Tax-variation clauses override firm-price treatment, requiring excise-duty reductions to benefit the purchaser and preventing supplier unjust enrichment.

Contract clauses requiring quoted rates to include taxes and duties, while reimbursing statutory tax variations on actuals, governed despite the firm-price condition. Read as a whole, the arrangement placed the tax component on the purchaser: tax increases were reimbursable to the supplier and tax reductions correspondingly benefited the purchaser. Section 64-A of the Sale of Goods Act applied absent a contrary contractual intention. Allowing the supplier to retain excise-duty savings without any change in cost or agreed profit would cause unjust enrichment. Accordingly, the reduced excise-duty benefit was payable to the purchaser, not refundable to the contractor.

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Issues: Whether the contractor was entitled to refund of the amount deducted following a reduction in excise duty despite the agreed firm contract price.

Analysis: The work orders incorporated the tender documents and the contract agreement, under which quoted rates included taxes and duties and statutory variations in taxes and duties were reimbursable on actuals. The firm-price condition was construed with the incorporated tax-variation clauses as a whole. Section 64-A of the Sale of Goods Act, 1930 applies unless the contract manifests a different intention. The contractual arrangement showed that the tax component was to be borne by the purchaser: an increase would be reimbursed to the supplier, while a reduction correspondingly benefited the purchaser. Retention of the savings from reduced excise duty by the supplier, without any change in its costs or agreed profit, would result in unjust enrichment.

Conclusion: The contractor was not entitled to refund of the deduction arising from the reduction in excise duty; the benefit of the reduced tax was payable to the respondent.

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