TMI Blog1997 (9) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ASMAC or that the manufacturer is absolved of the obligation to pay excise duty. - Civil Appeal No. 5105 of 1997, & 5106, 5122-5133 of 1997, W.P. No. 4975 of 1997 - - - Dated:- 9-9-1997 - BHARUCHA S.P. AND THOMAS K.T. AND KHARE V.N. JJ. G.L. Sanghi, Senior Advocate (A.T.M. Sampath, Advocate, with him), for the appellants. V.R. Reddy, Senior Advocate (V. Krishnamurthi and T. Harish Kumar, Advocates, with him), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by S.P. BHARUCHA, J. -These are appeals against the judgments and orders of Division Benches of the High Court at Madras in tax revision cases that involve the same issue, namely, whether the excise duty on potable liquor manufactured by the appellants, paid by the purchasers thereof, is includible in the taxable turnover of the appellants for the purpose of levy of tax under the Tamil Nadu General Sales Tax Act. 2.. The appellants manufacture Indian-made Foreign Liquor (IMFL) on the strength of licences issued to them under the provisions of the Tamil Nadu Indian- made Foreign Spirits (Manufacture) Rules, 1981. The manufacture, supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lending unit, brewery or warehouse licensed or established under this Act, or in accordance with such scale of equivalents, calculated on the quantity of materials used or by the degree of attenuation of the wash or wort, as the case may be, as may be prescribed." Rule 22 of the Manufacture Rules, as amended on 4th October, 1982, reads thus: "22. Payment of excise duty and vend fee.-(1) An excise duty, at such rate as the State Government may prescribe from time to time, shall be paid by the person who removes the goods from a manufactory, on the stock of Indian- made foreign spirits so removed from the manufactory. (2) A vend fee of rupees two per bulk litre shall be paid by the licensee on all stocks of Indian-made foreign spirits issued from the manufactory." Rule 15(1) of the Wholesale Rules, amended at the same time, reads thus: "15. Payment of excise duty and vend fee.-(1) The licensee shall pay the excise duty on the stock of Indian-made foreign spirits removed by him from a manufactory in the State as required under sub-rule (1) of rule 22 of the Tamil Nadu Indian-made Foreign Spirits (Manufacture) Rules, 1981, or the countervailing duty on the stock of Indian-mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer by way of tax separately without including the same in the price of the goods bought or sold shall not be included in the turnover." Section 2(n) defines "sale" to mean "every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration........" Section 3 provides for the levy of tax on sales or purchase of goods. 6. Learned counsel for the appellants submitted that, by virtue of the provisions of the Act and the Rules aforementioned, particularly rule 22 of the Manufacture Rules, the manufacturer of the IMFL was not liable for the payment of the excise duty thereon. The imposition of the excise duty by reason of rule 22 was squarely on the party who removed the IMFL from its manufactory, namely, TASMAC. The manufacturer could not, by reason of rule 22, seek to recover the excise duty from the party so removing the IMFL. The element of the excise duty did not enter into the turnover of the manufacturer and, accordingly, no sales tax was payable on the element of excise duty. Learned counsel cited the judgment of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court referred to the aforementioned two authorities of the Federal Court and several authorities of this Court to hold that excise duty was levied on manufacture but it could be levied at any convenient stage so long as the character of the impost, that is, that it was a duty on the manufacture or production, was not lost. The method of collection did not affect the essence of the duty but only related to the machinery of collection for administrative convenience. This court said, "While the levy in our country has the status of a constitutional concept, the point of collection is located where the statute declares it to be". 9.. The liability to pay excise duty on the IMFL is, therefore, that of the manufacturer thereof. Rule 22 only provides a mode for collecting the excise duty, a mode which is obviously convenient for it requires the party removing the IMFL from the factory of its production to pay in advance the excise duty thereon. That party might be the manufacturer. That the Act provides in another section that all IMFL should be supplied in the State of Tamil Nadu by wholesale only through TASMAC does not, in our view, make any difference to this position. It cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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