Case of innocent dealer :
Suppose in above example, ‘D’ is innocent. He is not aware that ‘A’ has not paid the tax. He has actually purchased and exported the goods. In such case, can Government disallow refund to ‘D’?
If ‘D’ is innocent, he cannot be penalised by default of ‘A’.
One such case has been decided by Court of Justice of European Communities. It is highest Court of European Union. In Optigen Ltd v. Commissioners of Customs and Excise 2006 EUECJ C-354/03 (decided on 12-1-2006), it has been held that Government cannot refuse refund in such cases.