TaxTMI 
TaxTMI 
TaxTMI 
1975 (8) TMI 123
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....mount and there was a short-fall, demand notices were issued for the total short-fall. For the years 1967-68, 1968-69 and 1969-70 the liquor contractors obtained licences for sale of country liquor at a stipulated amount of license fee under the exclusive privilege system. Where the contractors failed to pay the guaranteed amount there was a demand for a short-fall. The appellants who were the liquor contractors challenged the demand for short-fall of the guaranteed amount. The liquor contractors contended that what was being demanded as short-fall amounted to levy of excise duty. The State, on the other hand, contended that what was being realized from the liquor contractors was the guaranteed amount in the licence for the exclusive privilege of selling country liquor. It may be stated here that there was no levy of excise duty prior to 6 March, 1964. After the imposition of excise duty, the licences during the year 1967-68 and thereafter were issued for guaranteed sum under the exclusive privilege system. The State contended that what was being demanded as short-fall was the stipulated guaranteed amount which was excise revenue. The licenses granted upto the year 1967-68 conta....
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....contention which had been advanced before the High Court that when the State Government wanted to enforce the guaranteed sum it amounted to recovery of excise duty by licence. The appellants contended that the issue prices in the licence are exclusive of prices of container but inclusive of excise duty levied under the Government notification and therefore, enforcement of the guaranteed amount meant realisation of excise duty. The appellants contended that unfulfilled guarantee amount which is sought to be recovered from the appellants is not balance of lump sum payment as price of exclusive privilege because the Government licence sanctioning guarantee system stated "that the licensee shall guarantee in respect of the year.. income to the Government on account of the issue price of country liquor issued for sale at his shop during the year.. " It was, therefore, said by the appellants that a promise to give income to the Government by purchasing a minimum quantity of liquor from the Government ware house was not equivalent to the payment o sum of money in consideration of grant of such privilege within the meaning of section 30 of the Rajasthan Excise Act. The appellants contende....
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....ces to which any excisable article or intoxicating drug is to be removed for consumption or according to the varying strength and quality of such article. Section 29 of the Act provides that subject to such rules regulating the time, place and manner of payment, as the State Government may-prescribe such duty may be levied in such one or more ways as the State Government may by notification in the official Gazette direct. Section 30 of the Act provides that instead of or in addition to any duty leviable under Chapter V which contains Sections 28, 29 and L 30), the Excise Commissioner may accept payment of a sum in consideration of` the grant of the licence for exclusive privilege under section The Rajasthan Excise Rules, 1956 provide in rule 67 I, 67 J, 67 K and 67 L the different forms of procedure for grant of exclusive privilege Rule 67 I provides that licence for exclusive privilege of selling by retail of country liquor within any local area under section 24 of the Act may be granted on condition of payment of such lump sum instead of or in addition to excise duty, as may be determined by the Excise Commissioner and subject to such other terms and conditions as may be laid dow....
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....and it would not be open to the licences to challenge the terms either on the ground of inconvenient consequence of terms or of harshness of terms. The legal position is also correctly stated in Madhavan v. Assistant Excise Commissioner, Palghat and ors.(3) where it is said that the rental charged by the State for licences is the consideration for the privilege of vending liquor. The licenses in the present appeals voluntarily contracted to pay the guaranteed sum of the stipulated lump sum for the exclusive privilege to vend liquor. In the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act 1938 case,(4) it has been said that in several Acts by which excise duties are imposed it is provided that duty is able articles from the place of manufacture or production and there is no provision for the imposition of an excise duty on retail sales. Many Acts provide for lump sum payments in certain cases by manufacturers and retailers, which may be described payments either for privilege or as consideration for the temporary grant of a monopoly, but these are clearly not excise duties or anything like them. (Sec 1939 F.C.R. 18 at pp. 53 and 54). This Court in M/s.....
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.... price fetched by the sale of country liquor is an excise revenue does not change the nature of the right. The sale is a mode of raising revenue. The decisions of this Court establish that the lump sum amount voluntarily agreed to by the appellants to pay to the State are not levies of excise duty but are in the nature of lease money or rental or lump sum amount for the exclusive privilege of retail sales granted by the States to the appellants. There is no levy of excise duty in enforcing the payment of the guaranteed sum or the stipulated lump sum mentioned in the licences, for these reasons. First, the licenses were granted to the appellants after offer and acceptance or by accepting their tenders or auction bid. The appellants stipulated to pay lump sum amounts as the price for the exclusive privilege of vending country liquor. The appellants agreed to pay what they considered to be equivalent to the value of the right. Second, the stipulated payment has no relation to the production or manufacture of country liquor except that it enables the licensee to sell it. The country liquor is produced by the distilleries. Under section 28 of the Act and under the relevant duty notif....
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....a Government warehouse and sell-in a financial year or part thereof, country liquor of a specified value, called the `'amount of guarantee.' The explanation to Rule 67-A is that 'value' for the purpose of that rule shall be the total issue price at Government warehouse calculated at the rate of such price current on. the I first day of January preceding the financial year to which the guarantee relates. The licences under the guarantee system are granted either by inviting tenders or by auction or by negotiation. The amount of guarantee under Rule 67-A be (a) where a licence is granted by invitng tenders the amount of the tender accepted for the grant of the licence; (b) where a licence is granted by auction the amount of the bid accepted for the grant of the licence; and (c) where a Licence is granted by auction or negotiation, the amount of guarantee shall be the amount determined by the Excise Commissioner and accepted by the licensee. The lump sum amount stipulated under the agreement is not to be equated with issue price. The issue price is payable only when the contractors take delivery of a particular quantity of specified value of country liquor. The issue ....
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....quor is totally misreading the conditions of the licence. The excise duty is collected only in relation to the quantity and quality of the country liquor which is drawn. No excise duty can be predicated in respect of undrawn liquor. Adjustment by way of reduction in the contractual liability of the appellants to the extent of a specific and quantified portion of the issue price is purely a measure of concession or remission and is a method of calculation. The question of adjustment arises only when liquor is drawn, otherwise the formula of remission does not come into the picture at all. The appellants relied on the decision of this Court in Bimal Chandra Banerjee v. State of Madhya Pradesh ([1971] 1 S.C.R. 844) in support of the contention that the attempt on the part of the State to enforce the full guaranteed amount or stipulated sum is collecting excise duty. In Bimal Chandra Banerjee's case (supra) a levy of excise duty on undrawn liquor was imposed in terms by the State Government by a notification amending the Rules and by an alteration in the conditions of the license. It was provided that certain minimum quantity of liquor would have to be withdrawn by each contracto....