Case Summary: Mafatlal Industries Ltd. vs Union of India (1996)
📄 Citation: (1997) 5 SCC 536 | AIR 1996 SC 1125
🧑⚖️ Judges: A. M. Ahmadi (C.J.), S.C. Sen, S.C. Agrawal, K.S. Paripoornan, J.S. Verma, B.P. Jeevan Reddy, B.N. Kirpal, B.L. Hansaria, A.S. Anand
📅 Date of Decision: 19 December 1996
🏛️ Court: Supreme Court of India (Nine-Judge Bench)
📂 Case No: Civil Appeal No. 3255 of 1984
[Judgment Source] https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=299223
Law Points Raised
1. Whether a person who has paid excise/customs duty under a mistake of law can claim a refund under general law, or must necessarily do so under Section 11B of the Central Excises and Salt Act?
2. Whether the doctrine of unjust enrichment bars such refund claims?
3. Whether Article 265 of the Constitution is violated when tax is collected contrary to law?
4. Whether decisions in earlier cases (like Kanhaiyalal) on refund provisions still hold good post-amendments?
Ratio Decidendi
The Supreme Court held that all claims for refund of duties of excise or customs, whether based on constitutional or statutory grounds, must be made strictly under Section 11B of the Central Excises and Salt Act or corresponding provision in the Customs Act. The doctrine of unjust enrichment is applicable and forms a valid ground to deny refund unless the claimant can prove that the burden of duty was not passed on to another party. The Court overruled prior inconsistent decisions allowing direct refund claims under Article 226 without going through the refund mechanism laid down in the statute.
Final Ruling
1. Section 11B of the Central Excises and Salt Act, 1944 is a comprehensive provision governing all refund claims related to excise duties.
2. Refund claims must adhere to the statutory procedure and cannot bypass it by invoking writ jurisdiction directly.
3. The doctrine of unjust enrichment will apply to all such refunds unless the claimant proves otherwise.
4. Earlier rulings inconsistent with this view (e.g., Kanhaiyalal) were overruled.
Relevant Paragraph Numbers
🔹 Para 9–12: Background and legal history
🔹 Para 20–25: Discussion on Section 11B
🔹 Para 95–103: Concept of unjust enrichment
🔹 Para 144–147: Final conclusions and ruling
Summary
This landmark judgment settled the law on refund of indirect taxes in India. It affirmed that statutory refund procedures must be followed and constitutional remedies under Article 226 cannot override express legal provisions like Section 11B. By reinforcing the doctrine of unjust enrichment, the Court ensured that unjust refund claims are filtered, protecting public revenue. This ruling brought clarity and uniformity to tax refund jurisprudence and overturned earlier case law that allowed refunds through writs alone.
[Judgment Source] https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=299223