TMI Blog1976 (10) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... , for the appellant in C.A. No. 693 of 1976. T.V.S.N. Chari, Advocate, for the respondent in C.A. No. 693 of 1976. A. Subba Rao, Advocate, for the appellant in C.A. Nos. 934-936 of 1976. Soli Sorabji, Senior Advocate (K.J. John, Advocate, with him), for the appellant in C.A. Nos. 248-251 of 1976. Niren De, Attorney-General for India, P.P. Rao, Senior Advocate, and D.V. Sastry and T.V.S.N. Chari, Advocates, for the respondents in C.A. Nos. 248-251 and 934-936 of 1976. -------------------------------------------------- The judgment of the Court was delivered by JASWANT SINGH, J.- This batch of appeals by special leave which are directed against three separate judgments of the High Court of Andhra Pradesh at Hyderabad dismissing three sets of Writ Petitions Nos. 1195 to 1198 of 1975, 3931, 3944 and 4029 of 1975 and 6790 of 1974 filed by the appellants to challenge certain orders of the sales tax authorities made in respect of redetermination of their turnover for certain years under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act") shall be disposed of by this judgment, as they raise a common question as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he distillery officer has to affix the said receipt to the counterfoil of form D-6. Rule 83 of the Rules casts responsibility upon an applicant for a distillery pass to make a correct calculation and full payment of the excise duty upon the liquor desired to be removed. Rule 84 of the Rules requires the distillery officer to issue the liquor under a pass in form D-6 sending a duplicate thereof to the Excise Superintendent of the district of destination on being satisfied that the applicant is entitled under the Rules to remove the liquor and has made payment of the requisite excise duty. Accordingly, every buyer of the Indian liquor from either of the appellants' distilleries during the years in question obtained the distillery pass for release of the liquor after making payment of the excise duty and presented the same at the concerned distillery whereupon a bill of sale or invoice was prepared by the distillery showing the price of the liquor. The said bill did not include the excise duty paid by the buyer. The appellants' books of account also did not contain any reference regarding the excise duty paid by the purchasers in the manner stated above. The appellants paid the sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. Sometime thereafter, the Sales Tax Appellate Tribunal by its order dated August 5, 1974, passed in T.A. Nos. 331 of 1973 and 5 of 1974 upheld the assessment made under similar circumstances by the Commercial Tax Officer, Vijayawada, on the turnover of M/s. Shaw Wallace Co. Thereupon the Deputy Commissioner, Com- mercial Taxes, Hyderabad, by virtue of the power vested in him under sec- tion 20 of the Act issued the impugned notice dated October 9, 1974, to the appellant calling upon it to show cause why the order passed by the Assistant Commissioner, Commercial Taxes, on March 26, 1973, should not be set aside and the original assessment order of the Commercial Tax Officer dated August 16, 1972, restored. The appellant was also required to file objections and adduce evidence in support thereof within 7 days from the date of receipt of the impugned notice. Aggrieved by the notice, the appellant filed a petition, being Petition No. 6790 of 1974, before the High Court of Andhra Pradesh See [1976] 37 S.T.C. 467., seeking issue of an appropriate writ, order or direction declaring that the appellant was not liable to pay sales tax on excise duty paid by the purchasers in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts for anything done in respect of the liquors sold but was charged by the excise authorities before removal of the liquors under the Andhra Pradesh Excise Act, 1968, and the Rules made thereunder, it could not constitute a part of the turnover and taxed under the Act. Although some controversy was sought to be raised by the counsel for the appellants regarding the nature and character of the excise duty and countervailing duty but as rightly pointed out by the learned Attorney-General, the matter has been put beyond doubt by the decisions of this Court. In R.C. Jall v. Union of India, after a review of the authorities bearing on the matter, it was held by this Court as follows: "The excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. Subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience." Again In re Sea Customs Act [1964] 3 S.C.R. 787., it was observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on property and income." It is, therefore, clear that excise duty is a duty on the production or manufacture of goods produced or manufactured within the country though as observed by one of us (Khanna, J.) in A.B. Abdul Kadir v. State of Kerala [1976] 3 S.C.C. 219., laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. The position with regard to the nature and character of countervailing duty has equally been made clear in a number of decisions of this Court. In Kalyani Stores v. State of Orissa [1966] 1 S.C.R. 865., which was followed in Mohan Meakin Breweries Ltd. v. Excise and Taxation Commissioner, Chandigarh [1976] 3 S.C.C. 421., Shah, J. (as he then was), observed: "This brings us to the consideration of the meaning of the expression 'countervailing duties' used in entry 51, List II of the Seventh Schedule to the Constitution. The expression 'countervailing duties' has not been defined in the Constitution or the Bihar and Orissa Act 2 of 1915. We have, therefore, to depend upon its etymological sense and the context in which it has been used in entry 51. In its etymological sense, it means to counterbalance; to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 5, 6, 67 and 76 of the Andhra Pradesh Distillery Rules, 1970, and condition No. 9 of the distillery licence granted under rule 5 of these Rules, rules 5 and 10 of the Andhra Pradesh Indian Liquor (Storage in Bond) Rules, 1969, conditions Nos. 7 and 10 of the licence granted in form B.W. 1 under rule 5(2), the phraseology of the application for receipt of liquor into the bonded warehouse prescribed by rule 9(2) and the terms of the counterpart agreement required to be executed by a licensee of an Indian liquor bonded warehouse under rules 3(2) and 5(2) of these Rules] the buyers of the said liquors are also liable under the law for payment of the aforesaid duties can be sustained. For a proper determination of this question, it is necessary to recall the provisions of the Andhra Pradesh Distillery Rules, 1970, which have been set out in the earlier part of this judgment. The said rules particularly rules 79, 81, 82, 83 and 84 lend a good deal of support, in our opinion, to the contention of counsel for the appellants and make every intending buyer of the Indian liquor liable for payment of the excise duty before obtaining the distillery pass and lifting the quantity mentioned th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deferred payment, or for any other valuable consideration..........." In the instant case, it is not disputed that excise duty or countervailing duty paid directly to the excise authorities by the purchasers of Indian liquors before removal thereof from the distilleries or the bonded warehouse on the strength of the distillery and warehouse passes was not included in the bills of sale as the consideration for the sales, but that alone, according to the Attorney-General, is not determinative of the matter. He has invited our attention to the second part of the definition of the word "turnover" as set out above and has strenuously urged that as in addition to the price of the liquor set out in the bills of sale as consideration for the sales, other sums charged by the dealer at the time of or before the delivery of the goods also form part of turnover and, according to the well-established canon of construction, a taxing statute has to be interpreted reasonably so that there is no evasion of the tax, the phrase "any sums charged by the dealer" occurring in the aforesaid definition of the word "turnover" must be construed as meaning any item of expense including the excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bearing the same cause title, viz., George Oakes (Private) Ltd. v. State of Madras [1961-1962] 12 S.T.C. 476 (S.C.); 13 S.T.C. 98 (S.C.). In the first of these cases, it was observed: "Under the definition of turnover the aggregate amount for which goods are bought or sold is taxable. This aggregate amount includes the tax as part of the price paid by the buyer. The amount goes into the common till of the dealer till he pays the tax. It is money which he keeps using for his business till he pays it over to Government. Indeed, he may turn it over again and again till he finally hands it to Government." In the other decision, Hidayatullah, J. (as he then was), said: "In laws dealing with sales tax, turnover has, in England and America also, been held to include the tax. The reason for such inclusion is stated to be that the dealer who realises the tax does not hand it over forthwith to Government but keeps it with him, and turns it over in his business before he parts with it. Thus, the tax becomes, for the time being, a part of the circulating capital of the tradesman, and is turned over in his business. Again, it was said that the price paid by the purchaser was not so much ..... X X X X Extracts X X X X X X X X Extracts X X X X
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