TaxTMI 
TaxTMI 
1976 (10) TMI 103
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....rt of Andhra Pradesh at Hyderabad dismissing three sets of Writ Petitions Nos. 1195 to 1198 of 1975, 3931, 3944 and 4029 of 1975 and 6790 of 1974 filed by the appellants to challenge certain orders of the sales tax authorities made in respect of redetermination of their turnover for certain years under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act") shall be disposed of by this judgment, as they raise a common question as to whether the excise duty deposited directly in a State treasury or a sub-treasury by the purchasers of the Indian-made foreign liquor called "Indian liquors" before removing the said liquor from a distillery and the countervailing duty remitted directly to a State treasury or a sub-treasury by the purchasers of the aforesaid specie of liquor before removing it from a bonded warehouse can properly be said to form part of the turnover of the manufacturer and of the owner of the bonded warehouse respectively and as such liable to sales tax under the Act. The circumstances which have given rise to these appeals lie in a short compass and may be briefly stated: The appellants in the first two sets of Appeals Nos. 248 to 251 of 1....
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....ry pass for release of the liquor after making payment of the excise duty and presented the same at the concerned distillery whereupon a bill of sale or invoice was prepared by the distillery showing the price of the liquor. The said bill did not include the excise duty paid by the buyer. The appellants' books of account also did not contain any reference regarding the excise duty paid by the purchasers in the manner stated above. The appellants paid the sales tax in full as per final assessments made by the sales tax authorities under the Act. It appears that after the completion of the assessments of the sales tax under the Act for the years in question, the Commercial Tax Officer felt that there had been a failure to include the excise duty paid on the aforesaid liquors vended by the appellants in their taxable turnover. Accordingly, acting under the provisions of section 14(1) of the Act, the Commercial Tax Officer issued notices in February, 1975, to the appellants in the aforesaid first two sets of appeals to show cause why the assessments be not reopened. Aggrieved by the said action of the Commercial Tax Officer, the appellants filed Writ Petitions Nos. 1195 to 1198 of 197....
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....lant was also required to file objections and adduce evidence in support thereof within 7 days from the date of receipt of the impugned notice. Aggrieved by the notice, the appellant filed a petition, being Petition No. 6790 of 1974, before the High Court of Andhra Pradesh See [1976] 37 S.T.C. 467., seeking issue of an appropriate writ, order or direction declaring that the appellant was not liable to pay sales tax on excise duty paid by the purchasers in their own names and restraining the Deputy Commissioner, Commercial Taxes, Hyderabad, respondent in the appeal, from taking further proceedings in pursuance of the said notice. The said petition having been dismissed, the appellant has, as already stated, come up in appeal to this Court. At the hearing of these appeals, Mr. Sorabji and the other counsel appearing on behalf of the appellants have assailed the aforesaid judgments and orders of the High Court by urging in the first instance that the view taken by the High Court about the nature and character of excise duty and countervailing duty is not correct. They have also after trying in vain to argue for considerable length of time that on the true construction of the Andhra ....
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....uction or manufacture of goods produced or manufactured within the country. Subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience." Again In re Sea Customs Act [1964] 3 S.C.R. 787., it was observed: "The question with respect to excise duties was considered by this Court in the case of Amalgamated Coalfields Ltd. v. Union of India [1962] Supp. 3 S.C.R. 436; A.I.R. 1962 S.C. 1281.. After considering the previous decisions of the Federal Court in In re Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 [1938] 1 S.T.C. 1 (F.C.); [1939] F.C.R. 18., Province of Madras v. Boddu Paidanna and Sons[1942] 1 S.T.C. 104 (F.C.); [1942] F.C.R. 90. and of the Judicial Committee of the Privy Council in Governor-General in Council v. Province of Madras [1945] 1 S.T.C. 135 (P.C.); [1945] F.C.R. 179., this Court observed as follows at page 1287: 'With great respect, we accept the principles laid down by the ....
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.... brings us to the consideration of the meaning of the expression 'countervailing duties' used in entry 51, List II of the Seventh Schedule to the Constitution. The expression 'countervailing duties' has not been defined in the Constitution or the Bihar and Orissa Act 2 of 1915. We have, therefore, to depend upon its etymological sense and the context in which it has been used in entry 51. In its etymological sense, it means to counterbalance; to avail against with equal force or virtue; to compensate for something or serve as an equivalent of or substitute for: see Black's Law Dictionary, 4th Edn., 421. This would suggest that a countervailing duty is imposed for the purpose of counterbalancing or to avail against something with equal force or to compensate for something as an equivalent. Entry 51 in List II of the Seventh Schedule to the Constitution gives power to the State Legislature to impose duties of excise on alcoholic liquors for human consumption where the goods are manufactured or produced in the State. It also gives power to levy countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India. The fact that countervailing d....
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....ary to recall the provisions of the Andhra Pradesh Distillery Rules, 1970, which have been set out in the earlier part of this judgment. The said rules particularly rules 79, 81, 82, 83 and 84 lend a good deal of support, in our opinion, to the contention of counsel for the appellants and make every intending buyer of the Indian liquor liable for payment of the excise duty before obtaining the distillery pass and lifting the quantity mentioned therein from the distillery. Accordingly agreeing with counsel for the appellants we hold that intending purchasers of the Indian liquors who seek to obtain distillery passes are also legally responsible for payment of the excise duty which is collected from them by the authorities of the excise department. The position in regard to the countervailing duty is not, however, clear though rule 10(1) of the Andhra Pradesh Indian Liquor (Storage in Bond) Rules, 1969, and rules 5(2) and 17 of the Andhra Pradesh Foreign and Indian Liquor Rules, 1970, enable the intending buyers of Indian liquors to remove the same from a bonded warehouse on payment of the said duty to the excise authorities. This is not, however, sufficient to dispose of the matte....
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...., other sums charged by the dealer at the time of or before the delivery of the goods also form part of turnover and, according to the well-established canon of construction, a taxing statute has to be interpreted reasonably so that there is no evasion of the tax, the phrase "any sums charged by the dealer" occurring in the aforesaid definition of the word "turnover" must be construed as meaning any item of expense including the excise duty or the countervailing duty to which the buyers were put by the manufacturers of the liquors or the owner of the bonded warehouse. We find ourselves unable to accept the construction sought to be put by him as it is opposed to the plain meaning of the said phrase. It will be advantageous here to refer to the decisions of this Court in A.V. Fernandez v. State of Kerala [1957] 8 S.T.C. 561 (S.C.); [1957] S.C.R. 837., where Bhagwati, J., speaking for the Bench, after quoting the observations made by Lord Russell of Killowen in Inland Revenue Commissioners v. Duke of Westminster [1936] A.C. 1 at 24., which were approved by the Privy Council in Bank of Chettinad v. Income-tax Commissioner[1940] 8 I.T.R. 522 (P.C.); A.I.R. 1940 P.C. 183., observed: "....