Excise duty and reassessment limits in turnover disputes: purchaser-paid duty and final assessment items remained taxable.

Excise duty on liquor manufactured in the State was treated as part of assessable turnover where purchasers paid it directly to obtain transport permits and distillery passes, because the levy remained on the manufacturer and the payment was made on the manufacturer's behalf. Reassessment under sales tax law was confined to escaped turnover and could not reopen items already included and final in the original assessment. Freight charges and the value of unserviceable gunnies also could not be excluded in reassessment where they had not been disputed earlier, leaving them within the assessed turnover.

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Issues: (i) Whether excise duty paid directly by purchasers to the State Government for liquor purchased from the assessee distillers formed part of the assessable turnover; (ii) Whether items of turnover not disputed in the original assessment could be reopened in reassessment proceedings; (iii) Whether freight charges and the value of unserviceable gunnies were permissible deductions or could be excluded from turnover.

Issue (i): Whether excise duty paid directly by purchasers to the State Government for liquor purchased from the assessee distillers formed part of the assessable turnover.

Analysis: The charging provisions of the Andhra Pradesh Excise Act treated excise duty as a levy on liquor manufactured or produced in the State, and the statutory liability was held to rest on the manufacturer or producer. The collection machinery under the Excise Rules did not alter the incidence of the levy. On the sales tax side, turnover meant the total consideration for the sale, and the amount paid by the buyer, whether to the seller or to a third person on the seller's behalf, constituted part of the price. Applying the substance of the transaction, the duty paid by purchasers to obtain transport permits and distillery passes was treated as payment made for and on behalf of the manufacturer.

Conclusion: The excise duty paid by the purchasers formed part of the taxable turnover and the answer was against the assessee.

Issue (ii): Whether items of turnover not disputed in the original assessment could be reopened in reassessment proceedings.

Analysis: Reassessment under the sales tax law was confined to escaped turnover. Items that had already been included in the original assessment and had become final could not be reopened merely because reassessment proceedings were initiated for other escaped items. The scope of reassessment was therefore limited and did not permit a fresh examination of the entire turnover.

Conclusion: The assessing authority had no jurisdiction to reopen items which had not escaped assessment, and the answer was against the assessee.

Issue (iii): Whether freight charges and the value of unserviceable gunnies were permissible deductions or could be excluded from turnover.

Analysis: Since these items had already been included in the original assessment and were not put in issue at that stage, they could not be challenged in reassessment. The contention on merits was therefore not available in the reassessment proceedings. The freight component and the value of gunnies thus remained part of the assessed turnover for the purposes of these cases.

Conclusion: The claim for exclusion of freight charges and the value of unserviceable gunnies failed, and the answer was against the assessee.

Final Conclusion: All the substantial questions were answered against the assessees, and the tax revision cases and writ petitions were not maintainable on the grounds urged.

Ratio Decidendi: Excise duty payable on goods manufactured in the State is part of the sale consideration when, in substance, it is borne by the purchaser for the manufacturer's liability, and reassessment proceedings are confined to escaped turnover and do not permit reopening of final items from the original assessment.

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