TDS refund on works contract payments cannot be denied for unjust enrichment where non-liability is already accepted

Tax deducted at source on works contract payments, treated under the statute as tax paid on the dealer's behalf, could not be refused as a refund on unjust enrichment where the assessment had already accepted the assessee's non-liability and the T.D.S. certificate. Section 29-A did not apply because the dealer had not wrongly realised tax from another person, and the post-assessment enquiry was limited to verifying deposit of the deducted amount in the Government treasury under the rules. The refusal of refund was therefore unsustainable, and refund with statutory interest was upheld subject to treasury verification.

---

---

Issues: (i) whether the claim for refund of tax deducted at source from the works contract payments was barred by the doctrine of unjust enrichment; (ii) whether the refund could be refused under Section 29-A of the U.P. Trade Tax Act, 1948 after the assessment order had already accepted the assessee's non-liability and directed refund on verification of the T.D.S. certificate.

Issue (i): whether the claim for refund of tax deducted at source from the works contract payments was barred by the doctrine of unjust enrichment.

Analysis: Tax was deducted at source under Section 8-D of the U.P. Trade Tax Act, 1948 on payments for works contract. The deduction was treated by the Act as payment of tax on behalf of the dealer, and the T.D.S. certificate was produced before the Assessing Officer. In the assessment proceedings, the books of account and the T.D.S. certificate were accepted and a finding was recorded that the assessee was not exigible to trade tax for the job work carried out. On that footing, the doctrine of unjust enrichment, which applies where a person seeks refund after having passed on the tax burden to another, had no application to the present situation where the levy itself had been found not payable and the deduction had been made at source under the statutory mechanism.

Conclusion: The refund claim was not barred by unjust enrichment and was maintainable in favour of the assessee.

Issue (ii): whether the refund could be refused under Section 29-A of the U.P. Trade Tax Act, 1948 after the assessment order had already accepted the assessee's non-liability and directed refund on verification of the T.D.S. certificate.

Analysis: Section 29 of the U.P. Trade Tax Act, 1948 governs refund of excess tax and Section 29(4), which embodies a rule against refund unless passing on of burden is disproved, was held to be prospective and inapplicable to the assessment years in question. Section 29-A applies only where a dealer has wrongly realised tax from another person, which was not the factual situation here. The only permissible verification after assessment was whether the amount mentioned in the T.D.S. certificate had been deposited in the Government treasury, as contemplated by Rule 90 of the U.P. Trade Tax Rules, 1948. The subsequent attempt to re-open the issue of tax liability and impose a burden of proof on the assessee was beyond jurisdiction.

Conclusion: The impugned refusal of refund under Section 29-A was unsustainable and was quashed.

Final Conclusion: The assessee was entitled to refund of the tax deducted at source with statutory interest, subject only to verification that the deducted amount had been deposited in the Government account.

Ratio Decidendi: Where tax is deducted at source under a statutory mechanism and the assessment order has already accepted the dealer's non-liability, refund cannot be denied by invoking unjust enrichment or by reappraising the tax burden beyond the limited verification of deposit and certificate compliance prescribed by the statute and rules.

---