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2018 (10) TMI 145 - HC - VAT and Sales TaxRate of VAT - sale of Rectified Spirit - Case of Revenue is that as per Serial No.56, Part II of Schedule II of VAT Act on 'liquor', the petitioner is liable to pay VAT at the rate of 5% whereas, the 'Rectified Spirit' does not come within the aforesaid Schedule and, therefore, the petitioner is liable to pay VAT at the rate of 14% - Vires of Section 46 and 53 of the M.P. VAT Act, 2002, read with Rule 60 of M.P. VAT, Rules, 2006. Held that:- It is clear that rectified spirit is not alcohol and not fit for human consumption and hence, not an excisable article. In absence of such excise ability under the M.P. Excise Act, the question of levying excise or power to levy does not arise and hence the goods in question do not fall within preview of Entry 47, List I of VAT Act to be considered Tax free goods. Section 2(6) of M.P. Excise Act, 1915 says that excisable article means (a) any alcoholic liquor for human consumption, hence liquor is fit for human consumption and excisable article, but after 1.4.2013 liquor is also taxable by Entry 56 Schedule II of VAT Act - Rectified spirit is not fit for human consumption and by notification dated 01.04.2011, rectified spirit is not an excisable article. The Constitution Bench of the Apex Court in Mohd. Hanif Quareshi & others v. State of Bihar, [1958 (4) TMI 110 - SUPREME COURT] while dealing with the meaning, scope and effect of Article 14, reiterated what was already explained in earlier decisions that to pass the test of permissible classification, two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) such differentia must have rational relation to the object sought to be achieved by the statute in question. The Apex Court further stated that classification might be founded on different basis, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. Petition dismissed.
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