Excise duty incidence on petroleum products: purchaser-paid duty counted in taxable turnover, with liability fixed on the manufacturer.

Excise duty on petroleum products removed from bonded warehouses was held to remain a liability of the manufacturer, because excise is a duty on production or manufacture and the bonded warehouse rules did not alter that incidence. Payment by the purchaser merely discharged the manufacturer's existing duty and did not create a joint and several liability between manufacturer and purchaser. On that basis, the duty paid by the purchaser was includible in the taxable purchase turnover under section 5-A of the Kerala General Sales Tax Act, 1963, and the High Court's view was upheld in favour of the Revenue.

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Issues: Whether excise duty paid directly by the purchaser on petroleum products removed from bonded warehouses formed part of the purchaser's taxable purchase turnover under section 5-A of the Kerala General Sales Tax Act, 1963.

Analysis: The liability to pay excise duty was held to rest on the manufacturer, since excise is a duty on production or manufacture and the relevant rules governing bonded warehouses did not alter that basic incidence. Where the purchaser paid the duty, it merely discharged the liability that had arisen on manufacture and which remained that of the producer. The Court accepted the High Court's analysis of the statutory scheme and the relevant Central Excise Rules, and rejected the contention that the liability was joint and several between manufacturer and purchaser.

Conclusion: The excise duty paid by the purchaser was includible in the taxable turnover, and the decision of the High Court on this point was upheld in favour of the Revenue.

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