Inter-State electricity duty levy struck down; refund allowed only where the taxpayer bore the burden itself.

Section 4(4)(d) of the Tripura Electricity Duty Act, 2019 was held unconstitutional because a State cannot levy duty on inter-State sale of electricity where Parliament has exclusive power over inter-State supplies and the constitutional limits on State taxation remain in force after the GST amendments. The levy on inter-State electricity sales was therefore invalid. On refund, the doctrine of unjust enrichment applies: duty can be refunded only to the extent the claimant proves it bore the burden itself, and any portion passed on to purchasers or consumers cannot be refunded. Past collections were made refundable only after verification of actual incidence of duty.

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Issues: (i) Whether Section 4(4)(d) of the Tripura Electricity Duty Act, 2019, which levies duty on electricity sold outside the State, is beyond the legislative competence of the State legislature. (ii) Whether refund of electricity duty already collected is governed by the doctrine of unjust enrichment.

Issue (i): Whether Section 4(4)(d) of the Tripura Electricity Duty Act, 2019, which levies duty on electricity sold outside the State, is beyond the legislative competence of the State legislature.

Analysis: Electricity was treated as goods in the earlier constitutional scheme and the Supreme Court had held that a State could not levy duty on inter-State sale of electricity. The Court examined the effect of the GST-era constitutional amendments, including Article 246A, Article 269A, and the substituted Entry 54 of List II, together with the continued operation of Article 286 and the exclusive power of Parliament over inter-State supplies. It held that the entries in the Seventh Schedule are only fields of legislation and not sources of power, and that the constitutional limits on State taxation of inter-State transactions were not removed by the amendments. The Central GST and IGST regime already occupies the field of inter-State supply of electricity.

Conclusion: Section 4(4)(d) is unconstitutional and ultra vires the State legislature, and the levy on the petitioner's inter-State sale of electricity cannot stand.

Issue (ii): Whether refund of electricity duty already collected is governed by the doctrine of unjust enrichment.

Analysis: The Court held that refund of tax or duty can be granted only to the extent the claimant has borne the burden itself. If the burden has been passed on to purchasers or consumers, refund would result in unjust enrichment. The petitioner had stated that part of the duty had been passed on, so the factual extent of incidence had to be verified before refund could be ordered.

Conclusion: Refund is limited to the extent the petitioner proves that the duty burden was borne by it and not passed on.

Final Conclusion: The impugned levy on inter-State sale of electricity was struck down, future collection under the challenged provision was prohibited, and refund of past collections was made conditional upon verification of actual incidence of duty.

Ratio Decidendi: Even after the GST constitutional amendments, a State legislature cannot levy duty on inter-State sale of electricity where Parliament has exclusive power over inter-State supplies and the constitutional restrictions on State taxation continue to apply.

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