TMI Blog2023 (1) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... in March 2020. The prescribed shelf life of beer of six months expired in the meantime. Petitioner claimed refund of excise duty paid by it on the stock of beer which could not be removed for sale. The sheet anchor of the petitioner is that the excise duty / countervailing duty (CVD) under the Jharkhand Excise Act, 1915 was paid in advance as no liquor can be brought into the State of Jharkhand without payment of duties as per the restrictions imposed under the provisions of Chapter III of the Act. In view of proviso to Section 28(1) of the Act, duty is levied only on issuance of the goods from the warehouse and as such, payment made prior to the date of issuance is only an advance liable to be refunded, if no duty is leviable at all due to non-removal of beer from the warehouse for sale - According to the petitioner, the amount collected from the Respondent No. 3 was only an advance paid, which is subject to the final determination of duties on the date of removal of the goods from the warehouse. Charging provision cannot be effectuated at all before the event of removal takes place. Therefore, State cannot unjustly enrich itself by claiming duties on products which are destroy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts - petition dismissed. - W.P (T) No. 378 of 2021 - - - Dated:- 5-1-2023 - HON BLE THE ACTING CHIEF JUSTICE AND HON BLE MR. JUSTICE DEEPAK ROSHAN For the Petitioner: M/s Tarun Gulati, Sr. Advocate, Pandey Neeraj Rai, Rohit Ranjan Sinha, Akchansh Kishore, Advocates For the Respondents: Mr. Rajiv Ranjan, Advocate, General, Mr. Ashok Kr. Yadav, Sr. S.C.-1 In the present writ petition, petitioner has prayed for the following relief (s). (a) holding and declaring the retention by the respondents, of the amount paid as import and countervailing duties on the stock whose shelf life has expired and which is not to undergo removal for retail-sale, as without authority of law, illegal, arbitrary and violative of Articles 14, 19 (1)(g), 265 and 300A of the Constitution of India. (b) commanding upon the respondents to refund the amount paid as import and countervailing duties on the stock to the tune of Rs. 1,53,68,480/-, as demanded by the petitioner, inter-alia, in its letter dated 28.11.2020 (Annexure-7 series). 2. Case of the petitioner, as per the submission of the learned counsel for the petitioner and borne from the pleadings on record are as under: P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avy losses on account of reasons totally beyond its control, the petitioner brought these facts to the notice of the Minister of Excise vide its letter dated 28.08.2020 (Annexure 7 series) and sought a refund of the excise duty paid in advance through Respondent No. 3 on the stock of beer which could not be removed for sale. Thereafter, a refund application dated 28.11.2020 (Annexure 7 series) was filed before the Respondent No. 2 by the Petitioner through its Advocate seeking refund of Rs 1,53,68,480/- on the above stock. On account of the failure of Respondents to refund the amounts paid in advance on which there could not be any liability, the petitioner was constrained to file the present writ petition before this Hon'ble Court. 4. Excise duty/Countervailing duty (in short CVD ) is levied under the Jharkhand Excise Act, 1915 (in short the Act ) and the sale of liquor in the state of Jharkhand is regulated under the Act. No liquor can be brought into the state of Jharkhand without payment of duties as per the restrictions imposed under the provisions of Chapter III of the Act. Section 15 of the Act provides for establishment of warehouses where any intoxicant may be dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gree of attenuation of the wash or worth, as the case may be, as the State Government may prescribe; and (e) on tari drawn under a licence granted under Section 14, Sub-section (1), by a tax on each tree from which the drawing of tari is permitted: Provided that, where payment is made upon the issue of an excisable article for sale from a warehouse, it shall be at the rate of duty in force on the date of issue of such article from such warehouse: [Provided further that in case of excisable articles imported or transported on payment of duty according to the provisions of sub-clause (i) of clause (a) or clause (c) of this section, the difference of duty resulting from any provision in the rates of duty subsequent to such import shall be realized from, or credited to the account of the importing on transporting licence according to the revised rate of duty which may be higher or lower than the previous rate and the calculation thereof shall be made on the balance stock of excisable article on the date the revised rate of duty comes into effect:] Provided also that no tax shall be levied in respect of any tree from which tari is drawn only for the manufacture of gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the customs barrier and not when the goods enter the territory of India. It is relevant that just like the Customs Act, Section 15 provides for the levy of duty at a rate applicable on the date of clearance from the warehouse, Section 28(1) (a) (ii) read with the 1st proviso also specifically requires that the payment of duty is on issuance of the goods from the warehouse and at the rate applicable on the date of issuance of such goods from the warehouse. The above principles squarely apply to the facts of the present case. No duty is leviable until the goods are cleared from the warehouse and become available for sale for the purpose of human consumption in the State of Jharkhand. The entry of the goods into the territory of Jharkhand does not complete the taxable event but merely commences it. The taxable event ends only on clearance of the goods from the warehouse. 7. It is further submitted that the CVD is leviable only on removal of the goods from the warehouse. A cumulative reading of Section 17 and Section 28 of the Act would clearly demonstrate that CVD is levied only when the goods are removed from the warehouse. Until the removal of goods, any payment is only an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue on which the tax is to be levied. If any of these ingredients is missing, the tax cannot be imposed. 9. In the facts of the present case, the rate of tax is determinable only on the removal of goods from the warehouse. Therefore, the charging provision cannot be effectuated at all before the event of removal takes place. Learned counsel submits that the State cannot unjustly enrich itself by claiming duties on products which are to be destroyed on account of their action. Petitioner has already lost more than Rs. 17.00 crores on account of the lockdown declared by the State and its arbitrary refusal to extend the shelf life of the beer. The charge of CVD on alcohol which could not be removed from the warehouse on account of the action of the State is arbitrary and illegal. The levy and collection of duty on such stock is arbitrary and is in contravention to Article 14 of Constitution of India and amounts to the State attempting to unjustly enriching itself at the cost of the petitioner which ought not to be permitted. Learned counsel for the petitioner submits that no duty can be charged on alcohol unfit for consumption. The Act has been legislated pursuant to the power gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBCL. In its rejoinder, the petitioner has stated that it has no dispute with the Respondent No. 3 and the reliefs sought are only against Respondent No. 1. The entire dispute stems from the fact that certain stock of beer held by the petitioner had to be destroyed since it had become unfit for human consumption, having outlived its shelf life of six months. The petitioner's case is that since these imported beers never left or were removed for retail sale, the incidence of duty never happened and thus, the countervailing duty paid on such stock must be refunded. The petitioner attributes the lack of sale of their beers due to COVID-19. The inherent fallacy in the argument of the petitioner lies in the fact that it has completely misunderstood the very basis of levy of countervailing duty. Countervailing duty by its very nature, is not dependent on whether the goods were sold / removed for sale / consumed / destroyed etc. Rather, countervailing duty is leviable by the very factum of import, without anything else. Thus, the incidence of levy of countervailing duty is the import of the alcohol itself. 12. To fortify the above, it is relevant to refer to Entry 51 of List II of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is relevant to mention that the Hon'ble Supreme Court was dealing with the provisions of the Bihar and Orissa Excise Act, 1915 itself, more particularly Sections 27 and 28 thereof. The Hon'ble Supreme Court first differentiated between excise duty and countervailing duty in the following terms: 4. Excise duty and countervailing duty are well-known concepts and are attracted in different situations. Excise duty is essentially a duty on manufacture of goods, and the taxable event is the manufacture of the excisable goods. Countervailing duty , on the other hand, is imposed when excisable articles are imported into the State, in order to counterbalance the excise duty, which is leviable on similar goods if manufactured within the State. So far as countervailing duty is concerned, the incidence of the impost is on the import of the excisable articles, i.e., at the time of entry into the State. 16. It was thereafter held that facility for postponement of payment of tax, can, in no manner, affect the incidence of duty on imported goods since collection and levy are different concepts. It was thus held that - 7. In this view of the matter, the demand of cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, it matters not whether goods are destroyed since the levy is on import. Obviously, this cannot be equated with custom duty or excise duty where the incidence of levy is the clearance of the goods. The other judgments cited by the petitioner do not improve the case of the petitioner. In the case of Govind Saran Ganga Saran Versus Commissioner of Sales Tax and others [(1985) Supp. SC 205], it has been held that there is no uncertainty or vagueness in defining the taxable event, person on whom levy is imposed, rate of tax or the value to which the rate will apply. Hence, this Judgement is clearly inapplicable. In the case of Sree Balaji Enterprises, Bangalore versus Excise Commissioner in Karnataka, Bangalore and others [(2007) SCC Online Kar 16], the dispute was whether excise duty (i.e. goods manufactured inside the State) would be levied when goods are destroyed. In the said case, as per the prevalent rules, charging section for levy of excise duty is made operative only upon issue from any distillery. In the present case however, the Act is clear that CVD is levied at the time of import itself and is payable normally upon import. Only a facility for postponement of col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further argued that a perusal of Form 19C, i.e., the license for distributorship, will make it evident that the said license mandates that the license holder (distributor) shall after payment of countervailing duty in advance, sell only to wholesalers. Further, condition 8 of the said license stipulates that such distributor, for import from outside the state, shall first obtain an import permit on payment of countervailing duty and import fee. Under Rule 8-A, import of any liquor is permitted only by way of import pass granted by the Collector, on prepayment of duty as well as any import pass fee into the treasury of the importing district. Such import pass is in Form No. 52-B. 20. From a conjoint reading of the above rules, it is borne out that a manufacturer outside the State, must necessarily obtain a distributorship license in Form 19C and on obtaining such license, he can only sell to the wholesaler. In fact, the person who obtains a licensee in Form 19C, must be a manufacturer / distributor. Further, under the license, as also under Rule 7(3), import can be done only on payment of countervailing duty and on obtaining an import permit. It is thus evident that a manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments are not applicable to the facts of the present case. 22. We have considered the submissions of learned counsel for the parties and taken note of the materials relied upon from the pleadings on record. We have also gone through the provisions of Bihar and Orissa Excise Act, 1915 (hereinafter to be referred as the Act of 1915 ) and judgment cited by the parties. In order to appreciate the case of the parties, and their stand, it is appropriate to quote the relevant provisions of the Act of 1915. Chapter I Preliminary 2. Definitions (6) Excisable article means (a) any alcoholic liquor for human consumption (b) any intoxicating drug (6a) Excise duty and countervailing duty mean any such excise duty or countervailing duty, as the case may be; as it is mentioned in Entry 51 of List II in the seventh Schedule of the Constitution . (12) import except the phrase import into India means to bring into the State otherwise than across a customs frontier as defined by Central Government; CHAPTER III IMPORT, EXPORT AND TRANSPORT 9. Restrictions on import (1) No intoxicant shall be imported unless (a) the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed for the payment of such duty; and (ii) xxxxx 28. Ways of levying such duty. - Subject to any rules made under Section 60, Clause (12), any duty imposed under Section 27 may be levied in any of the following ways.- (a) on an excisable article imported- (i) by payment (upon or before importation) in the State or in the State or territory from which the article is brought, or (ii) by payment upon issue for sale from a warehouse established, authorised or continued under this Act, (g) on an excisable article exported- by payment in the State or in the State or territory to which the article is sent; (h) on an excisable article transported - (iii) by payment in the district from which the article is sent, or (iv) by payment upon issue for sale from a warehouse established, authorised or continued under this Act; (i) on intoxicating drugs manufactured, cultivated or collected (iii) by a rate charged upon the quantity manufactured under a licence granted in respect of the provisions of Section 13, Clause (a), or issued for sale from a warehouse established, authorised or continued under this Act, or (iv) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder this Act shall be granted for such period (if any) as may be prescribed by rule made by the State Government under Sec. 89, Clause (e). CHAPTER X Miscellaneous 89. Power of State Government to make rules (1) The State Government may make rules to carry out the objects of this Act or any other law for the time being in force relating to the Excise-revenues. (2) In particular, and without prejudice to the generality of foregoing provisions, the State Government may make rules- (a) for prescribing the powers and duties of Officers of the Excise Department; (b) for regulating the delegations of any powers by the Board, the Commissioner of a Division, the Excise Commissioner or Collectors under Section 7, clause (g); (c) for declaring in what cases or classes of cases and to what authorities appeal shall lie from orders, whether original or appellate, passed under this Act or under any rule made hereunder, and for prescribing the time and manner for presenting and the procedure for dealing with appeals; (d) for regulating the import, export or transport or any intoxicant; (e) for regulating the periods for which licences for the wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 12 and any prohibition made under section 11 and any rules made by the Board under sub-section (12) of section 90 of the Act. FOREIGN LIQUOR Import of Foreign Liquor 8. Imports of India-made foreign liquors by troops and military bodies or by persons holding licences for sale are allowed only under cover of passes from the Collector of the importing district and only after the following conditions have been satisfied:- (i) the importer has obeyed all rules in force in the district or place from which the liquor is brought; (ii) the Chief Revenue Authority of such district or place or the officer in charge of the distillery, brewery or warehouse from which it was taken has made endorsement on the pass, granted by the Collector of the importing district or place, and also on a copy thereof sent to him by the Collector of the importing district or place, or has himself issued an export pass in such form as may be prescribed for use in the district or place of issue; (iii) the Collector of the importing district has received back from the officer making the endorsement or issuing the export pass referred to in (ii), the copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (2000) 10 SCC 228, para-6 , and in the case of Govind Saran Ganga Saran versus Commissioner of Sales Tax and others [1985 (Supp) SCC 205, Para-6] on the four essential elements necessary for the levy of any tax. He also relied upon the case of Sree Balaji Enterprises, Bangalore versus Excise Commissioner in Karnataka, Bangalore and others [(2007) SCC Online Kar 16] on the proposition that the charge of duty does not get effectuated until the liquor is issued from the warehouse as it is on that date alone that the rate of tax applies. According to the petitioner, the amount collected from the Respondent No. 3 was only an advance paid, which is subject to the final determination of duties on the date of removal of the goods from the warehouse. Charging provision cannot be effectuated at all before the event of removal takes place. Therefore, State cannot unjustly enrich itself by claiming duties on products which are destroyed on account of their action. It is the case of the petitioner that since retention of the said amount by the State was in contravention of Article 265 of the Constitution of India, it is liable to refund the amount paid when there was no liability. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of goods and the taxable event is the manufacture of the excisable goods, whereas countervailing duty on the other hand is imposed when excisable articles are imported into the State in order to counterbalance the excise duty, which is leviable on similar goods if manufactured within the State. The incidence of the impost is on the import of excisable articles, i.e. at the time of entry into the State. In the facts of the said case also, it was contended by the petitioner that since the liquor was rendered unfit for human consumption and destroyed after its import, it was not liable to pay duty as payment of duty would arise only after excisable goods were removed from the bonded warehouse. Further, the Apex Court held that the fact that the liquor was rendered unfit for human consumption and destroyed after its import, which by itself attracted the levy of duty could not wipe off the liability of the appellant for payment of duty on the excisable goods after their import in the bonded warehouse. Even in the case of Mohan Meakin Breweries Ltd. (Supra), relied upon by the Respondent State, it was held that it is immaterial whether these goods were consumed or not, once they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Treasury of the importing district. Under licence as also under Rule 7(3), import can be done only on payment of countervailing duty and on obtaining an import permit. As such, the plea of the petitioner that non-removal of beer from the warehouse during the period of its shelf life on account of Covid lockdown would not make it liable for payment of countervailing duty in terms of proviso to section 28(1) of the Act, does not hold good in the eye of law since the taxable event occurs on the import of liquor into the territory of the State, as per the provisions of Section 27 (1) (a) of the Act. In this regard, it is appropriate to refer to the recent judgment of the Apex Court in the case of State of Uttar Pradesh through Secretary (Excise) And others versus McDowell And Company Limited [(2022) 6 SCC 223, para 57], wherein it has been held as under: 57. As per Section 19, no intoxicant (and that obviously includes the liquor manufactured by the respondent) can be removed from the distillery or the place of storage unless the duty leviable thereupon has been paid or a bond has been executed for the payment thereof. Considering the overall scheme of the Act and the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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