Refund follows the person who bore the tax burden; unjust enrichment cannot block restitution to the ultimate consumer.

Refund of excess tax was held payable to the person who ultimately bore the tax burden on inter-State diesel purchases for mining use. The court reasoned that the petitioners had paid the higher tax after denial of C forms, had borne the incidence of tax themselves, and were therefore entitled to direct refund from the Gujarat authorities despite the seller having deposited the amount. The doctrine of unjust enrichment did not apply because refund to the seller would have returned money to a party that had already recovered it from the petitioners, making any intermediary refund legally and practically untenable. The refund claim was to be processed in favour of the petitioners.

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Issues: (i) Whether the petitioners, who bore the tax burden on inter-State purchases of diesel for mining use, were entitled to direct refund from the Gujarat authorities despite the seller having deposited the tax. (ii) Whether the principle of unjust enrichment barred refund to the petitioners and required the refund to be processed only in the seller's hands.

Issue (i): Whether the petitioners, who bore the tax burden on inter-State purchases of diesel for mining use, were entitled to direct refund from the Gujarat authorities despite the seller having deposited the tax.

Analysis: The petitioners had been denied C forms by the Rajasthan authorities, resulting in payment of tax at the higher rate to the seller, who deposited the amount with the Gujarat authorities. The later directions of the Rajasthan High Court required issuance of C forms and refund of excess tax collected on account of the wrongful refusal. On the admitted facts, the petitioners were the ultimate consumers and had borne the incidence of tax. The stand that only the seller could claim refund was found inconsistent with the earlier judicial directions and with the factual position that the burden had already been passed on to the petitioners.

Conclusion: The petitioners were entitled to direct refund of the excess tax amount.

Issue (ii): Whether the principle of unjust enrichment barred refund to the petitioners and required the refund to be processed only in the seller's hands.

Analysis: Refund to the seller was found impermissible because the seller had already recovered the tax from the petitioners, and any refund to the seller would amount to unjust enrichment. The petitioners, having borne the tax themselves, were not seeking a windfall but restitution of the amount actually suffered by them. The suggested route of first refunding the seller and then passing the amount to the petitioners was held to be legally untenable and practically unworkable.

Conclusion: The principle of unjust enrichment did not bar refund to the petitioners, and the seller was not entitled to retain or claim the refund.

Final Conclusion: The refund claims were required to be processed in favour of the petitioners, and the authorities were directed to grant refund of the tax collected from them within the stipulated period.

Ratio Decidendi: Refund of tax must be granted to the person who ultimately bore the incidence of tax, and a claim by the intermediary or depositor is barred where it would result in unjust enrichment.

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