Allowing Refund Of Excess Octroi Duty Would Amount To ‘Unjust Enrichment’: Bombay HC Dismisses Colgate 's Plea
|The Bombay High Court has observed that allowing the refund of excess octroi duty when it was neither pleaded nor established that M/s Colgate has not passed on the burden of alleged excess octroi duty to millions of consumers, would result in unjust enrichment.
The Division Bench of Justice M.S. Sonak and Justice Kamal Khata observed, “In the present case, the Petitioner has neither pleaded nor established that the Petitioner has not passed on the burden of the alleged excess octroi collected by the BMC to its consumers. It is reasonable to assume that the Petitioner has already passed on such a burden to millions of its consumers. Accordingly, allowing any refund to the Petitioner would only unjustly enrich the Petitioner even though it is not established that the Petitioner has suffered any real loss or prejudice. This is a valid consideration for not ordering any refund even if this Court were to conclude that any excess octroi was collected from the Petitioner based upon any alleged misapplication or misinterpretation of the legal provision. In any event, even this alleged misapplication or misinterpretation issue is left open to be determined in appropriate proceedings.”
Advocate Jitendra Motwani appeared for the Petitioner whereas Drupad Patil appeared for the Respondents.
The Petition concerned the octroi duty paid by the Petitioner to the Respondent between April 1995 and March 2001. There was neither any record nor any clear averment in the Petition that the octroi duty for the said period was paid by the Petitioner “under protest” or “without prejudice” to the Petitioner’s rights to question the levy or to question the alleged overcharging.
The Court said, “There is no record of the Petitioner paying the demanded octroi duties under protest to the BMC. The octroi duties were paid without any protest or demur. It is reasonable to infer that the Petitioner has already passed on the burden of such octroi duties to its millions of consumers. Therefore, if the BMC, a public authority, is directed to refund the alleged excess octroi duty collected by it to the Petitioner, then the Petitioner would certainly be unjustly enriched. It is impossible to direct or enforce the direction for the Petitioner to return this amount to millions of its consumers. This is another consideration for declining to exercise our writ jurisdiction.”
The Court further added that the refund claimed can be allowed/decreed only when the Petitioner establishes that he has not passed on the burden of the duty or to the extent he has not passed on, as the case may be.
The Court heavily placed its reliance on the landmark judgment of the Constitution Bench in Mafatlal Industries Ltd. and others versus Union of India and ors. (1997 SC), which has observed that no person can seek to collect the duty from both ends. In other words, the person cannot collect the duty from the purchaser at one end and 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. The State represents the people of the country. No one can speak of the people being unjustly enriched.
“The doctrine of “unjust enrichment”, therefore, is that no person can be allowed to enrich himself inequitably at the expense of another. A right of recovery under the doctrine of “unjust enrichment” arises where retention of a benefit is considered contrary to justice or against equity. The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely quasi-contract or the doctrine of restitution. The “unjust enrichment” doctrine is based on equity and has been accepted and applied in several cases.”, the Court relied on Sahakari Khand Udyog Mandal Ltd. versus Commissioner of Central Excise & Customs (2005 SC).
Accordingly, the Court dismissed the Petition.
Cause Title: M/s. Colgate Palmolive (India) Ltd. v. Mumbai Mahanagar Palika and Anr. (Neutral Citation: 2024: BHC-OS:11009-DB)
Appearances:
Petitioner: Advocates Jitendra Motwani, Anusha Shah, and Ansh Agal.
Respondents: Advocates Drupad Patil, R. M. Hajare and Sunil Sonawane.