The doctrine of unjust enrichment evolved from Roman law . This is evident from a legal maxim that “no one should be benefited at another’s expense”
The Honourable Supreme Court of India In Sahakari Khand Udyog Mandal Ltd. v. CCE & Customs – (2005) 3 SCC 738 explained the doctrine of unjust enrichment as below :
“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.
The doctrine of ‘unjust enrichment’, therefore, is that no person can be allowed to enrich 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 taxation provisions of India gradually incorporated the doctrine of unjust enrichment in as much as everyperson seeking a refund has to pass the litmus test of unjust enrichment before getting the refund .
It is a cardinal principle of law, which has been settled by a Bench of seven Judges of this Court in the case of Mafatlal Industries Ltd. v. Union of India, 1997 (89) E.L.T. 247 (S.C.), that
the refund of a claim made by the assessee can be denied on the principle of undue enrichment if the assessee has passed of the burden to the consumers. This principle would be equally applicable to the revenue as well as it cannot have the double advantage.
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.