Question

Doctrine of Unjust Enrichment implies:

• A. Obtaining benefit from another (which is not a gift) without legal justification
• B. Restoration of the benefits obtained without legal justification
• C. Neither (A) nor (B)
• D. Both (A) and (B)
• A. Contractual Matters
• B. Tax Matters
• C. Both (A) and (B)
• D. None of these
• A. When the tax has been levied without the authority of law and the burden of tax is borne by the business entity
• B. When the tax has been levied without the authority of law and the burden of tax has been passed on to the consumer.
• C. When levy of tax is under the authority of law and the business entity has not passed the burden to the consumer.
• D. Both (A) and (C)
• A. If tax has been levied without the authority of law.
• B. If the legislature does not have legislative competence to levy that tax.
• C. Both (A) and (B)
• D. When the assessment of tax by assessing officer is contrary to facts and evidence on record.
• A. Union of India v. Mohit Minerals Pvt. Ltd. (2019) 2 SCC 599.
• B. Sudhir Kumar Atrey v. Union of India (2022) 1 SCC 352.
• C. Hindustan Construction Co. Limited v. Union of India (2020) 17 SCC 324.
• D. Union of India v. A. Shainamol 2021 SCC OnLine SC 262.
• A. Cess
• B. Fee
• C. Tax
• D. None of the above

Answer 1

The Correct Option is D

The Doctrine of Unjust Enrichment is a legal principle which implies both obtaining a benefit from another party without legal justification and the requirement to restore such benefits. In this context, the correct answer is that the doctrine includes both aspects provided in the options:

• Obtaining benefit from another (which is not a gift) without legal justification: This refers to receiving an advantage or benefit from another individual without having a legal right to it, except in the form of a gift.
• Restoration of the benefits obtained without legal justification: This involves the obligation to return or compensate for benefits acquired unlawfully.

The principle of restitution under the Doctrine of Unjust Enrichment is further explained in the context of tax law. If a tax is collected unconstitutionally, the party that paid is entitled to a refund. However, if the taxpayer has already transferred this tax burden to another party and recovered the amount, they are not entitled to this restitution. Therefore, when interpreting the Doctrine of Unjust Enrichment, it encompasses both gaining unjust benefits and the necessity to rectify such gains. Hence, the correct interpretation of the doctrine includes:

• Both (A) and (B): Obtaining benefit from another without legal justification and the restoration of such benefits.

Answer 2

The Doctrine of Unjust Enrichment applies to both contractual and tax matters. Here's how it works in each context:

• Contractual Matters: In contract law, the doctrine ensures that one party does not unfairly benefit at the expense of another. When someone receives a benefit they were not entitled to, and retention of that benefit would be unjust, they must compensate the other party.
• Tax Matters: When a tax is collected that is ultra vires (beyond the powers) or unconstitutional, a taxpayer may claim a refund. However, if the tax burden has been passed on to others, the original taxpayer cannot claim repayment, as it would result in undue enrichment.

The concept of unjust enrichment follows the principle that no one should benefit at another's expense unjustly. Both in contract law and tax disputes, this principle seeks to rectify situations where an unfair advantage has been gained, ensuring fairness and justice are maintained. Thus, the correct answer is: Both (A) and (B).

Answer 3

A business entity can claim a refund of tax on the ground of unjust enrichment when the tax satisfies certain conditions. To understand this, it's essential to explore the legal context:

If a tax is ultra vires (beyond legal power or authority) or unconstitutional, the entity paying it is entitled to a refund from the government. This stems from Section 72 of the Indian Contract Act, which covers payments made under a mistake. However, the doctrine of unlawful enrichment applies. If the taxpayer has transferred the tax burden to another party, such as consumers, then the taxpayer is not eligible to claim a refund. Understanding this, let's examine the given options:

Option A: "When the tax has been levied without the authority of law and the burden of tax is borne by the business entity."

This option correctly reflects the scenario where a refund can be claimed. The tax is imposed unlawfully, and the business entity, not having passed the burden onto others, bears it.

Option B: "When the tax has been levied without the authority of law and the burden of tax has been passed on to the consumer."

Under the doctrine of unlawful enrichment, no refund is applicable here because the financial burden has been shifted to consumers.

Option C: "When levy of tax is under the authority of law and the business entity has not passed the burden to the consumer."

This is irrelevant as the tax was legally imposed, and refund eligibility doesn't apply.

Option D: "Both (A) and (C)"

This option combines valid and invalid scenarios. Since Option C doesn't qualify for a refund, Option D is incorrect.

Thus, the correct scenario for claiming a refund based on unjust enrichment is described in Option A: "When the tax has been levied without the authority of law and the burden of tax is borne by the business entity."

Answer 4

A tax can be declared unconstitutional under certain conditions. Firstly, if a tax is levied without legal authority, it is considered ultra vires, meaning beyond the powers of the legislative body. According to Section 72 of the Indian Contract Act, any payment made under a mistake, such as a tax paid without authority of law, must be refunded by the government if the mistake is recognized. This involves the principle of restitution, where the government must repay the taxpayer if they wrongfully collected the tax. However, there is an exception based on the doctrine of unlawful enrichment. If the taxpayer has already transferred the burden of the tax to someone else and recouped the amount, they cannot claim a refund from the State, as the principle of unlawful enrichment prevents taxpayers from gaining an unearned advantage. Secondly, a tax is unconstitutional if the legislative body lacks the competence to impose it. Legislative competence is a fundamental requirement for the validity of tax laws, and taxes implemented without it can be invalidated by the courts. Therefore, both cases outlined, namely taxes levied without authority and taxes imposed by an incompetent legislature, are valid scenarios for declaring a tax unconstitutional. Hence, the correct answer to the question is: Both (A) and (B).

Answer 5

To determine the correct answer, we need to analyze the context in which the challenge to the constitutionality of the Goods and Service Tax (Compensation to States) Act, 2017, was rejected based on legislative competence. In this context, legislative competence refers to whether the legislature has the authority to enact a particular law. Among the given options, we focus on the case of Union of India v. Mohit Minerals Pvt. Ltd. (2019) 2 SCC 599. In this case, the Supreme Court of India addressed the issue concerning the legislative competence, and the challenge to the constitutionality of the Act was indeed rejected.

Answer 6

In the context of taxation, an additional tax that is imposed on top of an existing tax for a specified purpose is referred to as a cess. A cess is typically levied by the government to raise funds for a particular objective, such as education or infrastructure development.

Within the legal framework, if a tax, including a cess, is deemed ultra vires (beyond the powers) or unconstitutional, it becomes refundable to the taxpayer. The rationale for this is based on the doctrine of restitution and the prevention of unlawful enrichment, as outlined in legal cases and interpretations like those connected to Section 72 of the Indian Contract Act. This section deals with payments made under a mistake.

Accordingly, once a tax is identified as having been collected without legal authority, the government should refund it unless the taxpayer who originally remitted the tax has already transferred the tax burden to another party and subsequently recovered those sums. Under these circumstances, the principle of unlawful enrichment prevents the taxpayer from imposing the additional tax burden back on the state by demanding a refund.