Res judicata and unjust enrichment in indirect tax: fresh notice survived, but refund failed without proof of duty burden not passed on.

In quasi-judicial tax proceedings, res judicata does not bar a fresh show cause notice where it proceeds on an alleged subsequent change in the factual sales pattern, because earlier adjudication binds only the facts already examined. The notice here could therefore not be quashed at the threshold and the changed mode of sale had to be addressed in reply proceedings. On refund, indirect tax relief remains subject to unjust enrichment, so the claimant must prove that the duty burden was not passed on to buyers, even if payment was made under protest. As that burden was not established, refund was not granted and the applications were to be decided in accordance with law.

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Issues: (i) whether the show cause notice could be quashed on the ground that the valuation issue and the nature of sales had already attained finality and were barred by res judicata; (ii) whether the refund claim could be granted without proof that the excise duty burden had not been passed on.

Issue (i): Whether the show cause notice could be quashed on the ground that the valuation issue and the nature of sales had already attained finality and were barred by res judicata.

Analysis: The earlier adjudication and appellate orders, including the tribunal finding on retail sales, had concluded the controversy only on the factual pattern then examined. The impugned notice specifically alleged that the selling pattern had subsequently changed and sought adjudication on that later factual basis. A prior decision can operate as res judicata in quasi-judicial tax proceedings, but not where the later proceeding is founded on a different factual situation. Since the notice alleged a change in the mode of sale after the earlier orders, the bar of res judicata was not attracted at the threshold.

Conclusion: The show cause notice was not liable to be quashed on the ground of res judicata, and the issue of changed sales pattern had to be decided in reply proceedings.

Issue (ii): Whether the refund claim could be granted without proof that the excise duty burden had not been passed on.

Analysis: Refund of indirect tax is governed by the statutory refund mechanism and is subject to the doctrine of unjust enrichment. Even where duty was paid under protest, the claimant must establish that the burden was not passed on to buyers. On the material before the Court, that requirement was not established, and the refund applications themselves remained pending for decision under law.

Conclusion: The refund relief was not granted, and the refund applications were directed to be decided expeditiously in accordance with law.

Final Conclusion: The petition failed as the notice could not be interdicted on res judicata grounds and the refund claim was not established on the principle governing indirect tax refunds.

Ratio Decidendi: Res judicata does not bar a tax show cause notice where it proceeds on an alleged subsequent change in the material facts, and refund of indirect tax cannot be ordered unless the claimant proves that the duty incidence was not passed on.

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