1992 (4) TMI 247 - SC - VAT and Sales Tax

Summary

Issues Involved:
1. Vires of Rule 22 of the Madhya Pradesh Brewery Rules, 1970.
2. Legality of the demand for annual charges exceeding 5% of the duty leviable on the issue made from the brewery.

Summary:

Issue 1: Vires of Rule 22 of the Madhya Pradesh Brewery Rules, 1970
The appellant challenged the vires of Rule 22 of the Madhya Pradesh Brewery Rules, 1970, framed u/s 62 of the Madhya Pradesh Excise Act, 1915. Rule 22 mandates that the Excise Commissioner appoint an officer-in-charge of the brewery, with the pay of such officers met by the Government. However, if the annual charges exceed 5% of the duty leviable on the issue made from the brewery, the excess shall be realized from the brewer. The High Court upheld the rule, viewing it as a condition of the licence for working the brewery and within the rule-making power conferred u/s 62(2)(h) read with Section 28 of the Act.

Issue 2: Legality of the Demand for Annual Charges
The appellant, a company manufacturing and selling beer, contested the recovery of annual charges relating to the pay of the officer-in-charge exceeding 5% of the duty leviable. The High Court supported the view that the demand was reasonable and within the rule-making power. However, the Supreme Court analyzed the provisions and found that the demand, in essence, was an additional excise duty not authorized under Section 25 of the Act. The Court referred to precedents like Bimal Chandra Banerjee v. State of Madhya Pradesh, which held that no tax could be imposed by any rule unless the statute specifically authorizes it. The Court concluded that the demand was not a further fee or consideration but an additional excise duty, thus ultra vires the Act and beyond the rule-making power of the State.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgment and order of the High Court of Madhya Pradesh. Rule 22, to the extent it permits raising a demand equivalent to additional excise duty without it being actually due, was declared ultra vires the Act. The demand raised against the appellant was quashed, and the appellant was awarded costs.