TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Supreme Court upholds demand notice under Distillery Rules, allows challenge before State</h1> <h3>STATE OF M.P. AND ANR. Versus KEDIA GREAT GALEON LTD. AND ANR.</h3> STATE OF M.P. AND ANR. Versus KEDIA GREAT GALEON LTD. AND ANR. - TMI Issues Involved:1. Validity of the demand notice issued under Rule 4(41) of the Madhya Pradesh Distillery Rules, 1995.2. Applicability of the judgment in M/s. Lilasons Breweries (Pvt.) Ltd. vs. State of Madhya Pradesh to the present case.3. Examination of the vires of Rule 4(41) in the absence of a specific prayer in the writ petition.4. Reasonableness and arbitrariness of the demand.Detailed Analysis:1. Validity of the Demand Notice:The State of Madhya Pradesh issued a demand notice to the respondents for Rs. 13,24,189.50, claiming it as excess expenditure on the establishment of officers and employees under Rule 4(41) of the Madhya Pradesh Distillery Rules, 1995. The respondents challenged this demand in a writ petition, arguing that the rule under which the demand was raised is void and non est, relying on a precedent set by the Supreme Court in M/s. Lilasons Breweries (Pvt.) Ltd. vs. State of Madhya Pradesh.2. Applicability of the Judgment in M/s. Lilasons Breweries:The respondents heavily relied on the judgment in M/s. Lilasons Breweries, where Rule 22 of the Madhya Pradesh Brewery Rules, 1970, which allowed the State to realize charges exceeding five percent of the duty leviable, was struck down. The respondents argued that Rule 4(41) of the 1995 Rules is similarly void. However, the State contended that the judgment in Lilasons was not applicable as it dealt with a different rule and that the demand was fully covered under Rule 4(41).3. Examination of the Vires of Rule 4(41):The respondents did not specifically pray for declaring Rule 4(41) as ultra vires in their writ petition. The State argued that the vires of Rule 4(41) could only be challenged before a Constitution Bench. The learned Single Judge noted that Rule 4(41) appeared to be ultra vires but did not pass any order in this regard due to the absence of a specific prayer and the jurisdictional limitations of the bench at Indore.4. Reasonableness and Arbitrariness of the Demand:The learned Single Judge found the demand notice void, relying on the judgment in Lilasons and reasoning that the demand towards establishment charges was more than 150 percent of the total income of the distilleries, making it arbitrary and unreasonable. The State argued that the demand was proper and within the powers conferred by the M.P. Excise Act, 1915. The Supreme Court examined whether the demand was arbitrary and unreasonable, noting that the respondents had not laid a sufficient foundation in their writ petition to challenge the reasonableness of the demand.Conclusion:The Supreme Court set aside the judgment of the High Court dated 04.05.2000, which had quashed the demand notice. The Court provided liberty to the respondents to represent against the demand notice before the State, which should consider the representation and take an appropriate decision expeditiously. The Supreme Court did not find the reliance on the Lilasons case appropriate and upheld the validity of the demand under Rule 4(41), subject to the State's reconsideration of the specific circumstances of the case.
TaxTMI 