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of <h1>High Court Orders Refund of Tax Overpaid, Emphasizes No Unjust Enrichment</h1> <h3>Udaipur Cement Works Ltd. Versus State Of Gujarat & 2 Other (s)</h3> Udaipur Cement Works Ltd. Versus State Of Gujarat & 2 Other (s) - 2020 (42) G.S.T.L. 167 (Guj.) Issues Involved:1. Refund of excess tax collected2. Issuance of C form declarations3. Applicability of CST Act post-GST regime4. Principle of unjust enrichment5. Compliance with Rajasthan High Court’s orderIssue-wise Detailed Analysis:1. Refund of Excess Tax Collected:The writ applicant, a Public Limited Company, sought a refund of Rs. 33,85,782 collected as tax by the seller (Reliance Industries Ltd.) and deposited with the respondent authorities under the CST Act. The authorities in Rajasthan refused to issue C form declarations post-GST regime, leading to the collection of tax at a higher rate (20%) instead of the concessional rate (2%). The Rajasthan High Court directed the issuance of C form declarations and refund of excess tax collected. The respondents argued that the refund could only be made to the seller after its assessment was concluded.2. Issuance of C Form Declarations:The Rajasthan authorities initially refused to issue C form declarations for diesel purchases post-GST regime, claiming the registration certificates were automatically canceled. This refusal led to the seller charging full tax. The Rajasthan High Court ruled that the authorities erred in refusing to issue C form declarations and directed them to issue the forms and refund any excess tax collected.3. Applicability of CST Act Post-GST Regime:Despite the introduction of the GST regime, certain commodities, including diesel, continued to be governed by the CST Act for inter-State transactions. The refusal to issue C form declarations was based on a misinterpretation that the GST regime nullified existing CST registrations.4. Principle of Unjust Enrichment:The court emphasized that the refund should be granted to the party bearing the ultimate tax burden to avoid unjust enrichment. The seller (Reliance Industries Ltd.) collected the tax from the petitioner and deposited it with the authorities. Since the petitioner bore the tax burden, they were entitled to the refund, not the seller. The court referred to previous judgments, including the Supreme Court’s ruling in State of M.P. v. Vyankatlal, which established that only the party bearing the ultimate burden is entitled to a refund.5. Compliance with Rajasthan High Court’s Order:The Rajasthan High Court had directed the authorities to issue C form declarations and refund the excess tax within twelve weeks of the refund claim. The Gujarat High Court reiterated this directive, emphasizing that the respondents must comply with the order and process the refund claims promptly. The court dismissed the respondents' argument that the refund could only be processed after the seller’s assessment, stating it would lead to unnecessary delays and potential unjust enrichment.Conclusion:The Gujarat High Court allowed the writ application, directing the respondents to process the refund claim of Rs. 33,85,782 collected from the petitioner and deposited by the seller within twelve weeks, in accordance with the law. The court emphasized that the refund should be granted to the petitioner, who bore the ultimate tax burden, and not to the seller, to avoid unjust enrichment.
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