2015 (10) TMI 1107 - HC - VAT and Sales Tax

High Court directs refund due to lack of unjust enrichment.

M/s. United Spirits Ltd. Versus State of Haryana and another

M/s. United Spirits Ltd. Versus State of Haryana and another - [2015] 83 VST 514 (P&H) Issues:Appeal against the order of Haryana Tax Tribunal for review under Section 41 of the Haryana General Sales Tax Act, 1973 - Justification of levying tax on selling dealer and appellant for the same transaction - Tribunal's rejection based on unjust enrichment.Analysis:1. The appeals were filed against the Haryana Tax Tribunal's order rejecting the appellant's review application under Section 41 of the Haryana General Sales Tax Act, 1973. The key question raised was whether the Tribunal was justified in rejecting the appellant's claim on the grounds of unjust enrichment. The Tribunal's decision was based on the presumption that the appellant had factored the tax element into the price of alcohol sold to consumers, leading to the rejection of the review application.2. The appellant, a liquor manufacturer, purchased ethyl alcohol from M/s. Haryana Organics. Ethyl alcohol was taxable under the Act, while liquor was not taxable during the relevant assessment year. M/s. Haryana Organics issued certificates stating that the rate of spirit supplied included sales tax and other levies. Despite this, the appellant was assessed to purchase tax as neither the appellant nor M/s. Haryana Organics had paid the tax. The Tribunal upheld the levy of purchase tax on the appellant, considering them the last purchaser of taxable goods for manufacturing non-taxable goods.3. The Tribunal, after M/s. Haryana Organics became entitled to exemption, admitted the review application and concluded that the appellant was no longer liable to pay tax. However, the review was rejected on the grounds of unjust enrichment, assuming that the appellant had included the tax element in the selling price. The High Court found this reasoning flawed, emphasizing that the appellant had deposited the tax amount with the authorities as a condition for appeal, making them out of pocket. The Court highlighted that even if the tax was not paid, there was no evidence that the appellant had recovered it from consumers.4. The High Court held that there was no basis for unjust enrichment in either scenario. Therefore, the appeals were allowed, and the respondents were directed to refund the amount within 12 weeks. The judgment clarified that the appellant would be entitled to a refund regardless of whether the tax was paid or not, as there was no evidence of unjust enrichment in either case.This detailed analysis of the judgment provides insights into the legal issues, factual background, Tribunal's decision, and the High Court's reasoning, ultimately leading to the allowance of the appeals and the direction for refund of the amount by the respondents.