TaxTMI 
TaxTMI 
2011 (3) TMI 1538
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.... has also added the amount of the excise duty paid by the purchaser outside the State of U.P. in the turnover. Being aggrieved by the assessment order the applicant filed an appeal before the Deputy Commissioner (Appeals), Trade Tax, Agra, which has been dismissed vide order dated July 24, 2002. Aggrieved by the order of the Deputy Commissioner (Appeals), the applicant filed second appeal before the Tribunal. The Tribunal by the order dated February 22, 2003 allowed the appeal in part. The Tribunal has sustained the enhancement of the turnover by Rs. 5 crores. The Tribunal has also confirmed the view of the assessing authority treating the excise duty paid by the ex-U.P. purchaser as the part of the turnover and the levy of tax thereon. The assessing authority has found that the applicant has not included the amount of excise duty in the sale price of the petroleum product which have been transferred from its bonded warehouse (BWH) to BWH of other marketing companies (OMC) situate outside the State of U.P. However, on the amount of Rs. 1,75,58,83,025 tax at Rs. 7,02,23,321 has been paid at the rate of four per cent under protest. It has been held that the excise duty is th....
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....be deposited without payment of duty, from where such goods are removed. The "assessee" is defined under rule 2(ib) of the Central Excise Rules, 1944 (hereinafter referred to as, "the Excise Rules"). It says that any person who is liable for payment of duty assessed and also includes any producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored. Rule 7 of the Excise Rules provides that every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty or duties leviable on such goods, at such time and place and to such person as may be designated, in, or under the authority of these rules, whether the payment of such duty or duties is secured by bond or otherwise. However, rule 9 of the Excise Rules provides time and manner of payment of duty. It says that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf. It further provides that such goods may be deposited without payment of duty in a store-room or other place of ....
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....e for the payment of excise duty under the aforesaid provision while clearing the goods from their warehouse. In the circumstances it is wrong to say that the excise duty is leviable only on the manufacturer. In the present case the excise duty was leviable on the purchaser at the time of removal of the goods from their warehouse situate outside the State of U.P. Such purchaser has also paid the excise duty while removing the goods from the warehouse. Therefore, the amount of excise duty paid by the warehouse would not be a part of the sale price of the petroleum product. Such excise duty has neither been paid by the purchaser to the applicant nor it has been deposited by the applicant. It has been directly paid by the purchaser under the Act 1944 and the Rules made thereunder as they were liable to pay the excise duty on the clearance of such goods from their warehouse. In support of its contention he placed reliance on the Division Bench decision of the Lucknow Bench in Hindustan Sugar Mills Ltd. v. State of U.P. reported in [2007] UPTC 622 (paragraphs 11 and 12) and the decision of the apex court in the case of State of Punjab v. Guranditta Mal Shauti Prakash reported in [2004] ....
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....authorities below and given my anxious consideration to the rival submissions. So far as the enhancement of the turnover is concerned, in my view the matter requires reconsideration by the Tribunal. The Tribunal has not given any basis for the enhancement of the turnover by Rs. 5 crores. The Tribunal even has not referred the discrepancies found in the books of account. Therefore, the order of the Tribunal in this regard is liable to be set aside. Now, coming to the another question whether the excise duty paid by the purchaser would be liable to be included in the turnover of the assessee. Section 3 of the Salt Act provides levy and collection of excise duty on all excisable goods which are produced and manufactured in India in such manner as may be prescribed. Rule 7 of the Excise Rules provides that every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty or duties leviable on such goods. Rule 9 of the Excise Rules says that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in t....
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....cause it is much more convenient administratively to collect the duty (as in the case of most of the Indian Excise Acts) when the commodity 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. . ." This view has been followed by the apex court and the position has been put beyond doubt by a series of decisions. In R.C. Jall Parsi v. Union of India [1962] Suppl. 3 SCR 436, it has been observed: "The excise duty is primarily a duty on the production 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." In Re. Sea Customs Act [1964] 3 SCR 787, ....
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....85 UPTC 747 while dealing with the identical question whether the excise duty paid by the purchaser under the Andhra Pradesh Excise Act, 1968 and Andhra Pradesh Foreign Liquor and Indian Liquor Rules would be a part of the sale turnover of the manufacturer, held that "excise duty" as defined in section 2(10) of the Excise Act is leviable on the manufacturer of liquor and the manufacturer could not remove the same from the distillery unless the duty imposed under the Excise Act has been paid. Rule 76 of the Distillery Rules provides that no spirit or liquor manufactured or stored shall be removed unless the excise duty specified in rule 6 has been paid by the holder of D2 licence before such removal. The Constitution Bench of the apex court held as follows (page 289 in 59 STC): "Thus, the incidence of excise duty is directly relatable to manufacture but its collection can be deferred to later stage as a measure of convenience or expediency." It further held as follows (page 290 in 59 STC): "9. On an examination of the provisions of the Excise Act, the Rules framed thereunder and the pronouncements referred to above, we are of the view that the conclusion of this court at pa....
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....ideration be cash, deferred payment or any other thing of value) including any sums charged by the dealer for anything done in respect of goods sold at the time of or before the delivery of the goods and any other sums charged by the dealer, whatever be the description, name or object thereof'. 12. The definition clearly indicates that the total amount charged as the consideration for the sale is to be taken into account for determining the turnover. Where a bill of sale is issued (and obviously the bill has to state the total amount charged as consideration), the total amount set out therein is to be taken into account. In every transaction of sale, there is bound to be a seller at one end and a buyer at the other and transfer of title in the goods takes place for a consideration. 13. In Hindustan Sugar Mills v. State of Rajasthan [1979] 43 STC 13 (SC); [1979] UPTC 37 (SC); [1979] 1 SCR 276, this court observed: 'The test is, what is the consideration passing from the purchaser to the dealer for the sale of the goods. It is immaterial to enquire as to how the amount of consideration is made up, whether it includes excise duty or sales tax or freight. The only rele....
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....uty, or excise duty, the tax becomes part of the price which ordinarily the buyer will have to pay. The price of an ounce of tobacco is what it is because of the rate of tax, but on a sale there is only one consideration though made up, of cost plus profit plus tax. So if a seller offers goods for sale, it is for him to quote a price which includes the tax if he desires to pass it on to the buyer. If the buyer agrees to the price, it is not for him to consider how it is made up or whether that seller has included tax or not . . . So far as the purchaser is concerned, he pays for the goods what the seller demands, namely, the price even though it may include tax. That is the whole consideration for the sale and there is no reason why the whole amount paid to the seller by the purchaser should not be treated as the consideration for the sale and included in the turnover.' Admittedly, the bills issued by the appellant did not include the excise duty. As already found, payment of excise duty is a legal liability of the manufacturer; its payment is a condition precedent to the removal of the liquor from the distillery and payment by the purchaser is on account of the manufacturer....
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....d. It was subject to the legislative competence of the taxing authority to impose the duty at the stage which was most convenient and the most lucrative, wherever it might be, but 'that is a matter of machinery of collection, and does not affect the essential nature of the tax.' This was reiterated by the Federal Court in Boddu Paidanna's case [1942] 1 STC 104 (FC); [1942] FCR 90. In the Bombay Tyre's case [1984] 1 SCC 467, this court referred to the aforementioned two authorities of the Federal Court and several authorities of this court to hold that excise duty was levied on manufacture but it could be levied at any convenient stage so long as the character of the impost, that is, that it was a duty on the manufacture or production, was not lost. The method of collection did not affect the essence of the duty but only related to the machinery of collection for administrative convenience. This court said, 'while the levy in our country has the status of a constitutional concept, the point of collection is located where the statute declares it to be'. The liability to pay excise duty on the IMFL is, therefore, that of the manufacturer thereof. Rule 22 onl....