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2015 (8) TMI 945 - SUPREME COURT

2015 (8) TMI 945 - SUPREME COURT - TMI - Valuation - Price fixation of rectified spirit - Earlier HC has declared the provisions of Rule 17 unconstitutional in the case of Gowri Industries [1993 (10) TMI 354 - KARNATAKA HIGH COURT] as, Rule 17 in so far as it empowers of the fixation of price of rectified spirit, is therefore, declared as unconstitutional, and ultra vires the provisions of the State Act.

Held that:- The contention of learned counsel for the Appellant is that the State .....

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dent State recover the said ₹ 1/- per litre, it perforce had to challenge the Government Order dated 12.5.1992. Having failed to do so it cannot, thereafter, challenge the Demand dated 15.12.1993 which is predicted on the Government Order itself.

There were three Appellants before the Division Bench of the High Court of Karnataka in the case of but only one of them, i.e. the Appellant before us, has decided to further challenge the Demand of ₹ 13,32,000/- being accorded at .....

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pondent State. - Decided against assessee. - Civil Appeal No. 860 of 2006 - Dated:- 21-8-2015 - Vikramajit Sen And Shiva Kirti Singh,JJ. JUDGMENT Vikramajit Sen, J. 1. This Appeal brings into challenge the Judgment of the Division Bench of the High Court of Karnataka in terms of which the Judgment of the learned Single Judge had been upheld; however, with the direction that the competent authority shall examine the claim made by the Appellant for being classified as a non-captive unit. On 29.7.2 .....

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the Respondent State. For the period of 1.7.1992 to 30.6.1993, supplies of rectified spirit were made by the Appellant to various parties and the entire sum at the rate of ₹ 6/- per litre was recovered/received by the Appellant. It will be relevant to underscore that the supply of rectified spirit (ethyl alcohol) was made by the Appellant with full knowledge of the Government Order to which challenge has been made, namely, the payment of ₹ 1/- per litre to the State Government. The A .....

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powered to fix the price of rectified spirit by virtue of Rule 17 of the Karnataka Excise (Manufacture and Bottling of Arrack) Rules, 1987, the vires of which have not been questioned. The Rule is reproduced for facility of reference: Rule 17 - Rectified spirit - Whether Rule 17 which empowers the Government to fix the price of rectified spirit, valid? K.Shivashankar Bhat, J., Held. - Rule 17 of the State rules, invoked in the present case, nowhere lays down nor indicate the principles or factor .....

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shing point. Limitation is needed to prevent any possible dictatorial power being vested in the executive by the legislature. Rule 17 insofar as it empowers of the fixation of price of rectified spirit, is therefore, declared as unconstitutional and ultra vires the provisions of the State Act. 4. The manner in which the trade of arrack is conducted can be gleaned, inter alia, from a reading of Rule 13, which is also reproduced for convenience: Rule 13. Stock of rectified spirit. - (1) The quanti .....

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the Warehouse Officer by volume and strength or the quantity of pure alcohol in it and taken to the storage vats. The Warehouse Officer shall furnish a certificate of such verification to the Distillery Officer concerned and shall keep a register showing the details of stock indented, issued by the distillery and the stock as received in the warehouse. (3) Gauging of spirit shall be made by the Warehouse Officer every day in the presence of the licensee or his authorized representative and the .....

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ed. (b) The Warehouse Officer on receipt of the requisition may permit the transfer after gauging the stock in volume and strength. A perusal of the said Rule makes it patently clear that the Commissioner allots quantities of rectified spirit from the distillery to a warehouse , and the indents are duly counter signed by the Warehouse Officer. The Rule clarifies that the transportation charges are to be borne by the licencee. This arrangement, so far as transportation expenses are concerned, obv .....

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ld permit the Appellant to sell rectified spirit at the common fixed rate of ₹ 6/- provided it transferred ₹ 1/- per litre to the State. If the Appellant was serious in questioning the legal capacity of the Respondent State recover the said ₹ 1/- per litre, it perforce had to challenge the Government Order dated 12.5.1992. Having failed to do so it cannot, thereafter, challenge the Demand dated 15.12.1993 which is predicted on the Government Order itself. Learned counsel for th .....

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