Excise duty paid by purchasers counts toward taxable turnover, and statutory sales tax liability cannot be defeated by estoppel.

Madras HC held that excise duty paid by purchasers for removal of Indian-made foreign liquor formed part of the manufacturers' taxable turnover under the Tamil Nadu General Sales Tax Act, 1959, because the duty attached to manufacture and the mode of collection did not change its character; payment by the purchaser discharged the manufacturer's liability and was part of the sale consideration. The Court also rejected the plea of equitable or promissory estoppel, holding that there can be no estoppel against statute and that communications relied on could not override the statutory sales tax liability on the excise duty component. The writ petitions and tax case were dismissed.

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Issues: (i) Whether excise duty paid by the purchasers for removal of Indian-made foreign liquor from the manufactory formed part of the taxable turnover of the manufacturers for levy of sales tax under the Tamil Nadu General Sales Tax Act, 1959; (ii) Whether the demand of sales tax on the excise duty element was barred by equitable or promissory estoppel.

Issue (i): Whether excise duty paid by the purchasers for removal of Indian-made foreign liquor from the manufactory formed part of the taxable turnover of the manufacturers for levy of sales tax under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The levy of excise duty under the Prohibition Act and the connected rules was treated as a duty that attaches to manufacture, though collection may be effected at a later stage or through a purchaser acting on the manufacturer's account. The controlling principle applied was that the method of collection does not change the character of the impost. The sale consideration was held to be the total amount paid for the goods, and it was immaterial that the excise duty did not pass into the manufacturer's till or was not shown as part of the bill price. The purchasers' payment of duty was treated as discharge of the manufacturer's liability and therefore as part of the consideration for sale.

Conclusion: Excise duty paid by the purchasers was includible in the taxable turnover and the finding was against the assessee.

Issue (ii): Whether the demand of sales tax on the excise duty element was barred by equitable or promissory estoppel.

Analysis: The Court held that there can be no estoppel against a statute. The communications relied on were found insufficient to alter the statutory liability, and the authority that issued them was not competent to exempt the turnover from sales tax. The principle of estoppel could not override the statutory scheme governing sales tax on the excise duty component.

Conclusion: The plea of equitable or promissory estoppel failed and the finding was against the assessee.

Final Conclusion: The excise duty component was held taxable as part of the sale consideration, and the writ petitions and tax case were dismissed.

Ratio Decidendi: Excise duty, though collected from a purchaser for the manufacturer's account, remains part of the consideration for sale and enters the taxable turnover; statutory tax liability cannot be defeated by estoppel.

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