Excise duty on IMFL forms part of taxable turnover when paid as the manufacturer's liability through advance collection.

Excise duty on IMFL is treated as a levy on manufacture, with primary liability resting on the manufacturer even if collection is deferred to a later stage. Rule 22 of the Tamil Nadu Indian-made Foreign Spirits (Manufacture) Rules, 1981 was read as providing only a convenient advance-payment mechanism, not as shifting the duty burden to TASMAC. Accordingly, the purchaser's payment was regarded as discharge of the manufacturer's obligation and formed part of the manufacturer's taxable turnover. Explanation (1-A) to section 2(r) did not apply because the duty was not separately charged as tax and no equitable estoppel was established.

---

---

Issues: Whether excise duty paid by the purchaser of IMFL on removal from the manufacturer's premises formed part of the manufacturer's taxable turnover under the Tamil Nadu General Sales Tax Act.

Analysis: Excise duty is a levy on manufacture or production, and its incidence falls on the manufacturer, though the law may provide for collection at a later and more convenient stage. Rule 22 of the Tamil Nadu Indian-made Foreign Spirits (Manufacture) Rules, 1981 did not shift the primary liability from the manufacturer to TASMAC; it only prescribed a convenient mode of collection by requiring the removing party to pay the duty in advance on behalf of the manufacturer. The payment made by the purchaser was, in substance, discharge of the manufacturer's obligation and therefore entered the manufacturer's turnover. Explanation (1-A) to section 2(r) did not assist the appellants because the duty was not separately charged by them as tax, and no representation capable of founding equitable estoppel was shown.

Conclusion: The excise duty was includible in the appellants' taxable turnover and sales tax was payable on that amount.

---