TaxTMI 
TaxTMI 
2005 (5) TMI 308
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.... arises, inter alia, for consideration by this Court, namely-Whether the incidence of excise duty, having regard to the provision of the Kerala Abkari Act and the relevant Rules, falls upon the manufacturer/distiller such as the respondents herein and therefore includable in their turnover for the purpose of levy of turnover tax, or whether the incidence of excise duty falls on the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited, a Government company which alone is liable to pay the excise duty on Indian-made foreign liquor, and consequently the said component is not includable in the turnover of the respondents/distillers. 3.. These appeals came up for hearing before a 3-Judge Bench of this Court. After hearing the parties for sometime, by order dated October 17, 2001, it was observed that, the point involved was an important one and it would be appropriate if the cases are heard by a larger Bench. The referring Bench observed thus: "The question which arises for consideration in these cases is, whether the excise duty levied under the provisions of the Kerala Abkari Act on Indian-made foreign liquor which is manufactured forms part of the turnover o....
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....n the aforesaid observations, this Court concluded that even if rule 22 of the Tamil Nadu Rules provides for realisation of the excise duty from the Corporation that was only a convenient method of collection, the primary obligation to pay excise duty being only of the manufacturer. Mr. Iyer, therefore, contended that following the said decision the appeals should be allowed. Mr. F.S. Nariman, learned Senior Counsel for the respondents, has drawn our attention to three Constitution Bench decisions of this Court. In the case of A.B. Abdul Kadir v. State of Kerala [1962] Supp 2 SCR 741, where at page 751 it was observed as follows: 'It may also be accepted that generally speaking the tax is on the manufacturer or the producer, though it cannot be denied that laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production.' (emphasis added) In R.C. Jall Parsi v. Union of India [1962] Supp 3 SCR 436, at page 451, it was contended that the excise duty cannot be legally levied on the consignee who had nothing to do with the manufacture or production of coal. This argument was repelled and at page 451, it was observed as follows: 'E....
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....nected cases are heard by a larger Bench. We direct, the papers be laid before the honourable Chief Justice for appropriate orders." That is how these appeals have been placed by the honourable Chief Justice before this Bench for disposal. 4.. The first batch of appeals arise out of writ petitions filed in the years 1998-1999 which were disposed of by a common judgment and order of a division Bench of the High Court dated November 27, 1999 See Kerala Distilleries and Allied Products Limited v. Assistant Commissioner (Assessment) (I), Commercial Tax [2000] 117 STC 553 (Ker). in O.P. Nos. 23008, 23903 of 1998-L, 818, 2255, 2264, 12893, 3283, 7437 and 19686 of 1999 whereby the High Court allowed See Kerala Distilleries and Allied Products Limited v. Assistant Commissioner (Assessment) (I), Commercial Tax [2000] 117 STC 553 (Ker). the writ petitions filed by the respondents/distillers holding, inter alia, that under the Scheme of the Kerala Abkari Act and the Rules, the incidence of excise duty on the manufacture of Indian-made foreign liquor was required by law to be borne by the Kerala Beverages Corporation to whom the liquor was sold at a price which did not include the ele....
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....judgment disposing of the first batch of writ petitions and was of the view that the incidence of excise duty fell squarely on the respondents/distillers and as such was includable in their total turnover for purpose of computation of turnover tax under the Kerala General Sales Tax Act. However, the division Bench held itself bound by the earlier decision rendered by the High Court and, therefore, following the earlier decision held that by adding an Explanation to section 5(2C) by the Kerala General Sales Tax Act the constitutional lacuna pointed out in the earlier judgment had not been removed by appropriate amendment to the Kerala Abkari Act. By merely adding the Explanation to section 5(2C) of the Kerala General Sales Tax Act, the excise duty element paid by the Corporation could not be added to the turnover of the respondents/distillers since it had been held in the earlier judgment that excise duty was leviable only on the purchaser, namely, the Kerala State Beverages Corporation. 7.. In this view of the matter the High Court allowed the writ petitions and declared that the Explanation appended to section 5(2C) of the Kerala General Sales Tax Act was unconstitutional an....
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....orporation which actually paid excise duty payable on the IMFL. Consequently the element of excise duty did not form part of the turnover of the respondents/distillers and was therefore not includable in the total turnover of the respondents/distillers for the purpose of computation of turnover tax payable by them under the Kerala General Sales Tax Act. 11.. The Kerala Abkari Act was formerly known as Cochin Abkari Act enacted in the year 1902. It applied to the territories comprised within the State of Cochin but with effect from July 11, 1967, by Act 10 of 1967, the provisions of the Act were extended to the whole of the State of Kerala. Chapter IV of the Act deals with manufacture, possession and sale of liquor. The relevant part of section 12 reads as follows: "12(1). Manufacture of liquor or intoxicating drug prohibited except under the provisions of this Act.-No liquor or intoxicating drug shall be manufactured, ............... except under the authority and subject to the terms and conditions of a licence granted by the Commissioner in that behalf, or under the provisions of section 21; ..............." 12.. Section 14 deals with establishment and control o....
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....s, include countervailing duty on such goods manufactured or produced elsewhere in India and brought into the State." "18. How duty may be imposed.-(1) Such duty of excise may be levied: (a) in the case of spirits or beer, either on the quantity produced in or passed out of a distillery, brewery or warehouse licensed or established under section 12 or section 14 as the case may be or in accordance with such scale of equivalents, calculated on the quantity of materials used or by the degree of attenuation of the wash or wort or on the value of the liquor as the case may be as the Government may prescribe; ............... " Section 18A of the Act provides as follows: "18A. Grant of exclusive or other privilege of manufacture, etc., on payment of rentals.-(1) It shall be lawful for the Government to grant to any person or persons, on such conditions and for such period as may deem fit, the exclusive or other privilege- (i) of manufacturing or supplying by wholesale; or (ii) of selling by retail; or (iii) of manufacturing or supplying by wholesale and selling by retail, any liquor or intoxicating drugs within any local area on his or their payment to the Government....
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....as may be prescribed by the Government, after denaturation under the rules prescribed under the Act." Rule 50 deals with removal under bond and reads as follows: "50. Removals under bond.-When spirits are removed from the distillery or warehouse without payment of duty, the distiller or warehouse keepers shall execute bond for the payment of duty on them at the prescribed rate in case of his failure to account for them to the satisfaction of the Commissioner. In the case of spirits exported, bond shall be executed with one or more sureties." The relevant part of rule 52 provides as follows: "52. To whom issues for local consumption may be made.-(1) Indian-made foreign spirit may be issued for consumption within the State only to the FL9 licensees in the State. ..............." 16.. Foreign Liquor Rules, 1953 have also been framed under sections 10, 24 and 29 of the Cochin Abkari Act. Rule 13, sub-rule (9) which deals with issue of licences in form FL9 reads as follows: "(9) Licence for possession and supply of foreign liquor in wholesale by the bonded warehouse licensees to foreign liquor-I licensees. Foreign liquor-3 hotel restaurant licensees. Foreign liquor-....
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....r payment of the excise duty that the goods were consigned to the concerned FL9 licensed premises owned and controlled by the KSBC. 19.. The Rules next to be noticed are the Foreign Liquor (Storage in Bond) Rules, 1961 which have been framed under sections 14(d) and 29(2) of the Cochin Abkari Act. Under the Rules "bonded warehouse" means a warehouse where foreign liquor is stored in bond. Sub-section (vi) of section 2 explains the words "to store foreign liquor in bond" as under: "With all its grammatical variations means to store, deposit or keep foreign liquor in a bonded warehouse without payment of the excise duty payable thereon." Rule 3 provides as follows: "3(a) Any person desiring to store in bond foreign liquor shall make an application for a licence in that behalf to the Commissioner of Excise through the concerned officer-in-charge of the Excise Division. The application shall contain the following particulars namely: (1) name and address of the applicant in the case of a firm or company, the names and addresses of the partners or directors should be furnished; (2) name and address of the place where foreign liquor is to be stored or bond together with ....
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....hereunder. This obligation shall be void but otherwise and on breach in the performance of all or any of the terms and conditions herein contained the same shall be in full force. ..........." Rules 11 and 14 are also relevant which read as follows: "11. (1) Foreign liquor stored in the bonded warehouse shall be removed only to the premises licensed under the FL 9 licence referred to in sub-rule (C) of rule 3, held by the bonded warehouse licensee, and such removal shall be only under cover of a pass granted in that behalf and on payment of the excise duty due. Foreign liquor intended for export to foreign countries on the strength of the export authorisation from the Government of India shall also be brought and stored in the bonded warehouse and the removal therefrom shall be only under cover of a pass granted in that behalf. The pass shall be granted on the execution a bond to pay excise duty at full rate payable on the quantity not exported as evidenced from the certificate from the 'customs authority' of the port of export: Provided that nothing contained in sub-rule (1) shall be applicable to the licensee in form BW1(A). (2) If the licensee wants to issue....
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.... " 22.. As we have noticed earlier, with effect from January 5, 1999, by amendment of the Foreign Liquor Rules, KSBC was required to pay to the distillers/manufacturers, the duty element levied under section 17 before removing the IMFL to its licensed premises. 23.. We may now briefly refer to the facts of the cases before us. The representative facts are taken from the writ petition filed by M/s. Kerala Distilleries and Allied Products Ltd., now renamed as Maharashtra Distilleries Limited as per the Scheme of Amalgamation sanctioned by the High Court of Kerala. The aforesaid petitioner is engaged in the manufacture and sale of IMFL. It is registered as dealer both under the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956. Pursuant to the policy of the Government creating a monopoly in favour of the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited, the petitioner has been submitting tenders as required for sale and supply of IMFL. The prices quoted of the various brands of IMFL do not include the sales tax or the excise duty since it was only the Kerala State Beverages Corporation which was liable to pay the tax. Excise duty w....
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....oration on IMFL sold by it to the Corporation. The levy of turnover tax on such amount of excise duty was sought to be quashed as being ultra vires and beyond the legislative competence and therefore unconstitutional. 25.. The State in its counter-affidavit contended, inter alia, that the excise duty paid by the Kerala State Beverages Corporation formed part of the sale turnover of the manufacturer, since it is the obligation of the manufacturer to pay excise duty, though it may be discharged by others. Relying upon the decision of this Court in Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer, Madras See [1997] 107 STC 212. (1997) 7 SCC 542 it was contended that excise duty element formed part of the total turnover which was chargeable to turnover tax under section 5(2C) of the Kerala General Sales Tax Act, 1963. 26.. The Kerala State Beverages Corporation which was respondent No. 4 in the writ petition accepted the fact that the excise duty on IMFL purchased by it from the petitioner (respondent herein) was paid by it and the same is included in its price which it realised as a wholesale dealer from its purchasers, and the turnover of the Corporation is compute....
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.... the turnover of goods as specified hereunder, namely: (a) by an oil company defined in the Explanation under serial number 97 of the First Schedule to this Act whose total turnover in a year exceeds rupees fifty lakhs at the rate of three per cent on the turnover from the 1st day of April, 1991 till 31st day of July, 1991 and thereafter at the rate of four per cent on the turnover; (b) by any dealer in Foreign liquor (Indian-made) or Foreign liquor (Foreign made) as specified in entries against serial numbers 53 and 54 of the First Schedule at the rate of five per cent on the turnover at all points; . . .. . .. . ..." 30. The entry against serial No. 53, which is relevant is to the following effect: "53. Foreign liquor (Indian-made) At the point of sale by the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited and at the point of first sale in the State by a dealer who is liable to tax under section 5 (except where the sale is to the Kerala State Beverages (Manufacturing and Marketing) Corporation Ltd." 31. In the first batch of writ petitions which were disposed of by a division Bench by its judgment and order of November 27, 1999 See....
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....n favour of the Beverages Corporation. Under such circumstances it was difficult to accept the argument that the amount payable by way of excise duty necessarily became part of the turnover of the manufacturers. 35.. On such reasoning the High Court held that the manufacturers/distillers were not required to pay excise duty which never formed part of their turnover. The finding of the High Court has been summarised in paragraph 41 of the judgment, which is as follows: "(i) That a duty of excise is leviable under section 17 either at the point of manufacture or at the point of issue from a manufacturer or warehouse. The choice is that of the Government. (ii) That the duty may be imposed either on the quantity produced or passed out from a distillery, brewery or warehouse. (iii) For ad valorem the value is such at which the fourth respondent purchases from the suppliers. (iv) The petitioner does not have any licence except for compounding, blending and bottling in form No. 1, in form No. 2 and form No. 4. (v) The fourth respondent is the exclusive marketing organisation in the State of Kerala and all sales have to take place to the said organisation. (vi) The fou....
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....hich the rules and agreements between the parties changed the point of collection, excise duty in its true character is always a duty payable by the manufacturer of an article and remains the liability of the manufacturer. If as a result of the rules and the agreements it is discharged by someone else such discharge must be held on account of the manufacturer himself. The learned Judges referred to the decision of this Court in Mohan Breweries & Distilleries Ltd. See [1997] 107 STC 212 (SC); (1997) 7 SCC 542. which according to the learned Judges squarely governed the case. After noticing several judgments of this Court the learned Judges were not inclined to agree with the view of the earlier Bench on this aspect of the matter, but finding themselves bound by the earlier decision, they proceeded to dispose of the writ petitions on the basis that the manufacturers/distillers were not liable to pay turnover tax under the Abkari Act. It held that the earlier judgment could not be said to have been rendered per incuriam because the judgment was rendered after considering the binding judgments of the Supreme Court. The High Court also noticed the fact that appeals were pending befor....
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....arned counsel appearing on behalf of the State of Kerala drew our attention to the provisions of the Abkari Act and the various other Rules which have been noticed earlier in the judgment. He submitted that it is not in dispute that up to April 1, 1984 the excise duty on the manufacture of liquor was being paid by the distillers/ manufacturers like the respondents. With effect from April 1, 1984 the KSBC came into existence and a monopoly was created in its favour for whole sale marketing in foreign liquor. The manufacturers/ distillers were obliged to sell their products to the aforesaid Corporation which distributed the same to the retailers all over the State. In view of the powers conferred by section 17 of the Abkari Act notifications levying the excise duty were issued from time to time which cast the liability to pay excise duty on the distillers/manufacturers under the Abkari Act. He has drawn our attention, in particular, to two Notifications being S.R.O. No. 60/61 dated March 18, 1961 and S.R.O. No. 330/96 which came into force on April 1, 1996. The first of these notifications shorn of unnecessary details is to the effect that in exercise of the powers conferred by se....
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....it was removed therefrom. After the monopoly was created in favour of KSBC with effect from April 1, 1984 the liquor stored in the warehouse of the distillery was removed under bond to the Corporation bonded warehouse licenced in form BW1 under the Storage and Bond Rules. Corporation also was required to execute a bond in form A undertaking to pay the excise duty. He, therefore, submitted that the liability to pay excise duty was clearly on the manufacturers/distillers. The amendment made to the Rules only enabled the KSBC to procure IMFL from the manufacturers without payment of excise duty and stock the same in its bonded warehouses. The liability to pay excise duty which was cast on the manufacturer was never shifted. That liability arose at the point of manufacture and there was no amendment to the relevant statutory provision whereby the liability to pay excise duty was shifted from the manufacturers to the KSBC. As a matter of convenience the amended rules provided for payment of excise duty, which was the primary liability of the manufacturers, by the KSBC and therefore it was the liability of the manufacturer which was discharged by the KSBC. Reliance was placed on a decisi....
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....arging section itself imposes the liability on all those mentioned in clauses (c) to (g) all of which are related to manufacture. According to him all that is required is for the Government to evince its intention by levying the duty by appropriate notification. Such notifications have been issued from time and time and those notifications specified that duty is imposed on the manufacturer of IMFL. That the excise duty liability is of distiller is also evident from the fact that the duty payable is on the value sale price of the liquor sold by the distillery to the KSBC and not on the basis of the sale price of the KSBC to retailers. He, therefore, submitted that the amendment of the Rules, particularly the (Storage in Bond) Rules, did not shift the liability of the manufacturer under the notification issued under section 17 of the Abkari Act. It only enabled the IMFL to be removed from the distillers warehouse to the premises of the FL9 licensees namely, the KSBC under the cover of a pass granted in that behalf and on payment of excise duty. The excise duty liability has never been obliterated or dispensed with by statutory provision. The liability continued and only the collectio....
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....ued from a distillery, brewery, winery or other manufactory or warehouse licensed or established under section 12 or section 14, or sold in any part of the State. He submitted that the duty of excise is levied on the manufacture of the goods. The levy contemplated by clauses (a) to (g) of section 17 is not necessarily connected with manufacture of liquor, as it also envisaged the levy of duty on liquor exported or transported under clauses (b) and (c) or even issued from the distillery as contemplated by clause (f) or sold in any part of the State as contemplated by clause (g). Levy under these clauses cannot be characterised as levy of excise duty because they are not related to the manufacture of goods. Section 18 prescribes how duty can be imposed and in essence the basis of duty under the Abkari Act is either on the quantity produced in, or passed out of, a distillery, brewery or warehouse. The section, therefore, gives a discretion to the State to impose such duty either on a distillery or brewery or warehouse. Excise duty in essence is a duty on manufacture but section 18(A) of the Act also contemplates grant of exclusive or other privilege of manufacturing or supplying by wh....
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....upports the inference that though it is imposed under the Abkari Act, yet it is not a duty of excise on manufacture, but a consideration for parting with State's privilege, referable to entry 8 of List II. 45.. Before the High Court the same submission was advanced on behalf of the respondents which is noticed in paragraphs 44 and 46 of the judgment, but no finding has been recorded by the High Court on this aspect of the matter. 46.. Alternatively, and assuming without conceding, that the duty imposed is excise duty, Mr. Nariman submitted that the observations in Mohan Breweries See [1997] 107 STC 212 (SC); (1997) 7 SCC 542. that the incidence of excise duty falls on the manufacturer or producer of the goods is not a rule of universal application, as it must depend upon the words the statute employs. He relied upon decisions of this Court in support of his submission that the incidence of excise duty may fall on a person other than the manufacturer, if the statute so provides. In the present case, he submitted that up to the time the Abkari Act was amended in 2003, it gave an option to the Government to levy excise duty on liquor either on the manufacturer who was license....
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....that the payment of turnover tax by the Corporation must be similarly treated as having been made on behalf of the manufacturer. He submitted that if the turnover tax on excise duty is paid by the Corporation on its own behalf, then it cannot be treated as part of the turnover of the manufacturer. However, if the excise duty is to be treated as paid on behalf of the manufacturer, then it must follow that the turnover tax on that duty must also be treated as having been paid on behalf of the manufacturer. Therefore, there could be no additional liability on the manufacturer to pay turnover tax since the same had already been paid by the Corporation. 49.. Mr. Ashok Desai, Senior Advocate appearing on behalf of some of the respondents, supplemented the arguments advanced by Shri Nariman and submitted that having regard to the scheme of the Abkari Act and the Rules, the exigibility to the duty of excise was on KSBC which has the sole marketing and monopolistic rights as from April 1, 1984. In fact that is how the authorities also understood the law till the judgment in Mohan Breweries case See [1997] 107 STC 212 (SC); (1997) 7 SCC 542.. According to him under the legal frame work th....
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....e duty is on manufacture. There is force in his contention because the mere fact that a duty is described as a duty of excise in a statute may not be conclusive, particularly when there is a competing entry under which such a duty may be levied. It is, therefore, always a question for the court to consider under which entry the tax falls. In Synthetics & Chemicals Ltd. v. State of U.P.See [1991] 80 STC 270. (1990) 1 SCC 109 this Court has taken judicial notice of the fact that in many statutes excise duty and price of privilege were regarded as one and the same. This Court in paragraph 87 See at page 315 of 80 STC. of the Report observed: "87. On an analysis of the various Abkari Acts and Excise Acts, it appears that various Provinces/States reserve to themselves in their respective States the right to transfer exclusive or other privileges only in respect of manufacture and sale of alcohol and not in respect of possession and use. Not all but some of the States have provided such reservation in their favour. The price charged as a consideration for the grant of exclusive and other privileges was generally regarded as an excise duty. In other words, excise duty and price for pri....
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....dity leaves the factory for the first time, and also because the duty is intended to be an indirect duty which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example, been destroyed in the factory itself. It is the fact of manufacture which attracts the duty, even though it may be collected later." 56.. In Governor-General in Council v. Province of Madras See [1945] 1 STC 135 (PC). AIR 1945 PC 98 the Privy Council noticed the earlier decisions of the Federal Court and rejected the contention before it that the power to impose a duty of excise, which is given to the Federal Legislature alone by entry No. 45 of the Federal List, entitles that Legislature and no other to impose a tax on first sales of goods manufactured or produced in India. Their Lordships observed: "To their Lordships this contention does not appear well-founded. The term 'duty of excise' is a somewhat flexible one: it may, no doubt, cover a tax on first and perhaps on other sales: it may in a proper context have an even wider meaning. An exhaustive discussion of this subject, from which their Lordships have obtained valuable assistance, is ....
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....rational connection between the duty and the person on whom it is imposed ceased to exist, is to be decided on fair construction of the provisions of a particular Act." 58.. The next decision of this Court which may be noticed is the decision of the Full Court in Re: The Bill to amend section 20 of the Sea Customs Act, 1878 and section 3 of the Central Excises and Salt Act, 1944 [1964] 3 SCR 787 in which the law was stated in the following words: "This will show that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. We may in this connection contrast sales tax which is also imposed with reference to goods sold, where the taxable event is the act of sale. Therefore, though both excise duty and sales tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it be said that the excise duty or sales tax is a tax directly on the goods for in that event they will really become the same tax. It would thus appear that dutie....
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....) contemplate events which are not related to manufacture, such as liquor permitted to be exported or permitted to be transported under clauses (b) and (c) or liquor issued from a distillery under clause (f) or sold in any part of the State under clause (g). If the duty of excise is levied under section 17 read with clauses (b), (c), (f) and (g) it may not be possible to contend that what is levied is a duty of excise since the taxing event envisaged under the aforesaid clauses do not relate to manufacture. Learned counsel for the respondents, in particular, emphasised clause (f) of section 17 because it is their contention that in the instant case the levy of duty is under clause (f) of section 17 since the State intended to recover duty from KSBC on the issue of liquor from its warehouses in course of its monopoly wholesale trade. It was further emphasised that section 18A which related to grant of exclusive or other privilege of manufacturing or supply by wholesale, etc., enabled the State to grant such privilege on the basis of annual rental by way of consideration for the grant of such privilege and the rental could be collected to the exclusion of or in addition to the duty o....
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....om time to time under section 17 of the Act. The relevant portion of the notification reads thus: "SRO 60/61 The Government of Kerala hereby direct that the duty under the said section shall be levied on the following kind of liquors manufactured in the area where the said Act is in force or manufactured elsewhere in India and imported into the said area by land or under bond by sea, at the rates mentioned against each kind of liquor." 68.. It was argued that the notifications suggest that such duties are levied either on goods manufactured in the area or imported into the area. It was also submitted that an essential characteristic of duty of excise is a uniformity of incidence. It cannot vary from notification to notification. 69.. From a perusal of Notification No. SRO 60/61 issued on 18th March, 1961 it appears that different rates of duties have been prescribed for different kinds of liquor. So far as Indian-made foreign spirits, except that consumed by defence services personnel, the rate of duty prescribed was Rs. 12 per proof litre. For the Indian-made foreign spirits for defence services that rate was Rs. 3 per proof litre. This was subsequently substituted ....
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.... thereon was payable at the time of removal of goods from the bonded warehouse to FL9 premises. The Corporation remitted turnover tax on the total value of turnover of the Corporation for each year at the rate of turnover tax prevalent during the relevant year. The turnover of the Corporation was computed so as to include the value of the goods at which the supplies were received by the Corporation, excise duty paid by the Corporation, profit margin of the Corporation and sales tax paid by the Corporation. It is thus admitted by the Corporation that under rule 11 of the (Storage in Bond) Rules the duty was payable when the goods moved out from its bonded warehouse to FL9 premises. This also supports the submission of the respondents that the duty was levied at the stage of movement of the goods from the bonded warehouse of the Corporation to the FL9 premises and, therefore, the levy of duty in terms of rule 11 must necessarily be traced to section 17(f) which levied duty on liquor "issued from a distillery, brewery, winery or other manufactory or warehouse licensed or established under section 12 or section 14". Even the parties understood that it was for the KSBC to pay the dut....
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....s in intoxicants. The State in its regulatory power has the right to prohibit absolutely every form of activity in relation to intoxicants-its manufacture, storage, export, import, sale and possession and all these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants. In Devans Modern case See [2004] 2 RC 122; 2003 JT (10) SC 485., this Court held: "The Kerala State Beverages Corporation has licence only for wholesale and retail of liquor which will not authorise them to import liquor and that the only licence issued to import liquor into the State is the permit issued on payment of the import fee and, therefore, it is seen that the levy of import fee is authorised by sections 6 and 24 of the Abkari Act, 1077. It is not excise duty or countervailing duty referable to entry 51 of List II. It is a collection falling under entry 8 of List II. It is the price paid to the State for parting with its exclusive privilege of dealing in liquor which includes every fact of it including its import. In my view, the State has the right to prohibit every form of activity in relation to into....
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....ng the rubber cess was quite clear. Sub-section (1) provided for the levy and collection as a cess a duty of excise on all rubber produced in India at such rate not exceeding one anna per pound of rubber so produced as the Central Government may, by the same or a like notification, from time to time fix. Sub-section (2) provided that the said duty of excise shall be payable by the owner of the estate on which the rubber is produced, and shall be paid by him to the Board within one month from the date on which he received a notice of payment therefor from the Board. In view of the clear language of the charging section which saddled the owner of the estate on which the rubber is produced with the liability to pay the said duty of excise, this Court held that the liability to pay the said amount of cess got attached to the rubber so produced and, therefore, if the rules did not provide for the excise duty to be paid by the producer then whoever purchased the said rubber would be purchasing goods to which the liability of payment of duty was attached. We do not find such a provision in the Kerala Abkari Act. 77.. From the above discussions the following conclusions emerge: (1) Sect....
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....KSBC in consideration of the State parting with its exclusive privilege of wholesale trade in IMFL in favour of the aforesaid Corporation. 79.. It was alternatively submitted on behalf of the State that even if it is held that what is levied is privilege price it will still form part of the sale price of the liquor sold by the distillers to the Beverages Corporation and hence part of the taxable turnover for the purpose of levy of turnover tax. The respondents on the other hand contend that by its very nature the privilege price must be paid by the beneficiary and is not capable of being transferred to the manufacturers/distillers from whom the IMFL is purchased for wholesale trade. 80. We are of the view that if the privilege price is a part of the consideration payable by the Corporation to the manufacturers for supply of IMFL to the Corporation it will certainly be a component of the sale price of the liquor sold by the manufacturers to the Beverages Corporation. If it is not so, then the respondents are right in contending that having regard to its very nature, privilege price is a price which the beneficiary, in whose favour the State parts with its privilege, must pay. ....
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....d that from January 5, 1999, the date with effect from which the KSBC started paying duty to the manufacturers/distillers before lifting the stock of IMFL to its own licensed premises, the amount of duty paid formed part of the consideration paid by the Corporation to the manufacturers and consequently it formed part of the turnover of the manufacturers. 83.. Mr. Ashok Desai, Senior Advocate appearing on behalf of some of the respondents strenuously urged before us that in view of the provisions of section 5(1) and section 5(2C) of the Kerala General Sales Tax Act, there was no liability on the manufacturer of liquor to pay turnover tax on the sale of IMFL. We find no merit in this submission. 84.. The levy of tax under the Kerala General Sales Tax Act, 1963 is by virtue of section 5. Section 5(1) deals with levy of sales tax, whilst section 5(2C)(i) deals with turnover tax. The relevant portion of this section reads as follows: "5. Levy of tax on sale or purchase of goods.-(1) Every dealer (other than a causal trader or agent of a non-resident dealer) whose total turnover for a year is not less than two lakh rupees and every casual trader or agent of a non-resident dealer....
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.... (1) the serial number, (2) description of goods, (3) point of levy and (4) rate of tax - %. In the First Schedule there is no column for dealer. The reference to a dealer is only in column (3) which will indicate the point of time at which a dealer will pay tax. If under the charging section the point of time is not to be as per the First Schedule, then one will not consider column (3) at all. This is clear as the only items are "goods", "point of levy" and "rate of tax - %". With this in mind if one now look at section 5(1)(i) it becomes clear that thereunder the sales tax is payable on the "goods", "at the points" and "at the rates" specified in the Schedules. Whilst considering point and rate at which levy is to be made under section 5(1)(i) the levy and rate will be as per the First Schedule but under section 5(2C)(i)(b) the levy is at all points and at 5 per cent of the turnover. It is only if one has to see at what point and at what rate the levy is to be made that one will take columns (3) and (4) of the First Schedule into consideration. As against this under section 5(2C)(i) the turnover tax is on "Foreign liquor" specified in entries 53 and 54, i.e., in column (2) of ent....