Sales tax on liquor through retailers upheld as a valid levy, with double taxation challenge rejected and collection duties confirmed.

A fiscal levy on liquor sold through FL II licensees was treated as valid under the governing statutory scheme, and the challenge based on illegality and double taxation failed because the tax was recoverable from consumers through retailers. The presumption of validity attached to the notifications and circulars, and the revised label regime permitting sales tax over and above the maximum retail price was upheld. Retailers remained obliged to collect and deposit the tax, although cases where tax was not actually collected during the period of confusion were left for departmental examination on their own facts.

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Issues: (i) Whether the impugned circulars and notifications levying sales tax on liquor sold through FL II licensees were liable to be quashed as illegal or as amounting to double taxation; (ii) Whether the retailers could resist collection or deposit of sales tax in respect of stock manufactured before the revised label regime, including cases where tax was not collected during the period of confusion.

Issue (i): Whether the impugned circulars and notifications levying sales tax on liquor sold through FL II licensees were liable to be quashed as illegal or as amounting to double taxation.

Analysis: The levy was upheld as falling within the statutory framework governing liquor sales and sales tax. The Court applied the presumption of validity attaching to fiscal enactments, notifications and circulars, and noted that the State had amended the label regime and permitted collection of sales tax over and above the maximum retail price. The challenge of double taxation was rejected because the tax was treated as a valid levy recoverable from the consumer through the retailer.

Conclusion: The challenge to the validity of the impugned circulars and notifications failed and was rejected.

Issue (ii): Whether the retailers could resist collection or deposit of sales tax in respect of stock manufactured before the revised label regime, including cases where tax was not collected during the period of confusion.

Analysis: The Court held that the retailers were under an obligation to collect the tax from customers and deposit it in accordance with law. However, it recognised that there had been confusion until the public advertisement and that individual cases where tax was not actually collected would have to be examined by the department on their own facts, in light of the interim order already passed.

Conclusion: The retailers were not granted general relief against collection or deposit, though individual non-collection cases were left to be dealt with separately by the department.

Final Conclusion: The writ petition was dismissed on merits, the impugned levy and related directions were sustained, and only a limited factual accommodation was indicated for individual cases of non-collection.

Ratio Decidendi: A valid fiscal levy notified under the governing statutory scheme is enforceable against liquor retailers, who remain obliged to collect the tax from consumers and cannot defeat the levy by alleging double taxation or general confusion.

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