Case Law Details
Torrent Power Ltd. Vs Union of India & Anr. (Gujarat High Court)
Amount paid towards ocean freight to be refunded to petitioner who will pay to consumer who suffered burden of tax
Gujarat High Court held that amount paid (IGST and service tax) towards ocean freight which is held unconstitutional is liable to be refunded to Torrent Power (Petitioner) and ultimately petitioner is directed to refund the same to consumers who have suffered the burden of tax.
Facts- The petitioner is engaged in the generation and distribution of power was duly granted electricity distribution license under the Electricity Act, 2003. The petitioner had imported natural gas from outside the Country which is used in generation of power and some miscellaneous items for use in the course of the business on CIF (Cost Insurance and Freight) basis. While importing the goods, the petitioner filed bill of entry for home consumption and at the time of clearance of the goods for home consumption, the petitioner paid customs duty, countervailing duty (CVD) and other applicable duty on total value of the goods i.e. the CIF value.
The category of supply of service as mentioned in the Entry No.10 of the Notification No.10 of 2017-IGST (Rate) dated 28th June, 2017 fastens the liability upon the petitioner to pay the IGST on reverse charge basis for the services supplied by the person located in non-taxable territory by way of transportation of goods by a vessel from the place outside India up to the customs station of clearance in India.
This Court by Judgment and Order in case of Mohit Minerals Private Limited versus Union of India reported in (2020) 74 GSTR 134 strucked down Entry No.10 of the Notification No.10 of 2017 dated 28th June, 2017 as being ultra-vires the provisions of the IGST Act as well as being unconstitutional.
After pronouncement of the Judgment of this Court, the petitioner stopped paying IGST on ocean freight in respect of the CIF contracts and also claimed the refund of the IGST already paid on the ocean freight on the basis of the said Judgment.
The respondent No.3-Assistant Commissioner of Central Goods and Services Tax issued a show-cause notice dated 17th September, 2021 to the petitioner proposing to reject such refund on ground that refund cannot be granted by the Authority u/s. 54 of the GST Act in case of a statutory provision being declared unconstitutional by this Court.
Later, petitioner filed on-line refund application before the respondent-Authority on 28th September, 2022. A show-cause notice dated 10.11.2022 was issued proposing to partially reject the refund claim on the ground that the burden of such amount had been passed on to the consumers and therefore, the petitioner was not entitled to the refund and the amount was proposed to be transferred to the consumer welfare fund u/s. 57 of the GST Act.
Conclusion- The consumers of the petitioner have suffered the real loss who can claim the refund of the amount of the IGST and the Service Tax paid by the petitioner, however, such persons are now being represented by the petitioner as a custodian of its consumer and the methodology by which the petitioner has come forward by keeping the amount of refund in a seperate bank account to be considered as a revenue in the tarrif determination by the Gujarat Electricity Board as per the provisions of the Electricity Act, 2003, it cannot be said that it is not possible to refund the amount to such consumers for one or other reason. Therefore, it would not be just and appropriate that the respondent-Authorities can retain the amount of refund by transferring the same to the Consumer Welfare Fund.
Held that when the consumers of the petitioners, who are classed by itself have suffered the burden of the tax which is passed on by the petitioner by incorporating such burden in the tarrif, the same class of consumers are required to receive the benefit of the refund by treating the same as a part of the revenue of the petitioner for tarrif determination by the Gujarat Electricity Regulatory Commission in the tarrif order which may be passed.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned Senior Advocate Mr.Saurabh Soparkar with learned advocate Mr.Uchit N. Sheth for the petitioner and learned advocate Mr.Siddharth H. Dave for the respondents.
2. Rule, returnable forthwith. Learned advocate Mr.Siddharth Dave waives service of notice of rule for and on behalf of the respondents.
3. Special Civil Application No.1659 of 2024 is filed with the following prayers:
“A. This Hon’ble Court may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside appeal order dated 17.10.2023 (annexed at Annexure A) as well as order passed by the adjudicating authority (annexed at Annexure Q) to the extent it directs transfer of refund amount to the consumer welfare fund;
B. This Hon ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith grant refund of the amount of IGST of Rs. 19,28,86,868 permitting the Petitioner to offer the same as revenue for the purpose of determination of tariff by GERC under the Electricity Act, 2003.”
4. Special Civil Application No.13655 of 2024 is containing the following prayers :
“A. This Hon’ble Court may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside order dated 18.7.2024 (annexed at Annexure A) to the extent it directs transfer of refund amount to the consumer welfare fund as being wholly without jurisdiction, arbitrary and illegal;
B. This Hon’ble Court may be pleased to issue a writ of 13 mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith grant refund of the amount of service tax of Rs.4,72,03,838 permitting the
Petitioner to offer the same as revenue for the purpose of determination of tariff by GERC under the Electricity Act, 2003.”
5. Having regard to the controversy in narrow compass, with the consent of the learned advocates for the respective parties, both the petitions are taken up for hearing as they are containing the same facts under different Acts pertaining to the refund of the amount paid towards ocean freight which is held to be unconstitutional by the Hon’ble Supreme Court in case of Union of India Versus Mohit Minerals Private Limited reported in (2022) 10 SCC 700.
6.1. The factual matrix of the case of Special Civil Application No. 1659 of 2024 is that the petitioner who is engaged in the generation and distribution of power was duly granted electricity distribution license under the Electricity Act, 2003 in the Cities of Ahmedabad, Surat, Gandhinagar, Dahej SEZ and Dholera having electricity distribution franchisee for other parts of the country is also registered under the provisions of the Central/Gujarat Goods and Services Tax Act, 2017 (for short ‘the GST Act’).
6.2. The petitioner had imported natural gas from outside the Country which is used in generation of power and some miscellanious items for use in the course of the business on CIF (Cost Insurance and Freight) basis.
6.3. While importing the goods, the petitioner filed bill of entry for home consumption and at the time of clearance of the goods for home consumption, the petitioner paid customs duty, countervailing duty (CVD) and other applicable duty on total value of the goods i.e. the CIF value.
6.4. Section 5(3) of the Integrated Goods and Service Tax Act, 2017 (for short ‘the IGST Act’) empowers the Government to specify the categories of supply of goods or services or both the tax on which shall be paid on reverse charge basis by the recipient of such goods and services.
6.5. The category of supply of service as mentioned in the Entry No.10 of the Notification No.10 of 2017-IGST (Rate) dated 28th June, 2017 fastens the liability upon the petitioner to pay the IGST on reverse charge basis for the services supplied by the person located in non-taxable territory by way of transportation of goods by a vessel from the place outside India up to the customs station of clearance in India.
6.6. This Court by Judgment and Order in case of Mohit Minerals Private Limited versus Union of India reported in (2020) 74 GSTR 134 strucked down Entry No.10 of the Notification No.10 of 2017 dated 28th June, 2017 as being ultra-vires the provisions of the IGST Act as well as being unconstitutional.
6.7. After pronouncement of the Judgment of this Court, the petitioner stopped paying IGST on ocean freight in respect of the CIF contracts and also claimed the refund of the IGST already paid on the ocean freight on the basis of the said Judgment.
6.8. A Chartered Accountant Certificate was also attached with the application of refund wherein, the IGST amount recovered from the Customers through inclusion in tarrif and the IGST amount borne by the petitioner was tabulated and segregated.
6.9. The respondent No.3-Assistant Commissioner of Central Goods and Services Tax isued a show-cause notice dated 17th September, 2021 to the petitioner proposing to reject such refund on ground that refund cannot be granted by the Authority under Section 54 of the GST Act in case of a statutory provision being declared unconstitutional by this Court. By order dated 13.10.2021, the refund application was rejected by the respondent No.3 on the ground that respondent No.3 having no jurisdiction to grant such sanction being outside the purview of Section 54 of the GST Act.
6.10. The petitioner therefore, preferred Special Civil Application No.2603 of 2022 before this Court seeking refund of IGST paid on ocean freight on 21.01.2022. In the meantime, the Judgment of this Court in case of Mohit Minerals Private Limited (Supra) was affirmed by the Hon’ble Supreme Court in case of Union of India and Another versus Mohit Minerals Private Limited reported in (2022) 10 Supreme Court Cases 700 on 19.05.2022.
6.11. This Court allowed the Special Civil Application No.2603 of 2022 filed by the petitioner by order dated 04.08.2022 directing the respondents to consider the application for refund filed by the petitioner favourably after verifying the same and grant the refund to the petitioner.
6.12. Pursuant to the order of this Court, petitioner filed on-line refund application before the respondent-Authority on 28th September, 2022.
6.13. In response to such application, a show-cause notice dated 10.11.2022 was issued proposing to partially reject the refund claim on the ground that the burden of such amount had been passed on to the consumers and therefore, the petitioner was not entitled to the refund and the amount was proposed to be transferred to the consumer welfare fund under Section 57 of the GST Act.
6.14. The petitioner filed reply dated 17.11.2022 to the show-cause notice contending that the tax had been collected from consumers through the tariff mechanism and the refund would also be passed on to the consumers through such mechanism and therefore, the question of unjust enrichment would not arise.
6.15. However, the Adjudicating Authority rejected the reply of the petitioner without assigning any reason to the same and by order dated 29.11.2022, transferred the amount of refund which was collected through tariff mechanism to consumer welfare fund.
6.16. Being aggrieved, the petitioner preferred an Appeal before the respondent No.2 who by order dated 17.10.2023 confirmed the partial refund rejection on the ground of unjust enrichment and confirmed the order of transfer of refund amount to consumer welfare fund by relying upon Section 54 of the GST Act. Being aggrieved, the petitioner has preferred the Special Civil Application No.1659 of 2024.
7.1. Special Civil Application No.13655 of 2024 is preferred by the petitioner on the similar facts, however, there the ocean freight was liable to pay subjected to the service tax and the petitioner was paid the service tax on such ocean freight service under provisions of the Finance Act, 1994 and the refund application of the petitioner was rejected on the ground that the respondent-Authorities have no jurisdiction to consider such refund under Section 11B of the Central Excise Act, 1944 as applicable to the Finance Act, 1994.
7.2. The respondent-Authorities rejected the levy of contention of the petitioner that petitioner is entitled to the refund of the service tax paid by it on reverse charge mechanism as such tax has been held to be unconstitutional and without authority in view of the aforesaid decision of this Court and being without authority of law and in violation of Article 225 of the Constitution of India.
7.3. The petitioner challenged the order of rejection of the refund claimed by preferring Special Civil Application 2748 of 2022 before this Court which was allowed by Judgment and order dated 25.04.2024 directing the respondent to grant refund to the petitioner.
7.4. Pursuant to the order passed by this Court, the petitioner preferred an application dated 27.05.2024 for refund of the service tax paid on imports, however, the same was rejected by the impugned Order-in-Original dated 18.07.2024 though the same was ordered to be transferred to Consumer Welfare Fund.
7.5. The petitioner has therefore preferred the Special Civil Application No.13655 of 2024 without preferring an Appeal in view of the pendency of the Special Civil Application No.1659 of 2024 before this Court in the similar issue.
8. This Court passed the following order on 04.09.2024 in Special Civil Application No.1659 of 2024 :
“Learned advocate Mr. Siddharth Dave for the respondent No.3 prays for time to take instructions with regard to additional affidavit filed by the petitioner for depositing the amount of refund in separate account and not utilizing the same till such refund amount is recognized by the Gujarat Energy Regulatory Commission (GERC) as part of the revenue to determine the tariff so as to see that the amount of refund is passed on to the consumers of the petitioner and no unjust enrichment is made by the petitioner.
Stand over to 11th September 2024. Direct service through Email is permitted ”
9. The petitioner thereafter filed the affidavit affirmed by the signatury of the petitioner on 2nd September, 2023 allowing the Resoluton of the petitioner-Company which reads as under :
1. I am conversant with the facts of the present writ petition, and I am competent as well as authorized to file the present affidavit. I hereby state that the Petitioner will open a separate designated bank account in a Scheduled bank and the refund of Rs. 19,28,86,868, if and when disbursed by the Respondents in Doul respect of tax paid on ocean freight under the Integrated Goods and Services Tax Act, 2017, will be immediately transferred to such separate designated bank account.
2. I further state and submit that the Petitioner will not utilize the amount credited in the separate designated bank account as mentioned in the preceding paragraph till such amount is offered as well as accepted as revenue for the purpose of 314 determination of tariff by Gujarat Energy Regulatory Commission under the Electricity Act, 2003.
3. The Petitioner undertakes to return such amount to the Respondents if, for any reason, it is not accepted as revenue for the purpose of determination of tariff by Gujarat Energy Regulatory Commission under the Electricity Act, 2003.
4. The Resolution of the Committee of Directors of the Petitioner has passed resolution to the aforestated effect. Copy of Committee of Director’s resolution is annexed herewith and marked as Annexure A1.”
10.1. Learned Senior Advocate Mr.Saurabh Soparkar submitted that by inadvertent error in the Board Resolution as well as in the affidavit affirmed on 2nd September, 2024, instead of Gujarat Electricity Regulatory Commission, the name of Gujarat Energy Regulatory Commission is stated which does not exist. It was further submitted that the corrected affidavit and the Board resolution shall be placed on record within a period of three days from today.
10.2. Learned Senior Advocate Mr.Saurabh Soparkar for the petitioner, in view of the affidavit filed by the petitioner on 2nd September, 2023 submitted that the petitioner is not interested in keeping the amount of refund of IGST and Service Tax which can be paid to the petitioner so as to pass on the same to the consumers from whom the same is recovered by adjusting the electricity tarrif to be determined by the Gujarat Electricity Regulatory Commission under the provisions of the Electricity Act, 2003. It was further submitted that the petitioner has also undertaken to return the amount to the respondents if for any reason the amount of refund is not accepted as revenue to be considered as a part of the tariff computation by the Gujarat Electricity Regulatory Committee.
10.3. Learned Senior Advocate Mr.Saurabh Soparkar submitted that transferring the amount of refund to the Consumer Welfare Fund would be contrary to the decision of the Hon’ble Apex Court in case of Mafatlal Industries Limited versus Union of India reported in (1997) 5 SCC 536 wherein, the Constitution Bench of the Hon’ble Supreme Court of India has held that in case where the refund is claimed on the ground that the provisions of the Act under which it was levied has been held to be unconstitutional then such a claim is only maintainable by virtue of declaration containing Article 265 of the Constitution of India and accordingly, the petitioner had preferred a Writ Petition before this Court which was allowed.
10.4. It was therefore submitted that the respondent-Authority could not have granted the refund and ordered to deposit the same with the Consumer Welfare Fund by referring to the provisions of Section 57 of the GST Act, more particularly, when the petitioner is conscious about the principle of unjust enrichment and accordingly, the affidavit is filed before this Court stating that the petitioner shall not get any benefit from the refund amount and the same shall be passed on to the consumer by considering the same as a part of the revenue for determination of the tarrif before the Gujarat Electricity Regulatory Commission.
10.5. It was further submitted that it is therefore possible to refund the amount to the consumer who have borne the burden of the service tax and IGST which was passed on by the petitioner by adjusting the refund into the tarrif to be determined by the Gujarat Electricity Regulatory Commission and the petitioner has also undertaken not to utilise such amount till the same is passed on to the consumer.
11.1. On the other hand, learned advocate Mr.Siddharth Dave for the respondents submitted that it is a settled legal position that before claiming the amount of refund, the petitioner is required to show that the petitioner has paid the amount for which the refund is sought or such amount is not passed on as burden on the consumers and if such relief is not granted, the petitioner would suffer the loss. In support of his submissions, reliance was placed on the decision of the Hon’ble Supreme Court in case of Sahakari Khand Udyog Mandal Limited versus Commissioner of Central Excise & Customs reported in (2005) 3 SCC 738.
11.2. It was submitted that the Hon’ble Supreme Court in the case of Sahakari Khand Udyog Mandal Limited (Supra) has held as under:
“31. Stated simply, ‘Unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. `Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.
36. In Orient Paper Mills Ltd. v. State of Orissa, [1962] 1 SCR 549, this Court did not grant refund to a dealer since he had already passed on the burden to the purchaser. It was observed that it was open to the Legislature to make a provision that an amount of illegal tax paid by the persons could be claimed only by them and not by the dealer and such restriction on the right of the dealer to obtain refund could lawfully be imposed in the interests of general public.
45. From the above discussion, it is clear that the doctrine of `unjust enrichment’ is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.
46. In the present case, not only no such case has been made out by the appellant-Mandal, the position is just contrary. All the authorities below have expressly recorded a finding that the appellant-Mandal has recovered the amount from consumers and as such excise duty is passed on to consumers/customers. In view of specific finding, in our opinion, the conclusion is inescapable that the appellant-Mandal is not entitled to claim any amount.
Allowing exemption or refund of amount would result in `unjust enrichment’ by the appellant which cannot be permitted. In our opinion, therefore, even on that count, orders passed by the authorities and refusal to grant benefit cannot be held arbitrary, unreasonable or inequitable. The said ground also, therefore, has to be rejected.”
11.3. Referring to the above decision of the Hon’ble Supreme Court, it was submitted that the petitioner is not entitled to the refund unless and untill the twin conditions are fulfilled by the petitioner to the effect that the amount which is collected by the petitioner from its consumer is returned before claiming the refund or the petitioner has not passed on the burden of the tax which is collected from the petitioner to the consumers.
11.4. Reliance was also placed on paragraph No.108 of the observations made by the Hon’ble Supreme Court in case of Mafatlal Industries Limited (Supra) which reads as under:
“108. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax duty is claimed on the ground that it has been collected from the petitioner/plaintiff – whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter – by mis-interpreting or mis- applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Actor by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 and of this Court under Article 32 cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11-B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11-B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute “law” within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties imposed thereunder. Section 11-B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and give effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal – which is not a departmental organ – but to this Court, which is a civil court.
(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way or a suit or by way of a writ petition. This principle is, however, subject to an exception : where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be reopened on the basis of a decision on another person’s case; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it.
Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of Subsection (1) of Section 17 of the limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. It other words, a claim of this nature is not contemplated by the said enactments and is outside their purview.
(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.
The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to’ the State. State represents the people of the country. No one can speak of the people being unjustly enriched.”
11.5. Referring to the above directions, it was submitted that the petitioner is not entitled to the refund claimed otherwise the petitioner would have the unjust enrichment of the said amount at this stage. It was therefore submitted that the respondent-Authorities have rightly ordered to transfer such refund amount to Consumer Welfare Fund by resorting to Section 57 of the GST Act.
11.6. Learned advocate Mr.Siddharth Dave for the respondents further referred to and relied upon the additional affidavit-in-reply filed on behalf of the respondent No.3 wherein, the respondent No.3 has referred to the Scheme of the Consumer Welfare Fund by referring to a Notification No.21 of 2018 dated 18th April, 2018 wherein, Rule 97 of the GST Rules was substituted which pertains to the Consumer Welfare Fund as referred to in Section 57 of the GST Act.
11.7. It was submitted that the substituted Rule 97 of the GST Rules provides a mechanism for application of the amount to be deposited in the Consumer Welfare Fund. Reference was also made to the order No.3/2018-Central Tax dated 16th August, 2018 for constitution of the Standing Committee under Sub-rule (4) of Rule 97 of the GST Rules. Learned advocate Mr.Siddharth Dave also referred to and relied upon the Consumer Welfare Funds Guidelines, 2023 issued by the Department of Consumer Affairs Ministry of Consumer Affairs, Food and Public Distribution, Government of India, whereby, the over all objective of the Consumer Fund is to provide Financial Assistance to promote and protect the Consumers and strengthen the Consumer Movement in the Country.
11.8. It was therefore submitted that the respondent-Authorities have rightly transferred the refund amount to the Consumer Welfare Fund to which the petitioner is not otherwise entitiled to in view of the principle of unjust enrichment, so as to utilise the same for the benefit of the consumers at large as per the available guidelines and statute.
11.9. Learned advocate Mr.Siddharth Dave therefore submitted that no interference is required to be made at this stage by evolving a new methodology of granting refund to the petitioner by permitting the petitioner to retain the amount of refund till the same is adjusted in the tarrif by the Gujarat Electricity Regulatory Commission as it would amount to payment of refund to the petitioner resulting into unjust enrichment at this stage till the amount is adjusted in the Electricity Tarrif.
12. Considering the rival submissions made by the learned advocates of both the sides and in view of the facts of the case, it is undisputed fact that the petitioner is entitled to the refund of both IGST and Service Tax paid by the petitioner on the ocean freight in view of the decision of this Court in case of Mohit Minerals Private Limited (Supra) which is affirmed by the Hon’ble Supreme Court and in view of the orders passed by this Court in the Writ Petitions filed by the petitioner for refund of such amount which was collected by the respondent-Authorities under Notification No.10 of 2017 which was held to be unconstitutional.
13. It is true that the petitioner has passed on the burden of both IGST and Service Tax upon the consumers by including the same in the tarrif determination by the Gujarat Electricity Regulatory Commission, however, at the same time, the petitioner has also filed an affidavit before this Court stating as under :
“1. I am conversant with the facts of the present writ petition and I am competent as well as authorized to file the present affidavit.
2. I say and submit that there were inadvertent typographical errors in the additional affidavit affirmed on 2.9.2024 and filed before this Hon. Court and therefore the present corrected affidavit is being filed in supersession of the earlier additional affidavit affirmed on 2.9.2024.
3. I hereby state that the Petitioner will open a separate designated bank account in a Scheduled bank and the refund of Rs. 19,28,86,868, if and when disbursed by the Respondents in respect of tax paid on ocean freight under the Integrated Goods and Services Tax Act, 2017, will be immediately transferred to such separate designated bank account.
4. I further state and submit that the Petitioner will not utilize the amount credited in the separate designated bank account as mentioned in the preceding paragraph till such amount is offered as well as accepted as revenue for the purpose of determination of tariff by Gujarat Electricity Regulatory Commission under the Electricity Act, 2003.
5. The Petitioner undertakes to return such amount to the Respondents if, for any reason, it is not accepted as revenue for the purpose of determination of tariff by Gujarat Electricity Regulatory Commission under the Electricity Act, 2003.
6. The Committee of Directors of the Petitioner has passed resolution to the aforestated effect. Copy of Committee of Director’s resolution is annexed herewith and marked as Annexure A2.”
14. Considering the averments made in the affidavit together with the Board Resolution of the petitioner-Company, it is amply clear that the petitioner is not at all interested in having unjust enrichment over the amount of refund and the petitioner is to refund the same to the consumers who have borne the loss of such amount of tax which was passed on by the petitioner by including the same in the tarrif charged by it.
15. It would be therefore appropriate to reiterate what is directed by the Hon’ble Supreme Court in the aforesaid decision of the Mafatlal Industries Limited (Supra) as under :
“The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.”
16. Applying the above test to the facts of the case, the consumers of the petitioner have suffered the real loss who can claim the refund of the amount of the IGST and the Service Tax paid by the petitioner, however, such persons are now being represented by the petitioner as a custodian of its consumer and the methodology by which the petitioner has come forward by keeping the amount of refund in a seperate bank account to be considered as a revenue in the tarrif determination by the Gujarat Electricity Board as per the provisions of the Electricity Act, 2003, it cannot be said that it is not possible to refund the amount to such consumers for one or other reason. Therefore, it would not be just and appropriate that the respondent-Authorities can retain the amount of refund by transferring the same to the Consumer Welfare Fund.
17. We are of the opinion that when the consumers of the petitioners, who are classed by itself have suffered the burden of the tax which is passed on by the petitioner by incorporating such burden in the tarrif, the same class of consumers are required to receive the benefit of the refund by treating the same as a part of the revenue of the petitioner for tarrif determination by the Gujarat Electricity Regulatory Commission in the tarrif order which may be passed.
18. The contention on behalf of the respondents that before claiming the refund by the petitioner, the same is required to be refunded to the consumers or the petitioner ought not to have passed the burden to the consumers in view of the decision of the Hon’ble Apex Court in case of Sahakari Khand Udyog Mandal Limited (Supra), the aforesaid methodology in our opinion, is in consonance with the guidelines given by the Constitutional Bench of the Hon’ble Apex Court in case of Mafatlal Industries Limited (Supra) as it would be possible for the consumers of the petitioners to get the benefit of the loss borne by it regarding the tax which is collected by the petitioner to be paid to the respondents under the Notification No.10 of 2017 which is held to be unconstitutional later on.
19. We therefore, propose to pass the following order during pendency of this petition.
(i) the impugned orders passed by the respondent-Authorities, so far as it relates to transfer of the amount of refund of Rs.19 Crores and 4 Crores to the Consumer Welfare Fund, are hereby quashed and set aside.
(ii) The respondent-Authorities are directed to refund the aforesaid amount to the petitioner within a period of two weeks from the date of receipt of the copy of this order.
(iii) On receipt of the aforesaid amount, the petitioner shall deposit the same in the Separate Bank Account as per the affidavit of undertaking filed by the petitioner.
(iv) On deposit of such amount in the separate Bank account, the petitioner shall convert the same into a fixed deposit, initially for a period of six months which can be renewed from time to time till the Gujarat Electricity Regulatory Commission determines the tarrif for the next year for the petitioner-Company.
(v) The Gujarat Electricity Regulatory Commission shall consider the aforesaid amount of refund as a part of revenue as per the provisions of the Electricity Act, 2003 and the Rules framed thereunder, for determination of the tarrif of the petitioner-Company.
(vi) After determination of the tarrif of the petitioner-Company, the petitioner shall file a report before this Court for compliance and permission of this Court.
(vi) On receipt of the amount, the petitioner shall file an undertaking before this Court in terms of the affidavit which is already filed.
20. In view of the above, the petition is adjourned for compliance of the aforesaid directions with a liberty to both the sides to file an appropriate application for hearing of this matter and the Registry is directed not to list this matter by auto generate list date till such application is filed.
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