where a dealer collected sales tax from purchasers, failed to identify them, and did not show any refund to them, the court refused refund and interest. Relief under Article 226 is discretionary and may be declined to avoid unjust enrichment at the expense of the public exchequer and where no larger public interest is served.

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Issues: Whether the petitioner was entitled to refund of excess sales tax collected from purchasers, with interest, after the appellate order set aside the forfeiture order, despite the tax burden having been passed on to customers and no proof of refund to those customers.

Analysis: The statutory scheme under the Andhra Pradesh General Sales Tax Act, 1957 prohibited collection of tax in excess of the tax payable and also provided for forfeiture of such excess collection. At the same time, the refund provisions were construed in the light of the doctrine against unjust enrichment. The Court held that refund of indirect tax is not automatic merely because an assessment or forfeiture order is set aside; the claimant must establish that the burden was not passed on to another person and that he has actually suffered the loss. On the facts, the petitioner had collected the tax from purchasers, had not identified the purchasers, and had not shown that the excess collection was refunded to them. The Court further held that relief under Article 226 of the Constitution of India is discretionary and should not be granted where it would enable unjust enrichment at the cost of the public exchequer and would not serve larger public interest.

Conclusion: The petitioner was not entitled to refund or interest, and the writ relief was declined.

Final Conclusion: In indirect tax matters, refund is denied where the tax incidence has been passed on and the claimant seeks to recover the same amount again from the State, especially where grant of relief would prejudice the public exchequer and serve no larger equitable or public interest.

Ratio Decidendi: A dealer who has passed on the burden of an indirect tax to purchasers cannot obtain refund from the State unless he proves that he has himself borne the tax; relief in writ jurisdiction may be refused to prevent unjust enrichment.

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