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Issues: Whether excise duty paid by the assessee on petroleum products cleared from bonded warehouse and despatched outside the State formed part of the purchase turnover liable to tax under section 5A of the Kerala General Sales Tax Act, 1963.
Analysis: The levy of excise duty under the Central excise law was on the manufacture or production of the goods, with the primary liability resting on the manufacturer, though collection could be deferred to a later stage by the warehousing scheme and bond procedure. The sale bills raised in favour of the assessee showed only the price of the goods, but the duty paid on clearance from the bonded warehouse discharged the manufacturer's liability and not an independent liability of the purchaser. In such circumstances, the amount paid towards excise duty was part of the consideration traceable to the purchase of the goods and not an allowable deduction from the purchase turnover. The earlier contrary view was held to be incorrect.
Conclusion: The excise duty paid by the assessee was includible in the purchase turnover and was liable to tax under section 5A; the decision in Burmah Shell was overruled.
Ratio Decidendi: Where excise duty is primarily the legal liability of the manufacturer and the purchaser pays it only to discharge that liability at the stage of clearance from a bonded warehouse, the amount so paid forms part of the purchase consideration and is includible in taxable turnover under the sales tax law.
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