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2015 (8) TMI 590 - SC - VAT and Sales TaxLegality of Andhra Pradesh Rectified Spirits Rules, 1971 - Requirement of obtaining a licence and the payment of Excise duty and Pass fee for exporting rectified spirit to be legal - Power of State Government to impose duty on rectified spirit - Held that:- While State Governments are not competent to impose taxes/levies on industrial alcohol, fee charged for services rendered to prevent the diversion and conversion of industrial alcohol for human consumption is permissible and legal; such fee need not be charged strictly on quid pro quo basis and it will pass legal muster so long as it is not excessive. We therefore find that the 1971 Rules themselves are not illegal, but rather are well within the purview of the Constitutional powers of the State Government. - State Government has not undertaken any supervisory activity which would constitute a quid pro quo for the imposition of the “export permit fee” charged under Rule 15(3)(i). Any expenses incurred on such supervisory or administrative activity has perforce already been recovered or reimbursed from fees on account of storage or sale transactions on industrial alcohol. These dues paid by the Appellants are channelled towards preventing the illegal activities of unrelated third parties for which the Appellants are in no way responsible. It is evident that the intention behind this “fee” is to prevent manufacturers from exporting industrial alcohol to breweries of potable alcohol in other States that would fetch them a better price than producers of other products within their own State. Rule 15 is stroked down dealing with the export of rectified spirit, finding that it imposes a tax, not a fee, on the Appellants and is outside the Respondent State’s legislative competence. It has not been conclusively shown by the Respondent State that it has been constrained to monitor or superintend that industrial alcohol is not illegally diverted to other uses within the State. If industrial alcohol is exported outside the State as industrial alcohol, these impositions partake of a totally different character, transferring it into a tax - Decided partly in favour of assessee.
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