TaxTMI 
TaxTMI 
2016 (9) TMI 355
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....ent of tax under the M.P. Commercial Tax Act, 1994 for the financial year 2003-2004. 2. Petitioner is manufacturer of Indian Made Foreign Liquor (IMFL) and spirit. The IMFL manufactured by the petitioner in the State of Madhya Pradesh is sold both within the State and outside. Petitioner holds a valid license issued under the provisions of M.P. Excise Act, 1915 (hereinafter referred to as "Excise Act") including a license under FL-9 i.e. a license for bottling of Indian Made Foreign Liquor. Petitioner is registered under the M.P. Value Added Tax Act with TIN No.23225302. According to the petitioner, by virtue of entry No.18 to Schedule I of the Commercial Tax Act, petitioner is exempted from payment of Commercial Tax and Central Sales Tax on the IMFL manufactured and sold by the petitioner both within and outside the State. It is alleged that during the period under consideration i.e. between 1.4.2003 to 31.3.2004 petitioner had filed the prescribed returns under the Central Sales Tax Act along with M.P. VAT Act and vide assessment order dated 11.1.2007 (hereinafter referred to as "the original assessment order"). In the assessment year 2003-2004 assessment was done and petition....
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.... for payment of tax under the Sales Tax Act when sold to buyers within the State, then merely because it is sold to buyers outside the State, imposition of duty or tax is unsustainable. (d) Various grounds are also raised with regard to legality of the reassessment proceedings on account of the fact that it is barred by limitation. Reassessment or re-opening of assessment after a period of five years is not permissible etc. 4. Shri R. K. Khanna, learned Senior Counsel emphasized that right from the year 1958 upto 2009-2010 no duty was paid or tax assessed for IMFL manufactured and sold in the course of Inter State Trade and Commerce such goods were always exempted from payment of Sales Tax as it was treated to be goods on which duty is or may be levied under the Excise Act. However, all of a sudden, for the assessment year in question the duty/ tax is being charged. Shri Khanna, learned Senior Counsel apart from challenging the tenability of issuing notice for reopening of assessment by advancing various grounds pertaining to conditions for exemption not being notified in Entry 18 to Schedule I of M.P. Commercial Tax Act, invited our attention to the entry in question n....
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....I or Entry 47 to Schedule I of the Commercial Tax Act and VAT Act respectively, the exemption is liable to be granted as the goods will fall in the category of tax free good as provided under Section 15 or 16 of the Commercial Tax Act and VAT Act respectively. Apart from making these submissions, learned Senior Counsel made elaborate submissions with regard to the availability of the alternate remedy of appeal, why remedy of appeal cannot be availed of, maintainability of the writ petition before this Court and various other grounds in support of his contention. A detailed written submission has been submitted by him along with additional written submissions which are taken on record. In support of various contentions advanced, Shri Khanna, learned Senior Counsel relied upon the following judgments :- Alembic Distributers Ltd. and Anr. Vs. Asstt. Commissioner of Sales Tax - [1962]13 STC 64 (MP); Karnataka Cement Pipe Factory Industrial Estate Vs. Superintendent of Central Excise and Anr. - (1986)23 ELT 313 (Kar.); Tamil Nadu (Madras State) Handloom Weavers Cooperative Society Ltd. Vs. Assistant Commissioner of Central Excise - 1978(2) ELT 57 (Mad.); Assistant Collector of Centra....
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....ior Counsel also relied upon various judgments to say that the reassessment proceedings initiated are unsustainable. With regard to availability of alternate remedy, it is said that when the levy itself is per se illegal and when the jurisdiction exercised for imposing the liability is contrary to settled principles of law and justice, relegating the petitioner to take recourse to the alternate remedy is not proper. Reliance is placed on judgments of the Supreme Court in the cases of Paradip Port Trust Vs. Sales Tax Officer and others âEUR" (1998)4 SCC 90; Balco Captive Power Plant Vs. National Thermal Power Corporation - (2007) 14 SCC 234 and the law laid down by this Court in the case of Commercial Engineers & Body Builders Co. Ltd. Vs. Divisional Deputy Commissioner, Commercial Tax Office & Anr. (2015)27 STJ (MP) to say that even if an alternate remedy is available, this petition is maintainable and the petitioners cannot be relegated to take recourse to the remedy of appeal. It is said that duty imposed is illegal and unsustainable, therefore, the petition be allowed and the impugned orders or action quashed. 6. Shri P. K. Kourav, learned Additional Advocate General ap....
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...., no advance tax is charged. He took us through Rule 12 sub rule (3) and sub rule (4) to refute the contentions advanced by Shri Khanna and submits that under the sub rule itself it is clear that duty is not payable under the Excise Act, he argues that what is contemplated under Rule 12 is only a regulatory measure in the matter of controlling export of IMFL, it does not deal with imposition of duty, no excise duty is leviable on foreign liquor exported out of the State and therefore, the act of the Government is proper. In support of his contention, learned counsel relied upon the following judgments :- Gram Panchayat Gorakhpur Vs. Khushali Dindayal Sahu - AIR 1973 MP 19 (FB); Bhagwati Prasad Vs. Govt. of M.P. - 1966 MPLJ 557; Surinder Singh Vs. Central Govt. - (1986)4 SCC 667; Orissa State (Prevention & Control of Pollution) Board Vs. Oriental Paper Mill - (2003)10 SCC 421; Printers (Mysore) Ltd. Vs. M.A. Rashid - (2004)4 SCC 460; Some Distilleries Vs. State of M.P. - 1997(I) JLJ 319; Orient Weaving Mills Vs. UOI - AIR 1963 SC 98; Babulal & Bal Govind Vs. State - 1968 MPLJ 5 & M/s Gannon Dunkerley & Co. Ltd. Vs. State of Rajasthan - (1993)I SCC 364. 7. Both the counsels submit....
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.... 2 of 1915) [........] other than i) medicinal and toilet preparations specified for the time being in the schedule to the Medicinal and Toilet Preparations (Excise duties) Act, 1995 (No. 16 of 1955); and. ii)............................" Thereafter, when the M.P. Commercial Tax Act, 1994 came into force. Entry 18 to Schedule I to Section 15 provided as under :- "Goods on which duty is or may be levied under the Madhya Pradesh Excise Act, 1915 (No. 2 of 1915) other than medicinal and toilet preparations specified for the time being in the Schedule to the Medicinal and Toilet Preparations (Excise) Duties Act, 195 (No. 16 of 1955)." And thereafter, when the M.P. VAT Act, 2002 came into force, Entry 47 to Schedule I to Section 16 to this Act contemplated a provision which reads as under :- "47. Goods on which duty is or may be levied under the Madhya Pradesh Excise Act, 1915 (No.2 of 1915) other than medicinal and toilet preparations specified for the time being in the Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (No.16 of 1955). From 22.12.2009 entry 47 was :- 47. Goods on wh....
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....ug or opium. And under Section 2(9) of the Excise Act "export" has been defined to be an act of taking out of the State i.e. the State of M.P. any excisable good. Chapter V of the M.P. Excise Act deals with payment of duties and fees and Section 25 contemplates payment of duty on excisable article. Sub section (1) of Section 25 provides that "an excise duty or a countervailing duty, as the case may be, shall, if the State Government so directs, be levied on all excisable articles other than medicinal and toilet preparations, as may be specified in the schedule, when they are imported, exported, transported, manufactured, cultivated or collected etc. Proviso to this Section contemplates that it shall be lawful for the State Government to exempt any excisable article from any duty to which the same may be liable under the Act. Section 28 of the Excise Act deals with Forms and conditions of licence, permit and passes and Section 62 is the rule making power available to the State Government and under the Rule making power available, the M.P. Foreign Liquor Rules of 1996 have been formulated wherein, under Rule 8 categories licenses into FL.1, FL.1AAAA etc. and finally Rule 9 deals with....
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....rge of the importing unit, further consignment of foreign liquor involving the same or lesser amount of duty may be exported on the strength of the same cash deposit or bank guarantee or bond. ... 13. Securing the Verification Report - The exporter shall obtain a verification report from the officer-in-charge of the importing unit and furnish it to the authority who issued the export permit within 21 days of the expiry of period of permit. If the exporter fails to do so, the leviable duty on the foreign liquor exported shall be recovered from deposits made, bank guarantee furnished or the security bond executed in accordance with sub rule (4) of Rule 12. This shall be in addition to any other penalty which may be imposed under Rule 19. In case the foreign liquor is exported to another country, the licensee exporting the liquor shall furnish documentary evidence that the consignment has actually left the country." 15. Under Entry 18 to Schedule-I of the M.P. Commercial Tax Act, certain goods are exempt from payment of tax, these are the goods on which duty is or may be levied under the M.P. Excise Act. Similarly, under Entry 47 of the VAT Act, particulars of tax....
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....ny dispute to the fact that Indian Made Foreign Liquor manufactured in Madhya Pradesh and exported is an excisable good amenable to the provisions of the M.P. Excise Act, 1950, it is infact an "excisable article" and therefore, the State is empowered under the Excise Act to levy duty on the same. It is also a admitted position that IMFL manufactured in the State and when sold within the State it is subjected to payment of excise duty. 17. At this stage, we deem it appropriate to take note of certain judgments having bearing on the issue in question. In the case of Alembic Distributers Ltd. and Anr. (supra), Entry 32 to Schedule II of the Central Provinces and Berar Sales Tax Act, 1947 was considered by a Division Bench of this Court, this entry is para materia with the entries under the Commercial Tax Act, in the Central Provinces and Berar Sales Tax Act, the entry is identically worded i.e. "goods on which duty is or may be levied" under the Central Provinces and Berar Excise Act, 1915" after taking note of the aforesaid entry in para 7, the learned Bench held as under :- "On reading this entry, we agree that it is not necessary that duty should have been actually levi....
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....ct and found that Section 27 is the charging section for both excise duty and countervailing duty and Section 28 provides for the ways for levying the duty which can be imposed under Section 27. It was held that Section 28 deals with the manner of levying duty which could be imposed under Section 27 of the Act. Thereafter, in para 6 the Hon'ble Supreme Court held that expression "levy" may include both the process of taxation as well as the determination of the amount of tax or duty, the expression "collection" refers to actual collection of the payable duty or the tax. It is held that since the taxable event for attracting excise duty or countervailing duty is the manufacture or import of excisable goods into the State, the charge of incidence of duty stands attracted as soon as the taxable event takes place and the facility of postponement of collection of duty under the Act or the rules framed thereunder, can in no way effect the incidence of duty on the imported goods. If we apply this principle to the facts and circumstances of the present case, then, the moment liquor is manufactured in the State of M.P., it becomes liable for payment of excise duty. Now once an excisable....
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.... collection does not affect the essence of the duty but only relates to the machinery of collection for administrative convenience." ... 27. In M/S. Guruswamy & Co. etc. v. State of Mysore & ors (2) Sikri, J. (as he then was), spoke for the majority and stated the ratio thus: "These cases establish that in order to be an excise duty (a) the levy must be upon 'goods' and (b) the taxable event must be the manufacture or production of goods. Further the levy need not be imposed at the stage of production or manufacture but may be imposed later. " 28. In Jullundur Rubber Goods Manufacturers' Association v. Union of India & Anr., (3) Grover, J. after extracting a part of the Judgment in Jall's case (supra) spoke for the Court thus: "The above statement of law in no way supports the argument that excise duty cannot be collected from per sons who are neither producers nor manufacturers. Its incidence certainly falls directly on the production or manufacture of goods but the method of collection will not affect the essence of the duty." 29. In A.B. Abdul Kadir & Ors. v. State of Kerala, (4) this Court restated the positi....
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....he Union Government which can impose customs or excise duty under Entry 83 of list 1. The Court, in the aforesaid case took note of the meaning of the word "export", "import" as appearing in the M.P. Excise Act and held that the duty payable by the petitioner with regard to Foreign Liquor exported out of M.P. namely, Beer in the said case, and payment of duty for such export which is collected as export duty, in real and infact is a duty of excise which is levied at the point of export of beer from M.P. to another State. It has been held in the aforesaid case after taking note of the provisions of Section 25 sub section (1)(b) and 1(e) of the M.P. Excise Act that when an excisable good manufactured within the State is subjected to duty at the point of its export outside M.P. the real nature of duty is not export duty but only excise duty and for upholding this preposition, reliance has been placed on the judgment of Supreme Court in the case of R. C. Jall Parsi (supra). We find that in the matter of export of liquor from the State of M.P. also certain export fees are paid and if we take note of Rule 12 of the M.P. Foreign Liquor Rule, we find that a detailed procedure laid down for....
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....h duty is leviable and once it becomes a excisable good on which duty is leviable, it comes within the category of tax free good as provided under Section 15 and 16 of the Commercial Tax Act and the VAT Act and imposition of duty under the Commercial Tax Act and VAT Act is clearly impermissible. 22. Shri P. K. Kourav by referring to various judgments in the case of Gram Panchayat Gorakhpur (supra); Bhagwati Prasad (supra) and Som Distilleries (supra) had argued that IMFL which is exported from Madhya Pradesh forms a separate class which is not leviable for duty under the Madhya Pradesh Excise Act and therefore, the entry would not apply to them. 23. We cannot accept the aforesaid preposition putforth. Even if the IMFL exported out of the State form a separate class, still it is leviable to duty under the M.P. Excise Act and once it is found to be leviable to duty under the M.P. Excise Act, it becomes a tax free good, not liable for payment of commercial tax, sales tax or VAT, as the case may be, by virtue of Entry 18 or 47. The contention of Shri Kourav to say that there is no leviability on IMFL exported out of Madhya Pradesh is not correct. Once it is a excisable good, exci....