Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Kerala Abkari Act-Section 17(a) to (g) Excise Laws Monopoly created by Government of Kerala |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | Excise Laws: Kerala Abkari Act-Section 17(a) to (g)-Kerala General Sales Tax Act, 1963-Sections 2(xxvii), 5(2C)-Foreign Liquor Rules, 1953-Rule 13(9)- Kerala Abkari Shops (Disposal in Auction) Rules, 1974-Foreign Liquor (Storage in Bond) Rules, 1961-Kerala Distillery and Warehouse Rules, 1968: Monopoly created by Government of Kerala in wholesale trade of IMFL in favour of Government Company KSBC-In view of monopoly, distillers required to sell entire manufacture of IMFL to KSBC only-KSBC not required to pay excise duty to manufacturers of IMFL but pay it later when lMPD moved out of its warehouse~Sales Tax Authorities requiring manufacturers of IMFL to include amount of excise duty paid by KSBC in the turnover for the purpose of turnover tax-Correctness of-Held: Levy of duty is under Section 17(f) since the State intended to recover duty from KSBC on the issue of liquor from its warehouses in course of its monopoly wholesale trade-Duty so levied is not excise since taxing event envisaged in Section 17(f) does hot relate to manufacture-Amount of excise duty paid by KSBC is actually not excise duty in real sense but a privilege price and hence does not form part of turnover of manufacturer-However rules were amended in 1999 contemplating that KSBC to pay excise duty to manufacture at the time of purchase-Therefore, with effect from 1999 that amount of excise duty would form part of consideration to the manufacturer and included in their turnover for the purpose of levy of Turnover tax. Liability to pay excise duty-Taxable event-Held: Use of words 'duty of excise' in Section 17 of the Kerela Abkari Act is not conclusive and it is for the courts to examine in each case as to whether it is in fact a 'duty of excise '-In order that duty may be characterised as duty of excise, it must be shown that it is a duty on manufacture of goods-If it is unrelated to the manufacture of goods, it may be any other impost permitted by law, but would not qualify as duty of excise. The respondent is engaged in the manufacture and sale of Indian Made Foreign Liquor (IMFL). Pursuant to the policy decision of the Government of Kerela to create a monopoly in wholesale trade of IMFL, a Government company was incorporated, namely Kerala State Beverages Corporation Limited (KSBC). Necessary amendments to the Abkari Act and the relevant Rules were made with a view to effectuate this policy. In view of monopoly created, the respondents could not sell IMFL manufactured by them to anyone, and had to deliver the same to KSBC only for which purpose they had to submit tenders each year for the various brands of IMFL manufactured by them. KSBC was granted licence in Forms BW1 and FL9 under the Bond Rules. The IMFL supplied by the respondents/distillers was stored in bonded warehouses maintained by the KSBC in accordance with the Bond Rules. KSBC also executed an agreement in Form - A under which it was obliged to observe 'the provisions of the Abkari Act and not to remove goods without payment of duty. The price paid by the KSBC to the respondents did not include the element of excise duty which was later paid by the KSBC when the liquor moved out of its warehouses. Accordingly assessments were made from time to time on the basis that liability to pay sales tax and excise duty was on KSBC. The respondent paid turnover tax on the basis of price paid to it by KSBC. It, therefore, did not include the excise duty element while computing its total turnover. However, Sales Tax authorities on 19.7.1998 called upon the respondent to submit revised returns including element of excise duty paid by the KSBC. The High Court, on a challenge being made by the respondents held that this excise duty which was in fact paid by KSBC would not be regarded as being part of turn over of respondents for the purpose of levy ,of turn over tax and also declared that Section 2(xxvii) of the Kerala General Sales Tax Act authorizing the levy of turnover tax on the amounts of excise duty paid by the KSBC on the distillers was unconstitutional and void. State filed appeal before this court. Pending the appeals on 1.4.2001 the State of Kerala amended Section 5(2C) of the Kerala General Sales Tax Act, by the Finance Act of 2001, by adding an explanation which was brought into effect retrospectively from July 1, 1987 stating that the distillery selling liquor manufactured by it within the State to KSBC would be liable to pay turnover tax on the turnover of sale of liquor by it to KSBC which shall include any duty of excise liable on such liquor at the hands of such manufacturer whether such duty is paid by the manufacturer or by the said Corporation. The Sales Tax authorities issued notices to the respondents/distillers proposing to provisionally assess the turnover tax payable by the manufacturers from April 2001 at various rates. The respondents/distillers filed several writ petitions challenging the validity of Section 5(2C) of the Kerala General Sales Tax Act read with Section 3A of the Kerala Finance Act, 2001 as being unconstitutional, both in its retrospective and prospective operation. They also challenged the consequent actions initiated against them by the Sales Tax authorities. A Division Bench of the Kerala High Court allowed these writ petitions. Aggrieved State came up in appeal before this Court. |
Judge | Hon'ble Mr. Justice B.P. Singh |
Neutral Citation | 2005 INSC 264 |
Petitioner | State Of Kerala And Ors. |
Respondent | Maharashtra Distilleries Ltd. And Ors |
SCR | [2005] Supp. (1) S.C.R. 91 |
Judgement Date | 2005-05-06 |
Case Number | 2249 |
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