TaxTMI 
TaxTMI 
2025 (1) TMI 625
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....nit III, Vivek Pharmachem India Limited EPIP, Versus State of Jammu and Kashmir through Commissioner Secretary to Government, Finance Department., Excise Commissioner, J&K Government, Excise Department, Jammu, Director, Industries, Jammu, Deputy Excise Commissioner, Jammu Deputy Excise Commissioner, Lakhanpur, UT of Jammu and Kashmir through Commissioner Secretary to Government, Finance Department., UT of J&K through commissioner/Secretary Industries and Commerce Department. JUDGMENT SANJEEV KUMAR J 1. The petitioners in all these petitions are entrepreneurs who have established their industrial units in the UT of Jammu and Kashmir. Some of these units are engaged in the manufacturing of medicinal and toiletry preparations, whereas the others manufacture various products out of the raw materials, such as absolute alcohol/denatured spirit/special denatured spirit/rectified spirit/plain spirit, etc. They are aggrieved of and have challenged sub-clause (B) of Clause 14 "Excise Duty-Civil" of Excise Policy 2019-20 ["Excise Policy 2019-20"] to the extent it provides for the levy of excise duty at the rate of Rs. 10 per litre in respect of rectified spirit/alcohol and denatured spirit....
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....ated vide SRO 128 dated 25-02-2019 and the impugned clause 14 (B) thereof. The impugned clause reads thus: 14. Excise Duty: -CIVIL A................................ B Rectified spirit, alcohol, denatured spirit and molasses Type Rate Rectified spirit/alcohol/denatured spirit for use in medicinal and toiletry preparations, other than in manufacture of liquor Rs. 10/litre Molasses Rs. 20 per quintal 5. SRO 128 (supra) professes to promulgate the Excise Policy 2019-20, which was to come into force on 26.02.2019 and to remain in force till 31.03.2020. The policy, as is apparent from reading of its objectives, was issued to simplify the regulatory structure by rationalizing and reducing the number of taxes, duties and other levies, thereby maximizing revenue realization. It also aimed to promote greater social consciousness about the harmful effects of consumption of liquor and alcoholic beverages etc. Apart from providing other measures, it also fixed the rate of excise duty payable under the State Excise Act. So far as excise duty on the rectified spirit/alcohol/denatured spirit for use in medicinal and toiletry preparations is concerned, the policy prescribed a levy of ....
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....orted from the State of such amount as the Government may from time to time prescribe; Provided that it shall be lawful for the Government to exempt any liquor or intoxicating drug from any duty to which the same may be liable under any of the provisions of this Act". 11. It is, thus, evident that in terms of Section 16, the Government is empowered to levy duty on all liquor and intoxicating drugs manufactured in the territories of the State or imported into or exported from the State. The Government is also empowered to prescribe the rate of such duty. It is in the exercise of powers conferred upon the Government under Section 16 of the State Excise Act, the impugned clause in SRO 128 (supra) has been framed and a duty at the rate of Rs.10 per litre has been imposed on rectified spirit/alcohol/denatured spirit for use in medicinal and toiletry preparations. The aforesaid raw materials used in the manufacture of liquor are, however, exempted. 12. It is neither the argument of any of the learned counsel appearing for the petitioners, nor do we find any pleadings in any of the writ petitions that the State Excise Act is ultra vires the Constitution or beyond the legislative compe....
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....nt w.e.f 16.09.2016 does not take away, in any manner, the legislative competence of the State of Jammu and Kashmir to levy duty of excise on the import of liquor in the State of Jammu and Kashmir for manufacture of medicinal and toiletry preparations etc. Entry 54 of the State list, which in any case was not applicable to the State of Jammu and Kashmir prior to 5th August 2019 when Article 370 of the Constitution was suitably amended and abridged, only provides for the imposition of taxes through legislation on the sale of various commodities, including alcoholic liquor for human consumption. Entry 51 of the State list, which was relied upon by the learned counsel for the petitioners, to buttress their argument, was not applicable to the State of Jammu and Kashmir when the impugned excise policy was promulgated. The Entry, as is apparent from its bare reading, confers legislative power on the States to impose excise duty on goods manufactured and produced within the State, including alcoholic liquor for human consumption and excludes medicinal and toiletry preparations containing alcohol etc. 16. The argument of the learned counsel for the petitioners that. in terms of Entry 84 a....
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....t with the State Excise Act, and in particular, with Sections 5 and 16 thereof, the impugned clause in the Excise Policy cannot be declared bad and unconstitutional for being beyond the legislative competence of the State Legislature. We, however, find substance in the submission of the learned counsel appearing for the petitioners who are not using in their units rectified spirit/alcohol and denatured spirit etc. for medicinal and toiletry preparations. This so because the impugned clause itself makes it clear beyond any doubt that what is sought to be levied as the duty of excise at the rate of 10 per litre is only on the rectified spirit/alcohol/denatured spirit imported in the State of Jammu and Kashmir for its use in medicinal and toiletry preparations. The expression "other than in manufacture of liquor" is redundant appendix and needs to be ignored. As a matter of fact, the import of rectified spirit/alcohol/denatured spirit in the State of Jammu and Kashmir for its use in the manufacture of liquor or any other preparations, excluding the medicinal and toiletry preparations, is not leviable under the impugned clause with the duty of excise at the rate of 10 per litre. Doubl....
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....n" is, thus, a hollow argument unworthy of acceptance. 24. May be it is true that rectified spirit, alcohol, or denatured spirit supplied in the State of Jammu and Kashmir (now UT of J&K) from other State/States is exigible to tax under Section 7 of IGST Act, 2017, except when used for the manufacture of liquor fit for human consumption. However, that does not take away the power of the State to levy a duty of excise under Section 16 of the State Excise Act when such goods are imported by a unit for use in medicinal and toilet preparations. The IGST is charged by the Center on inter-State supply of goods and services, as per nature of such goods or services, as the case may be. The duty of excise impugned is on the quantity of goods imported for a particular use. The two levies, being legally distinct, can be levied simultaneously, and such a levy is not hit by the double taxation, as urged by learned counsel appearing for the petitioners. 25. We have deliberately avoided to go into the change in the legal landscape under the Constitution (Application to Jammu and Kashmir) Order, 2019, and its impact on the instant litigation. It is so because these petitions were filed before 5t....