Input tax refund on job-work consumables denied where the tax burden was already recovered through processing charges.

Input tax refund on consumables used in job-work processing is not allowable where the value of those consumables has already been recovered through job-work charges, because a further refund would amount to unjust enrichment. The Karnataka HC noted that job-work charges may include not only labour but also the inputs necessary to finish the goods, and the claimant must place material showing the terms of the arrangement. On that basis, the Court found no legal error in revisional interference under section 64(1) where the appellate relief had been set aside.

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Issues: Whether the appellant was entitled to refund of input tax paid on consumables used in job-work processing, and whether the revisional order setting aside the appellate relief suffered from any legal error.

Analysis: The appellant did not place material to show the terms of the job-work arrangement. The Court held that where the amount payable for job work includes the cost of consumables used in processing, the claimant cannot seek refund of the input tax, as such a claim would amount to unjust enrichment. The Court further accepted that in job-work, the work done includes not only labour but also the inputs necessary for finishing the goods, and if their value has already been recovered in the job-work charges, no infirmity arises in the revisional interference under section 64(1).

Conclusion: The refund claim was not sustainable and the revisional order did not warrant interference.

Ratio Decidendi: A refund of input tax is not allowable where the tax incidence on consumables used in job work has already been recovered through the job-work charges, since permitting such refund would result in unjust enrichment.

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