Excise classification of liquor barred Commercial Tax and VAT on the same goods under the State tax regime.

Indian Made Foreign Liquor and rectified spirit manufactured in Madhya Pradesh remained excisable goods under the Madhya Pradesh Excise Act, 1915, so the State could not also subject the same goods to Commercial Tax or VAT under the State sales tax schedules. The court relied on earlier co-ordinate bench rulings and the statutory scheme in Section 25, read with Rules 12 and 13 of the Madhya Pradesh Foreign Liquor Rules, which showed that export duty or security requirements did not alter the goods' essential character. For the assessment years 2011-12 and 2012-13, that earlier interpretation governed, and the levy under Commercial Tax/VAT was held impermissible.

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Issues: Whether Commercial Tax or VAT could be imposed on Indian Made Foreign Liquor and rectified spirit by virtue of the relevant entries in the State tax schedules, when such goods were treated as excisable articles under the Madhya Pradesh Excise Act, 1915.

Analysis: The Court noted that the controversy had already been answered against the Revenue in earlier co-ordinate bench decisions. Those decisions had held that liquor manufactured in Madhya Pradesh remained an excisable good, and that the duty or security required for export under the excise regime did not change its essential character. The statutory scheme under Section 25 of the Madhya Pradesh Excise Act, 1915, read with the export procedure under Rule 12 and Rule 13 of the Madhya Pradesh Foreign Liquor Rules, showed that the goods were liable to excise duty and that the State could not, for the same category of goods, treat them as taxable under the Commercial Tax Act or the Value Added Tax Act. Since the assessment years in the present petitions were 2011-12 and 2012-13, the earlier ruling was held to govern the matter.

Conclusion: The levy of Commercial Tax or VAT on the goods in question was impermissible, and the petitions were allowed.

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