Excess input tax refund must follow the statute; unjust enrichment and a proposed challenge cannot defer processing.

Section 10(5) of the Karnataka Value Added Tax Act was construed according to its plain terms: where input tax deductible by a dealer exceeds output tax payable, the excess must be adjusted or refunded with interest. The refund mechanism could not be postponed or denied on a plea of unjust enrichment, as that doctrine was treated as inapplicable to the statutory scheme. Refund applications also could not be kept in abeyance merely because the department intended to challenge an earlier binding Division Bench ruling. The earlier ruling was applied to confirm that sale of an exempt by-product does not defeat input tax benefit where the dealer manufactures only the taxable principal product.

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Issues: Whether the petitioners were entitled to refund of excess input tax rebate under section 10 of the Karnataka Value Added Tax Act, 2003, and whether the refund applications could be kept in abeyance on the ground that the State proposed to challenge the earlier Division Bench decision.

Analysis: The statutory language of section 10(5) was treated as clear and unambiguous: where input tax deductible by a dealer exceeds output tax payable, the excess is to be adjusted or refunded with interest. In a fiscal statute, the plain meaning controls and no words can be added or subtracted. The plea of unjust enrichment was rejected as inapplicable in the face of the statutory refund mechanism. The refund applications had been withheld only because the department intended to file an SLP against the earlier binding Division Bench ruling, which could not justify refusal or postponement of refund. The earlier ruling was applied to hold that sale of an exempt by-product does not defeat the entitlement to input tax benefit where the taxpayer manufactures only the taxable principal product.

Conclusion: The petitioners were entitled to refund processing and refund of the excess input tax claimed, and the State could not keep the applications in abeyance on the stated ground.

Ratio Decidendi: Where the statutory text expressly mandates refund of excess input tax, the refund cannot be denied or deferred by invoking unjust enrichment or by relying on an unfiled or proposed challenge to an existing binding precedent.

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