Holding

Capacitors are electronic goods and must be taxed at the concessional rate; the High Court correctly interfered with the Tribunal’s order, and the Revenue may recover any excess tax collected.

Summary

The State of Andhra Pradesh (Revenue) appealed against a High Court order that allowed manufacturers, dealers and traders of capacitors to claim a concessional tax rate on the basis that capacitors are "electronic goods". The assessees relied on Government Orders 520 and 521 and a list prepared by the Electronic Commission, which expressly included capacitors. The Sales Tax Appellate Tribunal had held capacitors to be "electric goods" and remanded the matter, but the High Court set aside that view, classifying capacitors as electronic goods and directing tax at the concessional rate. The Supreme Court examined whether the High Court could interfere with the Tribunal’s order and whether the inclusion of capacitors in the Commission’s list was determinative. It held that the list is conclusive for classification, the High Court was correct to intervene, and capacitors are electronic goods eligible for the concessional rate. The Court also affirmed that the Revenue may recover any excess tax collected at a higher rate, invoking the doctrine of unjust enrichment.

Issues considered

Whether capacitors qualify as "electronic goods" under the Andhra Pradesh General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956 for the purpose of concessional tax rate.
Whether the High Court could set aside the Tribunal's order despite the Tribunal’s remand.
Whether the Revenue is entitled to recover excess tax collected by assessees who paid tax at a higher rate.

Legislation cited

Subjects

sales taxconcessional rateelectronic goodscapacitorsclassificationElectronic Commissionunjust enrichmenttax revisiontribunalhigh court

Judgment

A STATE OF ANDHRA PRADESH AND ANR.
v.
MIS CONCAP CAPACITORS, BALANAGAR, HYDERABAD
AND ORS.

B OCTOBER 12, 2007

[C.K. THAKKER AND AL TAMAS KABIR, JJ.]
,\-

Sales Tax-On 'Capacitors '-The item classified as 'electronic f

c good' by Electronic Commission-By Government Orders, electronic
items exigible to concessional rate of tax-Asses sees claiming
concessional rate of tax on 'Capacitors '-Claim negated by
Authorities-Tribunal holding the item as an 'electric good' and
remanding the case for determination to the Authorities-High Court
D holding the item exigible to concessional tax as 'electronic good'-
On appeal, held: 'Capacitor' is an 'electronic good' and hence is to
be taxed at concessional rate-Ta.,y has to be levied on the basis of ~
classification done by Electronic Commission-However, ifassessees
have collected tax at higher rate from its customers, Revenue to take ),,...

E appropriate steps for recovery of such amount-Andhra Pradesh
General Sales Tax Act, 1957-Central Sales Tax Act, 1956-Doctrine
of Unjust Enrichment.
The respondent-assessees were manufacturers, dealers or
traders of electronic goods. They claimed concessional rate of tax
F on the item 'Capacitors' as 'electronic goods', in terms of various
Government Orders. In some cases the authorities treated the r-
'Capacitors' as 'electronic goods', while in other cases it did not. In ....
the cases, where the 'Capacitors' were treated as 'electronic goods',
the assessees challenged the same. The Authorities decided the
G assessees were entitled to concessional rate on the 'Capacitors'.
When the matters were taken to Sales Tax Appellate Tribunal at
the instance of Revenue, it held that the Capacitors were 'electric
goods' and not 'electronic goods' and remanded the matter to the
Assessing Authorities, giving opportunity to the assessees to prove
H 140
STATE v. MIS. CONCAP CAPACITORS, BALANAGAR, 141
,,..I HYDERABAD
that the item was an 'electronic good'. High Court set aside the order A
of the Tribunal holding that 'Capacitors' would fall under the
category of'electronic goods'; and that once the item was specifically
mentioned in the list of electronic items prepared by the Electronic
Commission and Government Orders the Tribunal was required to
test whether the item found place in the list and should not have B
undertaken further inquiry.
1-
In appeal to this Court, appellant-Revenue interalia contended
~ that the order of the Tribunal was not a final order and therefore, it
could not have been disturbed by the High Court; and that since the
assessee had collected the amount of tax at higher rates from the c
customers, the levy of tax on concessional rates would lead to 'unjust
enrich.ment' to the assessees.
Disposing of the appeal, the Court
HELD: 1.1 The item 'Capacitors' is subject to payment of tax D
>- at a concessional rate. The list prepared by Electronic Commission
expressly contained an item 'Capacitors'. In view of specific
_) reference to 'Capacitors', the High Court was right in relying on the
said item and in holding that 'Capacitors' could be said to be
'electronic goods' and was covered by a concessional rate of tax E
under Andhra Pradesh General Sales Tax Act, 1957.
[Paras 15 and 26] [149-G-H; 154-A].
State ofAndhra Pradesh v. Amara Raja Batteries, (1998) 111 STC
664 (AP) and India Extrusion v. Commission of Commercial Taxes, F
A.P., Hyderabad, (2001) 124 STC 474., referred to.
1.2. The High Court, was right in observing that when the
Electronic Commission had prepared a list which contained the item
'Capacitors', it had to be accepted by the Revenue and tax can be
levied only on the basis of such classification. High Court was also G
right in indicating that when the item has been specifically included
in the list prepared by Electronic Commission, the TribunaJ could
not have applied 'functional test', 'operating principle' or 'user test'.
A limited inquiry which was required to be made by the Tribunal was
H
142 SUPREME COURT REPORTS (2007] 11 S.C.R.

A whether the item had been included in the list prepared by the
Electronic Commission. If any item is included in the said list, it has
to be treated as such and tax has to be levied on that basis. But if
the item is not included in the list, it is open to the Tribunal to consider
its placement on the basis of 'functional test' as to whether such item
B could be said to be 'electronic goods'. The item 'Capacitors' has been
expressly included in the list prepared by the Electronic Commission
and hence it was not open to the Tribunal to apply 'operating -I-
principle' or 'user test'. [Paras 20 and 21] [150-H; 151-A; 152-D-F]
Commissioner of Income Tax, Amritsar v. Straw Board
C Manufacturing Co. Ltd., [1989] Supp 2 SCC 523; Commissioner of
Sales Tax v. Industrial Coal Enterprises, [1999] 2 SCC 607 and
Collector ofCentral Excise, Meerutv. Maruti Foam (P) Ltd., [2004]
6 sec 722, referred to.
D 2. It is not correct to say that the High Court ought not to have
interfered with the order of Tribunal as the same was.not afinal order.
Since the Electronic Commission included 'Capacitors' as one of the
items, it was not open to the Tribunal to enter into the question as to
the functions to be performed by Capacitors and to remit the ma~er
E to decide as to whether it would be covered by the item 'electronic
goods' or 'electric goods'. Hence, though the matter was remanded,
the High Court was justified in interfering with the said order as it
was not open to the Tribunal to pass such order.
[Para 23] [153-B-D; 154-A]
F 3. If any assessee had collected an amount at a higher rate of
tax from its customers than the concessional rate, it is open to the )-- I

Revenue to take appropriate proceedings in accordance with law for
the recovery of such amount. The excess amount, if any, recovered
by any assessee towards tax shall have to be paid by such assessee
G to the Government. [Para 26] [154-B]
Mafatlal Industries Ltd. v. Union of India, [1997] 5 SCC 536,
followed.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4832 of
H
, STATE v. M/S.CONCAPCAPACITORS,BALANAGAR, 143
HYDERABAD [C.K. THAKKER, J.]

2007. A
From the Judgment and Order dated 31.10.2005 of the High Court
of judicature, Andhra Pradesh at Hyderabad in T.R.C. Nos. 269, 270,
271,272,273,274,275,276,277,278,280,281,282,283,285,286,
287 of2003 and 2, 14, 15, 16, 17, 18. 19of2004 and 216of2004 B
and 5 and 18of2005.
Anoop G. Chaudhary, Manoj Saxena, Rajnish Kr. Singh, Rahul
Shukla and T.V. George for the Appellants.
A.R. Madhav Rao and M.P. Devanath for the Respondents.
c
The Judgment of the Court was delivered by
C.K. THAKKER, J. 1. Leave granted.
2. This appeal is filed by the State of Andhra Pradesh & Anr.
('Revenue' for short) against common judgment and order dated August D
31, 2005 in several Revisions. By the impugned order, the High Court
allowed Tax Revision Cases (TRC) filed by manufacturers, dealers and
traders ('assessee' for short) and held that 'Capacitors' is one of the items
of 'electronic goods' or components, taxable at a concessional rate of
tax under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter E
referred to as 'the State Act') as also under the Central Sales Tax Act,
1956 (hereinafter referred to as 'the Central Act').
3. To appreciate the issue raised by the Revenue, few relevant facts
may be stated.
F
4. The respondents in this appeal are manufacturers, dealers or
traders of electronic goods, components and materials. They are duly
registered under the State Act as well as Central Act. Their claim was
that Capacitors, manufactured by them, was exigible to tax at a
concessional rate as 'electronic goods' in terms of various Government G
Orders issued from time to time and not as 'electric goods' subject to
higher tax. It was their case that the Assessing Authorities had taken
conflicting views in different cases. In some cases, while making
assessment orders, they accepted the case of manufacturers/dealers/traders
treating Capacitors as 'electronic goods' and levied concessional rate of H
144 SUPREME COURT REPORTS [2007] 11 S.C.R.
)

A tax; while in other cases, the Assessing Authorities negatived such claim
as to concessional rate of tax and ordered to levy Capacitors as 'electric
goods'. Where the Assessing Authorities had decided against the assessee,
the assessee challenged the action before the Tribunal and where the issue
was decided by the Authorities in favour of assessee, the Revenue had
B challenged such decision. All the matters were, therefore, placed before
the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad. The
Tribunal considered the rival contentions of the parties as also provisions
of the State Act and Central Act and various G.O.Ms. and observed that
the item in question i.e. Capacitors did not operate on electronic principle
C and could not be considered as 'electronic' goods or component for the
purpose of concessional rate of tax. It, therefore, remanded the .cases to
the Assessing Authorities to pass fresh assessment orders giving
opportunity to the assessee to produce any material to show that they
sold Capacitors which could be said to be 'electronic goods'.
D 5. Being aggrieved by the orders passed by the Tribunal, the assessee
approached the High Court of Andhra Pradesh by filing Revisions. The
High Court, on consideration of relevant provisions of law as also various
G.O.Ms. and referring to several decisions, held that from the relevant
material, it was clearly established that 'Capacitors' would fall under the
E category of'electronic goods' and the Tribunal was wrong in upholding
the contention of Revenue that the item could not be said to be electronic
goods. The High Court also held that in G.O.Ms. issued by the Revenue
from time to time, various items were expressly specified and Capacitors
was one of them. In view of specific mention of the item, the Revenue
F was bound to grant benefit to the assessee of concessional rate of tax
and the Tribunal was not justified in considering the question on the basis
of 'operating principle'. The said process could have been undertaken
by the Tribunal had there not been a specific mention of the item and the
question was required to be decided on general principle and practice.
G But once there was a list of electronic items prepared by the Electronic
Commission and G.0.Ms. referred to those items wherein 'Capacito~s'
was included, only thing the Tribunal required to do was to ascertain
whether the item found place in the list or not. Once the item is included
in the list, no further inquiry could have been undertaken. Accordingly, all
H Revisions were allowed and the issue was answered in favour of the
~ STATE v. MIS. CON CAP CAPACITORS, BALANAGAR,
HYDERABAD [C.K. THAKKER, J.]
145

'"' assessee. A
6. The Revenue has challenged in this Court the decision of the High
Court. On July 31, 2006 delay was condoned and notice was issued.
Affidavits in reply and rejoinder were thereafter filed and the matters were
placed for final disposal.
B
7. We have heard learned counsel for the parties.
-j
8. The learned counsel for the Revenue challenged the decision of
the High Court. He submitted that the High Court was not at all justified
in ~terfering with the order passed by the Tribunal. He urged that a finding
offact was recorded by the Tribunal which was 'final' and could not have c
been interfered with by the High Court in Revisions. It was also submitted
that the Tribunal, in any case, had remanded the matter and it was thus
not a 'final order' which could have been disturbed by the High Court. If
the assessee was in a position to convince the Authorities that he was
entitled to concessional rate of tax, the Authorities would have decided D
)..
the case in his favour. The High Court was, therefore, not right in
entertaining and allowing Revisions. The counsel submitted that where a
... paiticular item is subject to payment of tax and the case of the assessee
is that he is not liable to pay tax or is liable to pay tax at a concessional
rate, the burden is on him to establish such case as it is an exception to E
the general rule. Such provisions oflaw-primary or delegated-must
be construed strictly. It was also argued that the Tribunal was wholly
justified in considering the question on 'operating principle'. The Tribunal
noted that so far as 'Capacitors' is concerned, it did not operate as
'electronic goods' but as 'electric goods'. Such approach which was real F
and practical, could not have been objected by the assessee and the High
Court could not have commented the basis on which the Tribunal
proceeded to consider the matter. Finally, it was submitted that in certain
cases, assessee (manufacturers/ dealers/distributors/traders) had collected
the amount of tax at higher rates from the customers. Thus, on the one G
hand, the assessee contended that the item was subject to payment of
concessional rate of tax and on the other hand, .it collected the tax at higher
rate from customers. The assessee thus would retain the amount collected
from customers towards tax. This cannot be allowed to be done as it
would amount to 'unjust enrichment' by the assessee. To that extent, H
146 SUPREME COURT REPORTS [2007] 11 S.C.R.

A therefore, in any case, the assessee is liable to pay the amount to the
Revenue. On all these grounds, it was submitted that the appeals deserve
to be allowed by setting aside the order passed by the High Court and
by restoring the order of the Tribunal.
9. Learned counsel for the assessee, on the other hand, supported
B the order passed by the High Court. It was submitted that no error of
law can be said to have been committed by the High Court in deciding
the matters and these are not fit cases to entertain appeals under the
discretionary jurisdiction of this Court under Article 136 of the Constitution. (
It was also submitted that it was clear from the provisions of law that
C 'Capacitors' could be said to be 'electronic goods' and subject to
payment of tax at a concessional rate. In several cases, such view was
taken by the Assessing Authorities. Since in some cases, a different view
was struck, G.O.Ms. were required to be issued by the AuthoritiP,S. Such
amendments I instructions I communications were declaratory in nature
D and obviously, therefore, they were applicable with retrospective effect;
i.e. not only to transactions subsequent to the issue of notification but even
to prior transactions. 'Capacitors', hence, must be treated as an item
covered by the entry 'electronic goods' and subject to payment of tax at
a concessional rate. It was also submitted that concessional rate has been
E granted on the item in question so as to ensure industrial growth in the
State. A provision which has been intended for a laudable object of
industrial development, must be liberally construed. And, even if two views ·
are possible, the view favourable to the assessee should be adopted. When
the High Court has taken such view, this Court may not interfere with it
F under Article 136 of the Constitution. It was also submitted that the High
Court was wholly justified in criticizing the approach adopted by the
Tribunal. The High Court was right in holding that 'operating principle'
or 'user test' would apply to those cases where there is no express
mention of a particular item in the notification or G.O.Ms. But once the
G item is specified in the list, there should not be further inquiry and the
assessee would be entitled to concessional rate of tax on the basis of such
entry. In the case on hand, several items were specifically mentioned in
various G.O.Ms. 'Capacitors', admittedly, was one of them. In view of
the said position, the Tribunal exceeded its jurisdiction in applying
H 'operating principle' or 'functioning' of the item and the High Courtwas
STATE v. MIS. CONCAP CAPACITORS, BALANAGAR, 147
HYDERABAD [C.K. THAKKER, J.]
right in criticizing it. The High Court was also constrained to observe that A
though the point was concluded by a decision of the High Court in earlier
cases, the Tribunal sought to distinguish the said decision on the grounds
not pennissible in law. The counsel, therefore, submitted that no case has
been made out by the Revenue to interfere with the order of the High
Court and the appeal deserves to be dismissed. B
10. We have given anxious consideration to the rival contentions of
the parties. The question which is raised before us and which was raised
before the Tribunal as well as before the High Court was as to whether
the item 'Capacitors' is 'electronic goods' or 'electric goods'. In thi$
connection, our attention was invited by the learned counsel for the parties C
to the provisions of the State Act as also of the Central Act. The learned
counsel for the assessee also refen-ed to G.0.Ms. No. 520, dated July
20, 1998, issued under the State Act and G.O. Ms. No. 521 issued under
the Central Act. The relevant part ofG.O. Ms. No. 520 reads thus:
D
(2) For the purpose of this notification, the term 'electronic goods'
.>-- means electronic systems, instruments, appliances, apparatus,
equipment operating on electronic principles and all types of
_),
electronic components, parts and materials and includes-
(i) consumer electronics; E
(ii) electronic test and measuring instruments;
(lii) medical electronic equipment,
(iv) electronic analytical instruments;
F
(v) electronic equipment I instruments for nuclear, geo-scientific
-i
and other special applications;
...
(vi) electronic process control equipment;
(vii) power electronic equipment;
G
(viii) electronic industrial automation and control equipment;
(ix) electronic data processing systems and electronic office
t
equipment;
(x) electronic broadcasting equipment;
H
148 SUPREME COURT REPORTS [2007] 11 S.C.R.

A (xi) electronic communication equipment and
(xii) electronic aerospace and defence equipment
11. G.O. Ms. No. 521 issued under Central Act is in pari materia
to G.O. Ms. No. 520.
B 12. On June 1, 1989, Memo No. 23718/ CT.II.2/89 was issued
by the Principal Secretary to Government of Andhra Pradesh, Revenue
(CT-II) Department, inviting the attention of the Commissioner of
Commercial Taxes to the reference cited in the said Memo and informing
him that the Government had decided that the list of electronic items
C prepared by the Electronic Commission should be followed for the
purpose of concessional rate of tax on electronic goods ordered in
G.O.Ms.Nos. 520 and 521. The Commissioner was requested to issue
necessary instructions to subordinate officers under Section 42A of the
State Act.
D
13. Pursuant to the above Memo, a Circular was issued by the
Commissioner of Commercial Taxes on July 13, 1989 which is also
relevant and reads thus:
Office of the
E Commissioner of Commercial Taxes
Andhra Pradesh : Hyderabad
Dated 13 .07 .1989
Ref. Al/1240/88
M.V. NATARAJAN, I.A.S.,
F COMMISSIONER OF COMMERCIAL TAXES
CIRCULAR
Sub: APGST Act & CST Act-Reduction in the rate of tax on
Electronic goods - Reg.
G
Ref: I. G.0.Ms.No. 520 Rev dt. 20.07.1988.
2. G.O.Ms.No. 521 Rev dt. 20.07.1988.
3. Govt. Memo No.23718/CT.l l.2./89 dated 01.06.1989
It is informed that vide G.O.s first and second cited,
H
STATE v. M/S.CONCAPCAPACITORS,BALANAGAR, 149
HYDERABAD [C.K. THAKKER,J.]
Government were pleased to reduce the rate of tax to 2 paise on A
Electronic goods with effect from 1.7.1988 mentioning a broad
classification of electronic goods such as Consumer Electronics,
Electronic test and measuring instruments, General Electronic
Equipment etc.
B
Several representations have been received from the dealers
requesting to clarify the specific items which falls under the
-+
classification, mentioned in the G. 0. first cited, a copy of the
Government Memo, third cited is enclosed along with a copy
of the list prepared by the Electronic Commission duly
authenticated C
2. The Assessing authorities are requested to take action
accordingly.
3. This reference may please be acknowledged to next authority.
Sd/- D
M.V. NATARAJAN
COMMISSIONER OF COMMERCIAL TAXES
(emphasis supplied)
14. A list of electronic items prepared by the Electronic Commission E
was also produced before the Tribunal as well as before the High Court
and before us. Item No.13.0 relates to 'Electronic Components' under
which at Item No.13 .39 is shown 'Plastic Film Capacitors'.
15. Thus, from the above G.O.Ms. and Circular issued by the F
Commissioner, it is clear that in pursuance of several representations
received from Dealers requesting to clarify the specific items falling under
'electronic goods' that the Classification Memo was issued by the
Government and the Circular by the Commissioner on the basis of the
list prepared by the Electronic Commission. The said list expressly G
contained an item 'Capacitors'. In view of specific reference to
'Capacitors', in our opinion, the High Court was right in relying on the
said item and in holding that 'Capacitors' could be said to be 'electronic
goods' and was covered by a concessional rate of tax under the Act.
H
150 SUPREME COURT REPORTS [2007] 11 S.C.R.

16. The learned counsel for the assessee stated that on the basis of ~
A
the list prepared by Electronic Commission, concessional rate of tax was
recovered on items mentioned in the list. A similar question came up for
consideration before the High Court of Andhra Pradesh in State of
Andhra Pradesh v. Amara Raja Batteries, (1998) 111 STC 664 (AP)].
B There, the Court was concerned with NICD Batteries. The Court
considered G.O.Ms. 520 and 521 and item No. 13.93 of the list ('Other
batteries') declared by Electronic Commission and held that it was entitled .+.-
to concessional rate of tax. ·
'( I
17. The Court observed:
c
"Since according to the list prepared by the Electronics
Commission, the batteries are electronic components and since the
electronic components are one of the items which are eligible for
concessional rate of duty and since the clarification in the list
D prepared by the Electronics Commission is treated as part of the
G.O. the batteries manufactured by the assessee are eligible for
concessional rate of duty under G.O. Ms. No. 520, Revenue dated
July 20, 1988 and G.O. Ms. No. 521 Revenue dated July 20, ~
1988 issued under the AP. General Sales Tax Act and also Central \..
Sales Tax Act".
E
18. It appears that the Revenue challenged the decision of the High
Court by filing Civil Appeal Nos. 723-25of1999, but a three Judge Bench
of this Court dismissed them on March 21, 2001 observing that there
was "no good reason to interfere with the order under appeal".
F
19. Once again, the issue came up for consideration before the same
Court in India Extrusion v. Commission of Commercial Taxes, A.P., j.-

Hyderabad, (2001) 124 STC 474. In India Extrusion, the Court was .,.
considering the item of 'Cable Joining Kits'. Relying on G.O.Ms. Nos.
520 and 521 and taking recourse to the list of electronic goods prepared
G
by Electronic Commission, the High Court held that it could be said to
be 'electronic goods' and was subject to levy at the concessional rate of
tax. The Revenue accepted the judgment and had not challenged the said ~
decision.
H 20. The High Court, in our opinion, was right in observing that when
STATE v. M/S.CONCAPCAPACITORS,BALANAGAR, 151
HYDERABAD [C.K. THAKKER,J.]
the Electronic Commission had prepared a list which contained the item A
'Capacitors', it had to be accepted by the Revenue and tax can be levied
only on the basis of such classification. The High Court was, therefore,
right when it stated:
"The contention of the learned Counsel for the petitioners is
that when the Government has issued clarificatory memo with B
reference to G.O. Ms. Nos. 520 and 521, adopting the list
prepared by the Electronics Commission for the purpose of
concessional rate of tax as electronic items or electronic
components, the same holds good even for the subsequent
notifications, as there was no material variation in the contents of C
the subsequent Government Orders except variation in the rate of
tax. But, on the other hand, the contention of the department is .
that unless a particular item operates on electronic principle the
same would not be considered as "electronic goods" or component
for the purpose of concessional rate of tax. We are lll1able to accept D
the said contention of the Revenue on the first principle. If a
particular item ofgoods or component, part or matehal is not
specified in the list either in the Government Order or in the
list of electronic items that are prepared by the Electronics
Commission, then only the question would arise for E
consideration whether a particular item can be treated as an
electronic goods or component or material, depending upon
its operating principle, but not otherwise. Admittedly, the list
of electronic items prepared by the Electronics Commission shows
that there are as many as 16 sub-headings under which various F
items that are listed or specified. In the present case, we are
concerned \vith "plastic film capacitors". The said item finds place
under the sub-heading "electronic components." In the list of items
prepared by the Electronics Commission the plastic film capacitors
is specified at 13.39. Similarly, there are other capacitors such as G
paper capacitors at 13.38, ceramic capacitors at 13.42, and mica
capacitors at 13 .43. Therefore, it is clear that the ,item in question
is clearly specified as one of the electronic items contained in the
list prepared by the Electronics Commission. In fact, when similar
issue came up for consideration before this Court in Amara Raja H
152 SUPREME COURT REPORTS [2007) 11 S.C.R.

>.
A Batteries, [1998] 111 STC 664, while considering G.O. Ms. Nos.
520 and 521, referred and relied upon the list prepared by the
Electronics Commission as was ordered to be adopted by the
Government by its memo dated June 1, 1989. As batteries, which
fell for consideration, was found under item 13.93, the division
B Bench accepted the claim of the assessee and upheld the decision
of the Tribunal where the Tribunal allowed the claim of the assessee
treating the batteries as electronic component. But, however, this +-
decision was distinguished by the Tribunal in the impugned orders
on unsustainable gr0tmds". 1
c (emphasis supplied)
21. To us, the High Court was also right in indicating that when the
item has been specifically included in the list prepared by Electronic
Commission, the Tribunal could not have applied 'functional test',
D 'operating principle' or 'user test'. A limited inquiry which was required
to be made by the Tribunal was whether the item had been included in
the list prepared by the Electronic Commission. If any item is included in
the said list, it has to be treated as such and tax has to be levied on that
basis. But if the item is not included in the list, it is open to the Tribunal to
E consider its placement on the basis of'functional test' as to whether such
item could be said to be 'electronic goods'. The item 'Capacitors' has
been expressly included in the list prepared by the Electronic Commission
and hence it was not open to the Tribunal to apply 'operating principle'
or 'user test' and the High Court was wholly justified in interfering with
F the order passed by the Tribunal.
22. The learned counsel for the assessee also urged that the
underlying object of granting concessional rate of tax to Capacitors was
industrial development. Relying on Commissioner of Income Tax,
Amritsar v. Straw Board Manufacturing Co. Ltd., [1989] Supp (2)
G S.CC 523, Commissioner of Sales Tax v. Industrial Coal Enterprises,
[1999) 2 sec 607 and Collector of Central Excise, Meerut V. Maruti
Foram (P) Ltd., [2004] 6 SCC 722, it was urged that whenever a
concession has been granted so as to bring about industrial expansion and
growth, the provision must be liberally construed. In view of the fact,
H however, that according to us, item relating to 'Capacitors' has been
STATE v. M/S. CON CAP CAP ACITO RS, BALANAGAR, 153
HYDERABAD [C.K. THAKKER, J.]
expressly included in the list prepared by Electronic Commission, it is not A
necessary for us to enter into larger question as, in our judgment, the
assessee had rightly succeeded and the High Court was justified in allowing
Revisions.
23. The learned counsel for the Revenue, no doubt, submitted that
the Tribunal merely remanded the matter to tl1e Authorities to decide them B
_, in accordance with !aw and the High Court ought not to have interfered
' with the order. In our opinion, however, the submission is ill-founded. As
rightly held by the High Court, the Authorities were required to proceed
on the basis of list prepared by Electronic Commission. Since the
Electronic Commission included 'Capacitors' as one of the items, it was C
not open to the Tribunal to enter into fue question as to fue functions to
be performed by Capacitors and to remit the matter to decide as to
whether it would be covered by the item 'electronic goods' or 'electric
goods'. Hence, though the matter was remanded, the High Court was
justified in interfering with tlle said order as it was not open to ilie Tribunal D
to pass such order. .
24. Finally, it was submitted fuat some offue manufacturers, dealers
and traders had collected the tax at the higher rate from fueir customers
and now iliey are seeking relief from fue Court to pay tax at concessional E
rate. If fue contention of tlle assessees is upheld and fuey will be allowed
to pay tax at a concessional rate, they would thereby unjustly enrich
fuemselves i.'1asmuch as on one hand fuey had collected much more a!llount
towards tax and will now pay lesser amount of tax to the Government.
No assessee can be allowed 'unjust enrichment'. Where an assessee is
F
not entitled to a particular benefit, he cannot be permitted to retain such
benefit. [vide Mafatlal Industries Ltd v. Union ofIndia, [1997] 5 SCC
536].

25. In the affidavit in reply, the allegation has been emphatically
denied by fue assessee. It was fue case offue assessee that tlle allegation G
was factually incorrect that the assessees had collected tax at a higher
rate and they now want to pay tax at a concessional rate. But in view of
assertion by the Revenue and denial by the assessee, it would be
appropriate if we do not enter into the said question by granting liberty
to the Revenue to consider the question independently. H
154 SUPREME COURT REPORTS [2007] 11 S.C.R.

A 26. We, therefore, hold that the item 'Capacitors' is subject to·
payment of tax at a concessional rate. The order passed by the High
Court, to that extent is, therefore, upheld. It is, however, made clear that
if any assessee had collected an amount at a higher rate of tax from its
customers than the concessional rate as held by us, it is open to the
B Revenue to take appropriate proceedings in accordance with law for the
recovery of such amount. The excess amount, if any, recovered by any
assessee towards tax shall have to be paid by such assessee to the
Government.
f
27. For the foregoing reasons, the appeal deserves to be disposed
C of and is accordingly disposed of subject to the observations made by us
hereinabove. On the facts and in the circumstances of the case, however,
there shall be no order as to costs.
K.K.T. Appeal disposed of.
D