TMI Blog1992 (9) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were raised before Pendse, J., the learned Single Judge from whose Judgment the present appeals are filed. The learned Single Judge negatived both these contentions of the petitioners by his judgment and order dated 19th of June 1986. Both these issues were also raised before a Division Bench of this Court at Nagpur in Writ Petition No. 1168 of 1981 filed at Nagpur in the case of J.E. Bilmoria Sons v. State of Maharashtra (1990) 2 Bombay Cases Reporter 108 (Nagpur Bench) Bombay (D.B.) decided on August 1, 1989 by M.S. Deshpande and D.J. Moharir JJ.. The Division Bench did not agree with the above decision of Pendse, J. which was brought to its notice and decided both these issues in favour of the petitioners before it. Thereafter the issue relating to retrospective supervision charges again came up for consideration before a Division Bench of this Court consisting of Pendse and De Silva, JJ. in Appellate Side Writ Petition No. 940 of 1982 in the case of Gautstad Nayar Irani v. State of Maharashtra Appellate Side Writ Petition No. 940 of 1982 decided by Pendse and Da Silva JJ. on September 12, 1990 (Unrep). It seems that the judgment of the Division Bench at Nagpur was not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of such Prohibition and Excise or Police staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Government by the person manufacturing, importing, exporting, transporting, storing, selling, etc. the intoxicant, or denatured spirituous preparation. 6. Under Section 143 of the Bombay Prohibition Act, 1949, the State Government may make rules for the purpose of carrying out the provisions of this Act or any other law for the time being in force relating to excise revenues. The State Government has framed the Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964 in the exercise of this power. Under these Rules, any person deciding to store foreign liquor in bond shall make an application for a licence in that behalf to the Commissioner as set out in Rule 3. Rule 3, Sub-rule (2) requires the applicant to give an undertaking to the effect that he shall abide by the provisions of the Act and the Rules, Regulations and Orders made thereunder and the Conditions of the Licence and shall execute a bond in Form B.W.A. for the payment of duty. Under Rule 6, all transactions pertaining to the receipt, transport, storage in bond and issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increased charges with retrospective effect from May 5,1970. The petitioners rely in this connection on a decision of the Supreme Court in the case of Income-tax Officer v. M.C. Ponnoose, AIR 1970 Supreme Court 385. The Supreme Court has observed in this case that while it is open to a sovereign legislature to enact laws which have retrospective operation, the Courts will not ascribe retrospectivity to new laws unless by express words or necessary implication, it appears that such was the intention of the legislature. The Parliament can delegate its legislative power, but where rules and regulations are made in the exercise of such delegated powers, the authority must have clear statutory powers to make retrospective delegated legislation. Where there is no such clear statutory power, the Courts have held that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect. 10. The ratio of this judgment, however, has no application to the facts of the present case. There is no question here of any delegated legislation which is made effective from a retrospective date without the requisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The demand is made when the cost increased. However the increase is with retrospective effect from May 5,1970. The petitioners have clearly agreed to bear the entire cost of supervision. If this cost of supervision goes up in 1979, they are required to pay the same whether it is calculated from May 5, 1970 or from any other date. 11. It was also contended by the petitioners that there is a promissory estoppel in their favour to the effect that the entire cost of supervision has already been collected from them by reason of Condition No. 3 in the licence which requires them to pay the cost of supervision in advance every quarter. The petitioners submit that the respondents must be considered as having accordingly informed them that the entire cost of supervision has been recovered from them in advance. The respondents therefore cannot now claim any additional amount from the petitioners. This submission is also not acceptable. Simply because for administrative convenience, the costs are calculated in advance and recovered from the petitioners, it cannot be said that there is any promise held out to the petitioners that they would not be liable to pay any further charges if, lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out that ordinarily the incidence of excise duty would be passed on by them to their customers. In the present case the stock which was in the bonded warehouse at the relevant time has been sold long back. There is no way in which the petitioners can recover the increased charges from their customers now because they have already sold the stock. This submission also does not deserve to be accepted. In the first place, there can be no presumption that the incidence of excise duty or other costs related to the manufacture and sale of the product in question will be necessarily passed on to the customers in full. This depends upon market conditions and what price the petitioners can charge for their product if their product is to be profitably sold in the market. The profitability or otherwise of marketing the product depends upon various factors. Undoubtedly, the cost of manufacture including all overheads and excise duties have a bearing on the price which the petitioners charge to the customers. Even assuming that the petitioners would have ordinarily passed on this increased cost of supervisory staff to their customers, the petitioners in the present case are not prevented from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royed, he may be permitted to do so without payment of excise duty. But if the licensee proposed to clear the alleged bottles of foreign liquor for being sold to known customers, necessary permission may be given, subject to payment of excise duty and transport fees at full rate as if the bottles were full and subject also to an undertaking being given by the licensee that in case of any complaint he shall be liable. 17. A subsequent circular was issued on 19th of April 1980 in modification of the instructions contained in the circular of May 29, 1979. With respect to breakages occurring in transit it stated that excise duty at the prescribed rates should be recovered on all breakages of Indian made foreign liquor in transit, whether such breakages pertain to a period prior to or subsequent to January 1, 1977. Regarding villages, it said that excise duty should be recovered on all alleged bottles whether destroyed or sought to be cleared out of bond for sale to known customers. 18. The petitioners have challenged both these circulars. They contend that under Section 106 of the Bombay Prohibition Act, 1949, excise duty is levied only upon issue of goods for sale from a bonded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortation, transport, possession, manufacture or sale referred to ins. 105, describe the points at which such a duty can be imposed. This is made clear by Section 106 which deals with the manner in which excise duty can be levied. In the case of an excisable article when it is imported, it can be collected either at the time of its import in the State or it can be collected at the point of the issuance of the goods for sale from a licensed warehouse. Similarly in the case of an excisable article which is transported, it can be collected in the district from which the goods are transported or it can be collected at the stage of issuance of such articles for sale from a licensed warehouse. Therefore, there are two stages at which such an excise duty can be collected - either at the time of its import or at the time of its sale from the warehouse. But the duty which is levied is on the goods manufactured or, in the case of countervailing duty, goods which are imported. For administrative convenience collection of such duty may be postponed to a later date namely the date of the issuance of the articles for sale from a licensed warehouse. In the latter case, the proviso to Section 106 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing duty under Section 2(14) of the Bombay Prohibition Act, 1949. This section defines excise duty and countervailing duty to mean such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 in List II of the VII Schedule of the Constitution. Referring to Section 106 the Supreme Court said that the section clearly envisages administrative convenience for the point of levy in the sense of collection. The charge of incidence co-related to the taxable event is on entry into the State by way of import. Referring to the Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964, the Supreme Court said that the proper reading of Rule 2(2) of these Rules also reinforced this interpretation because the words without payment of duty in that rule indicate that duty has become chargeable. If, however, the assessee complies with the rule, he is given a facility to defer payment. Similarly the Maharashtra Foreign Liquor (Import and Export) Rules, 1963 were also referred to by the Supreme Court as clearly showing that the normal rule is pre-payment of the duty at the time or before the import. Ranganathan, J. in his concurring judgment also said, The language o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the U.P. Excise Act provides that excise duty is chargeable only on the issue of the spirit and not on the quantity manufactured. The second judgment follows the earlier judgment. Both these judgments turn upon the provisions of the U.P. Excise Act and are not therefore applicable to the Bombay Prohibition Act, 1949 which has been interpreted by the Supreme Court as clearly imposing excise and countervailing duty at the point of manufacture and import respectively. The respondents have also pointed out a decision of the Supreme Court in the case of the State of U.P. v. Delhi Cloth Mills, AIR S.C. 735 where the Supreme Court has considered the U.P. Excise Act of 1910, and its Excise Manual and has said that the excise duty on excess transit wastage was valid in law. 23. The petitioners are therefore not right in contending that duty cannot be levied on breakages in transit or while in storage and on villages. The fact that upto the end of 1976 no duty was in fact charged on breakages and villages does not mean that the State is not entitled to collect or recover duty in respect of breakages which occur in transit after the goods are imported into the State or on villages whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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