TaxTMI 
TaxTMI 
2019 (7) TMI 316
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....he basis of services provided by the State in lieu thereof or being in the nature of quid pro quo. The original notification is in Hindi, the same reads thus: Free translation thereof has been filed by the appellant as annexure P-2. However, during the hearing as some doubt was raised about the accuracy of annexure P-2, we thought it appropriate to get the document (original in Hindi) translated from the official translator of this Court. That translated version, reads thus: "Translated version of Gazette by the Official Translator of the Supreme Court. ANNEXURE -3 THE JHARKHAND GAZETTE EXTRAORDINARY PUBLISHED BY THE GOVERNMENT OF JHARKHAND ---------------------------------------------------------- No. 680 19 Kartik, 1934 Shakabd Ranchi, Saturday, 10th November 2012 ----------------------------------------------------------- REVENUE BOARD Notification 6th November 2012 ------------------------------------------------------------------ No.1/ Policy-40-21/2012-928/ Ra. Pa.- In exercise of the power conferred by section 90 of Jharkhand Excise Act 1915 (Act-2 1915), the Revenue Board, Jharkhand makes the following a....
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....orce on the date of its publication in the official gazette. By the order of Board of Revenue, Jharkhand Sd/-illegible Deputy Secretary," 3. As aforesaid, the High Court accepted the challenge to the above-mentioned notification for the reasons noted hitherto. The relevant discussion in the impugned judgment in that behalf, reads thus: "13. The State under List-II is empowered to levy fee under Entry 66 in respect of any of the matters in the list but not including fees taken in any Court. Entry 66 read with entry 8 of List II therefore provides competence to the State to levy fee in respect of intoxicating liquor i.e. alcoholic liquor fit for human consumption i.e. to say on the production, manufacture, possession, transport, purchase and sale of intoxicating liquor. The present levy seeks to levy fee on the import of rectified spirit to be utilized for the purpose of, firstly for manufacture of ENA through re-distillation process and then for manufacture of IMFL. Rectified spirit is not fit for human consumption and it therefore does not come within the meaning of intoxicating liquor as contained in Entry 8 of List II. Levy on the import of rectified spirit is n....
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....ance, 18 cannot come within the legislative competence of the State Legislature. The impugned levy therefore is beyond the legislative competence of the State Legislature and consequentially also beyond the rule making power of the Board of Revenue." (emphasis supplied) And again................ "16. The respondent State sought to justify the levy as a regulatory measure for supervision and control of potable liquor to protect public health and morality. However, there are no materials brought on record by the respondent State to justify that any services in lieu thereof are provided in the nature of quid pro quo to justify the imposition of such a levy. The petitioner is already having various licences granted by the Excise Department, Government of Jharkhand in Form- 19, 19(B), 20, 25 and 28(A) prescribed by the Board of Revenue and is paying the licence fee for grant of such licences. Under Form-19 a licence for compounding and blending of foreign liquor is given. In Form-19(B), petitioner has been granted licence for the manufacture of foreign liquor / beer as also for the sale of foreign liquor / beer through licencee distributors as also to import or transport ....
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....ted by the subject notification being Rule 106 (Tha), is an impost and is merely described as an import fee. Because, it is reckoned on the basis of quantity of pure alcohol content of rectified spirit (which is known as "London Proof Liter"), imported for the purposes of manufacture of potable Foreign Liquor after the process of compounding, blending and reduction of strength of spirit from over proof strength to under proof strength is complete. Further, the unit for charging import fee is London Proof Liter (for short, "LPL") because, it does not change even after the spirit has undergone through the process of compounding, blending & reduction of strength. Indisputably, nothing can be nor will be charged in advance, so long as the imported rectified spirit is non-potable and till it is in the form of raw material. In other words, nothing is charged on industrial alcohol. Thus, it is neither a violation of provisions of the Constitution nor is it an arbitrary use of power under Section 90(7) by the Board of Revenue who was competent to issue the same towards levy of any kind of fee on potable liquor. In substance, the stand of the appellant-State is that the stated import fee is....
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....d also to manufacture of the product (IMFL). It is urged that the provision regarding collection of the fee after the rectified spirit has been used to first produce ENA and then potable liquor, would not alter the character of the levy being impost on the imported rectified spirit. The State is not competent to legislate on imported industrial liquor or levy any charge or tax thereon as such. The postponement of realization of charges predicated in the impugned rule would not alter the efficacy of the rule, providing for levy of import fee on rectified spirit. Relying on the decisions of this Court it was urged that rectified spirit is highly intoxicating and cannot be consumed by humans. It is industrial alcohol on which the State is not competent to legislate or levy taxes in the garb of duty or fee. The imported rectified spirit, in that form, would not attract excise duty. That can primarily be imposed on the happening of production or manufacture of goods produced or manufactured within the State. It is then urged that the respondent is engaged in production of "IMFL" for which it has obtained all essential licences prescribed by the Board of Revenue on payment of licensing f....
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....egories are poisonous, toxic and fatal for human consumption, rendering its use only for industrial purposes. It is stated that Isopropanol and methanol, because of their inherent chemical properties, cannot be purified and used for the production of 'intoxicating liquor' or 'potable liquor' by adopting 'physical means' like decantation, filtration, redistillation, fractional distillation etc. The third category namely, Ethyl Alcohol or Ethanol (in India is usually produced from molasses derived from sugarcane) in its concentrated form and it is also known as "Rectified Spirit" and its strength measured in LPL signifies the strength of alcohol by volume, 13 parts of which weigh exactly equal to 12 parts of water at 51 degrees Fahrenheit. 9. Be that as it may, rectified spirit after it undergoes certain 'physical changes' by adopting 'physical means' like re-distillation, rectification (repeated or fractional distillation) to remove impurities, it becomes purer and is known as Extra Neutral Alcohol (ENA). Thereafter, by addition and mixing of colouring and flavouring agents (compounding), as well as after dilution with water, ENA is left for maturation, to be bottled and used as ....
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....ction of potable liquor, is reckoned. 11. Reading the impugned provision as a whole and line by line or word by word in this perspective, it must follow that the substance of the provision is to levy charges on the product IMFL produced or manufactured by use of imported rectified spirit. In that sense, the levy is not on the input (imported rectified spirit) of the final product as such but is on the manufactured or produced product being potable alcohol palatable to human consumption. For the purposes of computing the levy, the yardstick of Rs. 6 per LPL on the total quantity of imported rectified spirit utilized for production of IMFL is reckoned. Thus, the impost is not on the imported rectified spirit as such but only on the produced foreign liquor before it is bottled for sale in the wholesale or retail market, as the case may be. If so understood, the whole edifice of the argument of respondents regarding the interpretation of the impugned rule must collapse. For, the challenge to the impugned rule is on the assumption that it permits the competent authority to levy charges on the imported rectified spirit and not fit for human consumption but which has the potency of bei....
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....y unlawful, nevertheless it is a privilege and not a right, subject to governmental control (p. 538). This power of control is an incident of the society's right to self-protection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime (pp. 539, 540, 541). 54. It was unnecessary in Krishna Kumar Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368 to examine the question from this broader point of view, as the only contention bearing on the constitutional validity of the provision impugned therein was not permitted to be raised as it was not argued in the High Court. The discussion of the question whether a citizen has a fundamental right to do trade or business in liquor proceeded in that case, avowedly, from a desire to clear the confusion arising from the "different views" expressed by the two Judges of the High Court. This may explain why the Court restricted its final conclusion to holding that dealing in liquor is business and the citizen has a right to do business in that commodity. The Court did not say, though such an implication may arise from its conclusion, that the citizen ....
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....the Government or its right to levy the same. 56. The distinction which the Constitution makes for legislative purposes between a "tax" and a "fee" and the characteristics of these two as also of "excise duty" are well-known. "A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not a payment for services rendered". A fee is a charge for special services rendered to individuals by some governmental agency and such a charge has an element in it of a quid pro quo. Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. The amounts charged to the licensees in the instant case are, evidently, neither in the nature of a tax nor of excise duty. But then, the "licence fee" which the State Government charged to the licensees through the medium of auctions or the "fixed fee" which it charged to the vendors of foreign liquor holding licences in Forms L-3, L-4 and L-5 need bear no quid pro quo to the services rendered to the licensees. The word "fee" is not used in the Act or the Rules in the technical sense of the expression. By "licence fee" or "fixed fee" is meant th....
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....ture of a tax than a licence fee". As the authority which levied the fee had the power to exact a tax, the levy could be upheld as a tax even if it could not be justified as a "fee", in the constitutional sense of that term. But the "licence fee" or "fixed fee" in the instant case does not have to conform to the requirement that it must bear a reasonable relationship with the services rendered to the licensees. The amount charged to the licensees is not a fee properly so-called nor indeed a tax but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transactions." (emphasis supplied) 13. Indeed, if the State legislation was to provide for levy on the imported rectified spirit per se the same would be without jurisdiction, as consistently held, including by the Constitution Bench in Deccan Sugar & Abkari Co. Ltd. Vs. Commissioner of Excise, A.P. (2004) 1 SCC 243, paragraph No.2 of this decision, which reads thus: "2. It is settled by the decision of this Court in Synthetics and Chemicals Ltd. v. State of U.P. that the State Legislature has no jurisdiction to levy any excise duty on rectified spirit. The State c....
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....t, however, placed heavy reliance on the decision in State of U.P. & Ors. Vs. Vam Organic Chemicals Ltd. and Ors. (2004) 1 SCC 225, to contend that the State is obliged to justify the impost based on quid pro quo. We are afraid, this decision is of no avail to the respondent. In that case, the Court was dealing with challenge to Rule 3(a) therein on the ground that the State Legislature did not have legislative competence to legislate on "denatured spirit" which is unfit for human consumption. In that context, this Court relied on the decision in Synthetics and Chemicals Ltd. and Ors. Vs. State of U.P. and Ors. (1990) 1 SCC 109 and answered the issue. If the case under consideration was to be regarding legislation on imported rectified spirit as such, this decision would have come handy. However, having opined that the purport of the impugned Rule 106(Tha), is to permit impost on the final processed product being foreign liquor "IMFL", before bottling as fit for human consumption, the State has jurisdiction to legislate on that subject and need bear no quid pro quo to the services rendered to the licencee of manufacturer of foreign liquor (IMFL). 17. In view of the above, we do ....
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....परà¥à¤·à¤¦ अधिसूचना संखà¥à¤¯à¤¾ - 23-137–2, दिनांक 29 अपà¥à¤°à¥ˆà¤², 1919 के अनà¥à¤¤à¤°à¥à¤—त बनाई गई नियमावली नियम -106 (ट) के बाद à¤à¤• नया नियम - 106 (ठ) निमà¥à¤¨ पà¥à¤°à¤•à¤¾à¤° जोड़ती है:- Document 2 नियम–106 (ठ):–'अधिसूचना संखà¥à¤¯à¤¾ - 470 à¤à¤«. दिनांक 15 जनवरी, 1915 के कंडिका-3 के शीरà¥à¤· 'विदेशी शराब' का उप शीरà¥à¤· (d) के अनà¥à¤¤à¤°....
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....¿ से पà¥à¤°à¤à¤¾à¤µà¥€ होगा। संखà¥à¤¯à¤¾ - 1 / नीति - 40-21 / 2012 - 927 / रा.प. - à¤à¤¾à¤°à¤–णà¥à¤¡ उतà¥à¤ªà¤¾à¤¦ अधिनियम, 1915 ( अधिनियम - 2, 1915) की धारा - 90 दà¥à¤µà¤¾à¤°à¤¾ पà¥à¤°à¤¦à¤¤à¥à¤¤ शकà¥à¤¤à¤¿à¤¯à¥‹à¤‚ का पà¥à¤°à¤¯à¥‹à¤— करते हà¥à¤, राजसà¥à¤µ परà¥à¤·à¤¦, à¤à¤¾à¤°à¤–णà¥à¤¡, परà¥à¤·à¤¦à¥€à¤¯ अधिसूचना संखà¥à¤¯à¤¾ - 23–137–2, दिनांक 29 अपà¥à¤°à¥ˆà¤², 1919 के अनà¥à¤¤à¤°à¥à¤—त बनाई गई नियमावà¤....
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....°à¤•à¤¾à¤¶à¤¨ की तिथि से पà¥à¤°à¤à¤¾à¤µà¥€ होगा। संखà¥à¤¯à¤¾-1 / नीति - 40-21 / 2012-928 / रा. प. - à¤à¤¾à¤°à¤–णà¥à¤¡ उतà¥à¤ªà¤¾à¤¦ अधिनियम, 1915 ( अधिनियम - 2, 1915) की धारा - 90 दà¥à¤µà¤¾à¤°à¤¾ पà¥à¤°à¤¦à¤¤à¥à¤¤ शकà¥à¤¤à¤¿à¤¯à¥‹à¤‚ का पà¥à¤°à¤¯à¥‹à¤— करते हà¥à¤, राजसà¥à¤µ परà¥à¤·à¤¦, à¤à¤¾à¤°à¤–णà¥à¤¡, परà¥à¤·à¤¦à¥€à¤¯ अधिसूचना संखà¥à¤¯à¤¾ - 23-137–2, दिनांक 29 अपà¥à¤°à¥ˆà¤², 1919 के दà¥à¤µà¤¾à¤°à¤¾ बनाई गà¤....