Court case(1997) 5 SCC 536

A large number of manufacturers claimed refunds of excise and customs duties that had been collected under provisions later held invalid or on a wrong interpretation of the law. The claims were resisted on the ground that the manufacturers had already recovered the duty from their buyers as part of the price, so that a refund would enrich them a second time. The questions were referred to a Bench of nine Judges.

The Court held, by majority, that claims for refund of duty must be made under and in accordance with the provisions of the taxing statute, and that the doctrine of unjust enrichment is a just and salutary principle: a claimant who has passed the burden of the tax on to others cannot recover it, because the loss is not his. Section 72 and the decision in Kanhaiya Lal (1959) do not confer an unqualified right to refund; equitable considerations, limitation and the passing on of the burden all bear on the claim. Where a levy is struck down as unconstitutional, a suit or writ may lie, but still subject to the rule against unjust enrichment.