M/S. Bajrang Bali Roller Flour Mills And Anr. vs. The State Of Assam And 5 Ors
Original PDF →Facts
The petitioners, M/s. Bajrang Bali Roller Flour Mills and another, challenged the levy and collection of cess by the respondent authorities under the Assam Agricultural Produce Market Act, 1972, post the Goods and Services Tax (GST) regime. The petitioner operates a manufacturing unit and brings goods from outside Assam for manufacturing purposes, asserting that they neither buy nor sell goods in the market, and therefore, no cess should be levied. They sought a direction for the refund of the cess amount allegedly collected illegally. The respondents include the State of Assam and various agricultural marketing boards and committees.
Held
The Court held that the levy and collection of cess by the respondent Board and Market Committees after the notification of the GST regime (specifically, after 28.06.2017 and 29.06.2017) were unconstitutional and ultra vires the provisions of the CGST Act, 2017 and AGST Act, 2017. This was based on the premise that the cess was subsumed by the GST. However, the Court declined to grant a refund of the cess amount collected from the petitioner. This decision was based on the principle of unjust enrichment, as the petitioner had not made specific pleadings or provided evidence to demonstrate that the burden of the cess was not passed on to their customers. The Court also considered the financial position of the respondent Board, deeming it inexpedient to direct restitution, as it would hamper the Board's functioning. The ratio decidendi is that while the levy of cess post-GST is illegal, a refund is contingent upon proving that the burden was not passed on, and in cases where the respondent's financial health is precarious, restitution may not be directed.
Key Issues
1. Whether the levy and collection of cess by the respondent authorities under the Assam Agricultural Produce Market Act, 1972, post the GST regime, is unconstitutional and ultra vires the provisions of the CGST Act, 2017 and AGST Act, 2017? Petitioner's contention: The petitioner argued that the cess collection is illegal as they are a manufacturing unit bringing goods for production and not engaged in buying or selling within a market area, thus not falling under the purview of the Act. They relied on previous judgments of the High Court dealing with similar issues post-GST. Revenue's contention: The judgment does not explicitly record arguments from the revenue side regarding the illegality of the cess. However, the court's decision on refund is based on the petitioner's failure to plead and prove that the burden of cess was not passed on to customers, referencing the doctrine of unjust enrichment and Supreme Court judgments.
Sections Cited
Section 72 of the Contract Act, Section 11-B of the Act (mentioned in context of unjust enrichment)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R
Date :
2025
.
Heard Ms. N. Hawelia, learned counsel for the petitioners. Also heard Mr. N.J. Gogoi, learned standing counsel for the respondent Assam State Agricultural Marketing Board authorities.
Challenge made in this writ petition is to the levy and collection of cess by the respondent authorities under the provisions of the Assam Agricultural
Page No.# 3/7 Produce Market Act, 1972, post GST regime. The petitioner has prayed for a direction to the respondent authorities to refund the cess amount, which has been wrongfully and illegally collected from the petitioner.
The case of the petitioner is that the respondent authorities have collected agriculture produce marketing cess from the petitioner, while bringing goods in the State of Assam. The petitioner is a manufacturing unit bringing goods from outside the State for manufacture. The petitioner neither buys nor sells goods in the market. Thereby no cess can be levied from the petitioner as the cess is levied on the buying and selling of goods in a market area.
It is submitted at the bar that the coordinate Bench of this Court has decided the similar issue in the case of M/s. Bhatter Traders and another vs. State of Assam, reported in (2023) 118 GSTR 470, and order dated 09.02.2024 in the batch of Writ Petitions leading being WP(C) No.4727/2018 (Eastern Roller
Perused the judgment and order in M/s. Bhatter Traders (Supra) and the order dated 09.02.204, in the batch of Writ Petitions leading being WP(C) No.4727/2018 (Eastern Roller Flour Mills (P) Ltd. vs. State of Assam and others) are reproduced herein under:
“2. The petitioners in the instant batch of writ petitions challenged the levy and collection of cess by the respondent authorities under the provisions of Assam Agricultural Produce Market Act, 1972 post GST regime and further for direction upon the respondent authorities to refund the cess amount which have been wrongfully and illegally collected from the petitioners.
In the said judgment, this Court had categorically held that the levy of cess by the respondent Board
Page No.# 4/7 of the Market Committees after the notification issued by the Central Government bearing Notification No.12/2017-Central Government (Rate) dated 28.06.2017 as well as the Notification bearing No.FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department, Government of Assam have come into effect was unconstitutional as well as ultra vires the provision of the CGST Act, 2017 and AGST Act, 2017. 4. This Court further dealt with the question as to whether the petitioners therein would be entitled to the refund of the amount of the cess collected illegally by the respondent Board and the Market Committees.
This Court opined that on the ground that there were no specific pleadings made in the instant writ petitions that the goods which have been brought for re-sale, the burden of cess were not passed on to the customers of the petitioners, the question of the amount collected from the petitioners as cess during the period from 01.07.2017 to 12.06.2020 to be refunded to the petitioners do not arise.
In that regard, this Court finds it relevant to refer to paragraph Nos.22 and 27 to 31 of the said judgment, i.e. Bhatter Traders and Another (supra) which are quoted herein under:-
The law if applied to the facts of the present cases would make the exemption so granted by the notification No.12/2017-Central Government (Rate) dated 28.06.2017 issued by the Government of India, Ministry of Finance, Department of Revenue at Sl. No.54 and the notification No.FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department of the Government of Assam at Sl. No.54 in respect to service by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale and purchase of agricultural produce pre-supposes that the cess which was collected by virtue of the hereinunder:- “33. We are passing this order keeping in view the peculiar situation as in either event it was cinema-goers who had lost a huge amount. It would be travesty of justice if the owners of the cinema theatre become eligible to appropriate such a huge amount for Page No.# 5/7 their own benefit. To the aforementioned extent, doctrine of unjust enrichment may be held to be applicable. A person who unjustly enriches himself cannot be permitted to retain the same for its benefit except enrichment. Where it becomes entitled thereto the doctrine of unjust enrichment can be invoked irrespective of any statutory provisions.
In Mafatlal Industries Ltd. Section 72 of the Contract Act providing for restitution may be taken recourse to. Doctrine of “unjust enrichment” was resorted to, observing: “108. (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 plaintiff-petitioner 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.”
In Sahakari Khand Udyog Mandal Ltd. v. CCE & Customs this Court has held:
“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 11-B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11-B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in the absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the appellant- petitioner 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.”
It may be true that hereat we are not concerned with refund of tax but then for enforcement of legal principles, this Court may direct a party to divest itself of the money or benefits, which in justice, equity and good conscience belongs to someone else. It must be directed to restitute that part of the benefit to which it was not entitled to.
Page No.# 6/7
We, therefore, direct that the State shall realise the amount to the extent the respondent had unjustly enriched itself and pay the same to a voluntary or a charitable organisation, which according to it is a reputed civil society organisation and had been rendering good services to any section of the disadvantaged people and in particular women and children. We would request the Hon’ble the Chief Minister of the State to take up the responsibility in this behalf so that full, proper and effective utilisation of the amount in question is ensured.
In the said judgment, reference was also made to the judgment of the Nine Judges of the Supreme Court in the case of Mafatlal Industries Limited & Others vs. Union of India vs Others, reported in (1997) 5 SCC 536. It was observed by the Supreme Court that the claim for refund can only succeed if it is alleged and proved that the person from whom the tax was illegally collected had not passed on the burden of the duty to another person or other persons. In the instant case, there are no averments made in the writ petitions that the goods which have been brought for resale, the burden of cess were not passed on to the customers of the petitioners. Under such circumstances, the question of the amount collected from the petitioners as cess during the period from 01.07.2017 to 12.06.2020 to be refunded to the petitioners do not arise.
It is also equally important in view of the judgment in the case of Swanstone Multiplex Cinema Private Limited (supra) to address another issue as to whether the Respondent Board can be permitted to retain the benefit of the cess levied by them illegally during the said period. In the said case, the Supreme Court observed that the Court may direct a party to divest itself of the money or benefit which in justice, equity and good consense belong to someone else, and accordingly, in that case, the Supreme Court directed the State to realize the amount from the respondents therein and pay the same to a voluntary or a charitable organization.
In the instant case, the Respondent Board and the Market Committee after having lost their powers to levy cess, the financial position of the Respondent Board is in a penurious state. It is surviving as could be seen from the additional affidavit filed on 28.09.2023 on the basis of grant-in-aid received from the State Government. Under such circumstances, it is the opinion of this Court that directing the State to recover the said amount from the Respondent Board would not be in the interest of justice, equity, good conscience as well as also it would seriously hamper the functioning of the Respondent Board in terms with the provisions of the Act of 1972. 31. Accordingly, this Court is not inclined to pass any direction(s) for restitution by the respondent Board of the cess so collected during the period from 01.07.2017 to 12.06.2020.”
Taking into account that the issue involved in the instant batch of the writ petitions are pari-materia to the facts and issue involved in the writ petitions disposed of under judgment in the case of Bhatter Traders and Another (supra), this Court therefore disposes of the instant writ petitions holding that the Page No.# 7/7 collection of the cess from the petitioners by the respondent Board or the Market Committees was unconstitutional as well as ultra vires to the provisions CGST Act, 2017 and the AGST Act, 2017. However, taking into account the facts involved, the averments made in the present writ petitions as well as the present financial position of the respondent Board, this Court is however not inclined to issue a writ directing the respondent to refund the said amount illegally collected from the petitioners”
Having considered the submissions of learned counsel for the parties and perusal of the above judgment in M/s. Bhatter Traders and order dated 09.02.2024 in the batch of Writ Petitions (Supra), I am of the view that the issue involved in the present case is pari materia with the facts and issue in the above cases and the same squarely covers the present case.
Accordingly, the present writ petition is disposed of, with an observation that collection of cess from the petitioner by the respondent authorities is unconstitutional as well as ultra virus to the provisions of the CGST Act, 2017 and the AGCST, 2017. However, as provided in the above cases, no relief for refund of the amount already collected from the petitioner is granted.
The writ petitions stands disposed of. JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.