Unjust enrichment controls input-tax refunds where tax incidence was passed on, despite retrospective exemption notifications.

Refund of tax paid on raw material is barred by unjust enrichment where the incidence has been absorbed in manufacturing cost and passed on through product pricing. A retrospective exemption notification does not, by itself, entitle the assessee to refund; the claimant must prove from accounts and supporting material that the tax burden was not included in the sale price. The Tribunal's basis was found incorrect, and the assessing authority was required to re-examine both passing on of incidence and the scope of the notifications. The refund claim was therefore remitted for fresh consideration.

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Issues: Whether the assessee was entitled to refund of tax paid on raw material in view of the doctrine of unjust enrichment and the retrospective exemption notifications.

Analysis: The claim for refund could not be granted merely because the tax was paid voluntarily and a retrospective exemption was later relied upon. The decisive question was whether the tax paid on the raw material had been absorbed in the manufacturing cost and passed on to purchasers through the product price. Refund is barred where the incidence of tax has been passed on, and the burden lies on the assessee to establish otherwise by producing relevant accounts and material. The earlier basis adopted by the Tribunal was found to be incorrect, and the scope of the relevant notifications was also required to be examined by the assessing authority.

Conclusion: The assessee was not automatically entitled to refund. The matter had to be re-examined by the assessing authority on the question of passing on of tax incidence and the effect of the notifications.

Final Conclusion: The revisions were allowed, the orders of the Tribunal and the first appellate authority were set aside, and the refund claim was sent back for fresh consideration before the assessing authority.

Ratio Decidendi: Refund of tax paid on inputs is not permissible where the incidence of tax has been passed on to purchasers, and the claimant must prove that the burden was not included in the sale price.

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