2016 (10) TMI 290 - HC - VAT and Sales Tax

High Court quashes duty order on IMFL & Rectified Spirit, citing M.P. VAT Act & Excise Act exemptions

The High Court allowed the appeal, quashing the order imposing duty/tax on the petitioner under the M.P. VAT Act, 2002 or the M.P. Commercial Tax Act, ... Imposition of tax - Sec. 53(2)(a) of the M.P. VAT Act, 2002 - whether by virtue of Entry No.18 to Schedule-I of the M.P. Commercial Tax Act, 1994 or Entry No.47 to Schedule-I of the M.P. VAT Act, 2002, the manufactured product i.e. IMFL or Rectified Spirit being an excisable article is liable to be taxed under the Commercial TaxAct, 1994 or the VAT Act, 2002? - Held that: - the decision in the case of Gwalior Alcobrew Pvt. Ltd. Vs. State of M.P. & Others [2016 (9) TMI 355 - MADHYA PRADESH HIGH COURT] apply where it was held that foreign liquor manufactured in the State of M.P. and exported to other State is an excisable article and even though it is exempted from payment of excise duty but being an excisable good on which the State Government may levy excise duty under the Excise Act, recovery of Commercial tax or VAT tax is not permissible. Amendment brought about in Entry No.47 to Schedule-I of the VAT Act vide notification issued on 1.4.2013. However, in the present appeal as the assessment year is prior to 1.4.2013, the principles laid down in the case of Gwalior Alcobrew Pvt. Ltd. will apply - appeal allowed - decided in favor of appellant. Issues involved:Challenge to order imposing duty/tax under M.P. VAT Act, 2002 or M.P. Commercial Tax Act, 1994 on manufactured products - IMFL/Rectified Spirit/Country Liquor. Interpretation of Entry No.18 to Schedule-I of M.P. Commercial Tax Act, 1994 and Entry No.47 to Schedule-I of M.P. VAT Act, 2002. Applicability of exemption to excisable articles under M.P. Excise Act to payment of duty/tax under Commercial Tax Act and VAT Act. Impact of judgment in W.P. No.2366/2016 - Gwalior Alcobrew Pvt. Ltd. Vs. State of M.P. & Others on the present case. Assessment of duty/tax for Rectified Spirit pre and post 1.4.2013.Analysis:The appeal before the High Court challenged an order passed by the Appellate Board imposing duty/tax on the petitioner under the M.P. VAT Act, 2002 or the M.P. Commercial Tax Act, 1994. The main issue revolved around whether the manufactured products, including IMFL and Rectified Spirit, were liable to be taxed under the Commercial Tax Act, 1994 or the VAT Act, 2002 based on specific entries in the respective schedules. The appellant argued that as excisable articles under the M.P. Excise Act, the products were exempt from such duty or tax. This argument was supported by a previous judgment in W.P. No.2366/2016, where the Court held that foreign liquor manufactured in M.P. and exported to other states, although exempt from excise duty, could not be subjected to Commercial tax or VAT tax. The Court applied the principles from the earlier judgment to the present case, emphasizing that until the amendment in Entry No.47 to Schedule-I of the VAT Act in 2013, the exemption should apply. Therefore, for the assessment year pre-dating 1.4.2013, the appeal was allowed, and all impugned orders were quashed.The Court specifically addressed the issue of Rectified Spirit, noting that post the 2013 amendment, the imposition of duty/tax might differ. However, for the period in question, the Court refrained from delving into other raised questions, leaving them open for future consideration if necessary. Ultimately, the appeal was allowed based on the precedent set by the Gwalior Alcobrew Pvt. Ltd. case, leading to the quashing of all impugned actions, including assessment orders, orders by the Revisional Authority, Appellate Authority, show cause notices, and related proceedings. The judgment concluded by allowing and disposing of the appeal, affirming the decision to quash the impugned actions based on the established legal principles.