Excise duty exemption for exported liquor depends on levy power, not actual collection, and writ relief remained available.

IMFL manufactured in Madhya Pradesh and exported outside the State was treated as falling within the exemption entries in the M.P. Commercial Tax Act, 1994 and the M.P. VAT Act, 2002 because those entries cover goods on which duty is or may be levied under the M.P. Excise Act, 1915. The Court reasoned that dutiability depends on the State's power to levy excise duty, not on whether duty is actually collected, and that export-related mechanisms such as bonds, security, or refund do not change that character. It also noted that an alternate statutory remedy does not preclude writ jurisdiction where the levy itself is contrary to law, so the reassessment notice, reassessment order, and revisional order were quashed.

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Issues: (i) Whether Indian Made Foreign Liquor manufactured in Madhya Pradesh and exported outside the State falls within Entry 18 of Schedule I to the M.P. Commercial Tax Act, 1994 and Entry 47 of Schedule I to the M.P. VAT Act, 2002 so as to be exempt from commercial tax or VAT; (ii) whether the writ petition was liable to be rejected on the ground of availability of an alternate statutory remedy.

Issue (i): Whether Indian Made Foreign Liquor manufactured in Madhya Pradesh and exported outside the State falls within Entry 18 of Schedule I to the M.P. Commercial Tax Act, 1994 and Entry 47 of Schedule I to the M.P. VAT Act, 2002 so as to be exempt from commercial tax or VAT.

Analysis: The entries exempt goods on which duty is or may be levied under the M.P. Excise Act, 1915. The expression covers not only goods on which duty is actually levied but also goods on which the State has the power to levy duty. IMFL manufactured in the State is an excisable article, and the statutory scheme under the Excise Act and the Foreign Liquor Rules shows that duty is capable of being levied on such liquor even when exported. The fact that the State may defer collection, grant exemption, or regulate export through security, bond, or refund machinery does not alter the character of the goods as dutiable goods for the purpose of the exemption entries. The Court applied the principle that the taxable incidence arises from manufacture and that the mode of collection does not affect the essence of the duty.

Conclusion: Yes. The exported IMFL was held to be covered by the exemption entries, and imposition of commercial tax and VAT on it was held impermissible.

Issue (ii): Whether the writ petition was liable to be rejected on the ground of availability of an alternate statutory remedy.

Analysis: Once the levy itself was found to be contrary to law, the existence of an appellate remedy did not bar exercise of writ jurisdiction. The question raised involved interpretation of the taxing statute and the Court found that relegating the petitioner to appeal was unnecessary in the circumstances.

Conclusion: No. The petition was held maintainable despite the alternate remedy.

Final Conclusion: The reassessment notice, reassessment order, and revisional order were quashed because the levy of tax on exported IMFL was held unsustainable under the exemption scheme, and the writ petition was allowed.

Ratio Decidendi: Goods on which duty is capable of being levied under the excise law remain within the scope of a tax-free entry even if the State does not in fact levy or collect that duty, and writ jurisdiction may be exercised where the impugned levy is itself contrary to law.

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