TMI Blog1989 (8) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... and questions of law arising in the other petitions are indentical. 3. On April 19, 1980, the respondent No. 2, Commissioner of Prohibition and Excise issued a circular ( Annexure-C) modifying and revising the instruction contained in his earlier circular dated May 29, 1979 (Annexure-B), pertaining to the breakages for the period prior to and subsequent to 1-1-1977 by directing that the excise duty at prescribed rates should be recovered on all breakages of Indian made foreign liquor in transit before ordering their write off, in view of the provisions contained in Rule 20 of the Maharashtra Foreign Liquor (Import and Export) rules, 1968 (hereinafter referred to as 'the Maharashtra Foreign Liquor Rules'). In respect of the ullages, excise duty was to be recovered on all ullaged bottles that were allowed to be destroyed and it was stated that it was not necessary to refer such cases to the Commissioner, as excise duty was to be recovered on all ullaged bottles. It was also made clear that it was not necessary to submit proposals for writing off to the Commissioner, as excise duty was to be recovered on all types of losses in the consignment of Indian made foreign liquor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 105 and 106 of the Bombay Prohibition Act permitted recovery of the excise duty on breakages and ullages, and since the taxing event was import of the goods, it was the duty of the licensees to pay the duty on the excisable articles in spite of the breakages and irrespective of whether the goods were stored in a Bonded Warehouse or not. With regard to the supervision charges it was urged that section 58-A of the Bombay Prohibition Act vested the State Government with the power of imposing supervision charges, in respect of the goods mentioned therein by the persons who were engaged in the concerned activity, and since section 58-A imposed the liability, it was open to the State Government to vary the quantum, taking in to account the circumstances, and it was not necessary to have a clear provisions for recovering the amount and no question of retrospective operation of the rule or provision arose in these circumstances. 6. For considering the contentions raised on the question of breakages in transit or in the Bonded Warehouse, it will be useful to extract the relevant provisions of section 105 and 106 of the Bombay Prohibition Act, which are as follows :- 105. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is important is that while levying the duty, the duty in respect of the manufacture or breakage on which the excise duty is the to be lived, must answer one or the other requirements in the Clause (a) to (c). Evidently, when different stages have been provided by the statute for levying the duty, the power to levy the duty must have reference to one or the other stages mentioned in the statute and, in the case of excisable article imported, the duty could be only on the basis of its import, the taxing event being the import of the excisable article Clause (a) itself carves out two classes while clothing the State with the power to levy the duty and Sub-clause (i) relates to the category where payment is to be made at the time of its import, while sub-clauses (ii) refers to the category where the duty is to be levied upon the issue for sale from a warehouse established or licensed under the provisions of the Act. The word or shows clearly that the State has to choose one or the other mode of levying the excise duty and it cannot impose a duty in both the ways and it cannot be used, in the context in which it occurs as a conjunctive, i.e., and . It is well settled that the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - We are not inclined to accept the contention of Dr. Syed Mohammad that the expression 'levy' in Rule 10 means actual collection of some amount. The charging provision section 3(1) specifically says-'There shall be levied and collected in such a manner as may be prescribed the duty of excise.......' It is to be noted that sub-section (i) uses both the expressions 'levied and collected' and that clearly shows that the expression 'levy' has not been used in the Act or the rules as meaning actual collection. The expression levied in the context in which it appears, in our view, must mean imposition of the duty and would not indicate merely the manner as to how the recovery is to be effected. 11. On behalf of the respondents, reliance was placed on the decision of a learned Single Judge of this Court at Bombay in Writ Petition No. 631 of 1982, decided on June 19, 1986. While dealing with the submission that section 106 not merely prescribes the time for the collection of duty, but emphasises the point at which the duty is to be collected, the learned Judge observed that in case the taxing events occur at the point of import of liquor in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, that is it is duty on the manufacture or production, 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. Thus, laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. It is also there explained that countervailing duties are meant to equalise the burden on alcoholic liquors imported from outside the State and the burden placed by excise duties on alcoholic liquor manufactured or produced in the State. We are also supported by the view taken by a Division Bench of the Allahabad High Court in M/s. Mohan Meakin Breweries Ltd. v. State of U.P., 1978 (4) Allahabad Law Reports 534. While construing indentical provisions of sections 28 and 29 of the U.P. Excise Act, 1910, it was held that excise duty is a single point duty i.e., if it is charged at the stage of manufacture or at the stage of transport, it cannot be charged at both the points, and is essentially one on the production or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fees at the full rates payable thereon. The learned Counsel for the petitioners stated that they had no grievance about their liability to account satisfactorily for the losses, and in the event their inability to do so, they would be liable to pay the excise duty and fees, but this would be only in respect of the goods stored in bond or issued therefrom and cannot have any reference to the breakages which occur prior to placing of the goods in the bonded warehouse. One of the submissions of Shri Ghate, the learned Counsel for some of the petitioners, was that excise duty was sought to be levied also in respect of the breakages in transit prior to the import of the goods within the State, but what has been referred to in the petitions is only loss in transit and it is apparent that this had reference only to the loss occasioned by virtue of the breakages from the place of manufacture or the place of import to the bonded ware-house, and not to the loss occasioned prior to the import. In fact, we see nothing on record or in the petitions to justify the submission that the respondents have claimed excise duty on breakages even prior to the import of the goods, and considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use all the breakages until the date of issue of that circular had been written of, as is apparent by the letters of the Collector dated 13th December, 1977 and 14th/15th September, 1978 (Annexures A-2 and A-3), and there was no cause for grievance. However, by issuing the circulars dated 19th April, 1980 (Annexure-C) and 6th April, 1981 (Annexure-D), excise duty was sought to be recovered on transit breakages in respect of the goods before they were put into the bonded warehouse and it became necessary to approach this Court for challenging these circulars. 16. It is apparent that if the excise duty is to be charged on the basis of sub-clause (i) of Clause (a) of section 106 of the Bombay Prohibition Act, on issue of the articles from the bounded warehouse, the question of loss of excise duty on transit breakagese would not rise. 17. What is purported to be done by the circulars (Annexures-C and D) is to levy excise duty on breakages, without the authority of the taxing statute. It is apparent that the rules framed did not clothe the State Government with the authority to charge excise duty on the breakages, since power to impose the duty is to be found only in sections 105 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or supply to another licensee holding a B.S. 1 licence in the State, under a pass granted by the Collector under the Maharashtra Foreign Liquor (Storage and Supply) Regulations, 1964. Condition No. 3 of the licence requires the licensee to pay to the State Government, in advance, at the beginning of each quarter commencing from the date of the licence, such cost of the staff appointed at the licensed premises for the purpose of excise supervision as may be fixed by the Director from time to time. 19. The grievance of the petitioners is that the supervision charges have actually been recovered much in excess of the actual salary of the staff employed in the licensed premises and that because there were revisions of salary of Government servants and some audit objections were raised, the respondent started taking action for recovery of supervision charges with retrospective effect from 5-5-1970 on the strength of the circular dated 7-4-1981 (Annexure-F to the petition). That circular shows that revised rates of supervision charges were communicated to all licence-holders by the letter dated 2-1-1979 with instructions to effect recovery of supervision charges with effect from 5-5-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such staff shall be paid to the State Government , that would have reference to the cost of the staff as obtaining for the period during which the goods are stored in the Bonded Warehouse and not the incidence which the State would have to bear by reason of such a remote circumstance as the upward revision of the pay-scales of its own employees at a latter date. 21. The learned Assistant Government Pleader tried to make a distinction between creation of liability under section 58-A of the Bombay Prohibition Act and the quantum that would have to be paid in pursuance of that liability, but this distinction appears to us to be without any difference, because section 58-A itself spells out that the liability shall be to the extent of the cost of the staff to be paid to the State Government. If this has to be paid in advance and if it had to be ascertained before the removal of the goods that the charges have, in fact, been paid, these circumstances would negative the existence of any power in the State Government or the Commissioner at a later date to ask for a higher amount by reason of circumstances which could not have been anticipated on the date when the charges become pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sell the goods on the effective representation that the cost of supervision charges for incoming quarter was fixed for the said quarter, cannot now be permitted to go back on their said representation and demand additional amount, more so with retrospective effect from 5-5-1970. 24. Reliance was placed on behalf of the petitioners on M/s. Motilal Padampt Sugar Mills Co. v. The State of Uttar Pradesh, AIR 1979 Supreme Court 621 and Union of India v. Godfrey Philips India Ltd., AIR 1986 Supreme Court 806, and it was urged that upon the facts of this case, the doctrine of promissory estoppel would apply. In the former, it was observed that it is not necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promisee, acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promise should have altered his position in reliance on the promise. But if by detriment we mean injustice to the promises which would result, if the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promisee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F to the petition) and that circular would have to be quashed. 26. In the result, we quash the Circulars dated 19-4-80, 6-4-1981 and 7-4-1981 Annexures C, D and F In Writ Petition Nos. 1167/81, 1168/81, 1169/81, 1170/81, 1171/81, 1172/81, 1173/81, 1174/81, 1175/81, 1176/81, 1296/81, 665/82 and 678/82. In Writ Petition Nos. 970/81 and 973/81, the communication, dated 1-9-1980 (Annexure-C); the corrigendum, dated 2-9-1980 (Annexure-D); the communication, dated 27-3-1981 (Annexure-F); and the communication, dated 27-3-1981 (Annexure-G); and in Writ Petition Nos. 971/81 and 972/81 the communications, dated 9-7-1979, 29-9-1980, 1-10-1980, and 26-3-1981-Annexures B, E, G H, respectively, were based on those very Circulars dated 19-4-1980, 6-4-1981 and 7-4-1981 (Annexures-C, D F in W.P. No. 1168/81). We quash these communications also and direct the respondents to forbear from claiming any levy, charge or excise duty on the debonded goods on the basis of those Circulars and communications. The rule in all the petitions is made absolute in the above term but in the circumstances of the case, there will be no order as to the costs. Rule made absolute. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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