9911796707
TMI Blog2023 (1) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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: Petitioner is a manufacturer and supplier of alcoholic liquor and inter-alia supplies beer in the State of Jharkhand. Respondent Nos. 1 and 2 are the State of Jharkhand and its functionaries. Respondent Nos. 3 and 4 are the Jharkhand State Beverages Corporation Ltd. and its Managing Director respectively. Respondent No. 3 holds the monopoly for supply of wholesale liquor in the State of Jharkhand. For the purpose of supply of beer, petitioner entered into a supply agreement with the Respondent No. 3 on 01.04.2019 (Annexure-2). Vide Annexure-4 dated 15.10.2019 in a meeting with Respondent No. 3, it was decided to increase the supply of beer in the State of Jharkhand so as to avoid the shortage as was noticed in the previous summer season. Accordingly, the petitioner commenced its supplies of beer in the state of Jharkhand in accordance with its commitmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 deposited and kept without the payment of duty. Under section 17 of the Act, it is provided that no intoxicant may be removed from any brewery or distillery or warehouse or any other place of storage unless duty payable under Chapter V of the Act has been paid or a bond has been executed for the payment thereof. Under Chapter V of the Act, duties are leviable on intoxicants. Section 27 authorizes the State to impose any excise duty or CVD on any excisable item imported in the State of Jharkhand. Section 28 provides for the way of levying duty and the relevant part of Section 28 is reproduced herein: 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us 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 gur or molasses and under such special conditions as the Board may prescribe." (Emphasis supplied) 5. Section 28 (1) (a) (ii), which applies to the present case, clearly provides that the event of charge of duty applies only on the removal of goods from the warehouse. The first proviso to Section 28 provides that the rate applicable shall be the rate in force on the date of issue of such article from the warehouse. The second proviso to Section 28 provides for the adjustment of duties which would have been paid in advance and provides for the payment or refund of differential duty, if any, on account of difference in the rate of duty on the date of payment and the date of issuance of the goods from the warehouse. From the above, it is clear that the duty is levied only on the issuance of the goods from the warehouse. The payment prior to the date of issuance is only an advance which is liable to the refunded if no du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 advance and the final duty is determinable only on removal. The second proviso to Section 28 which provides for adjustment of the actual duty payable on the basis of the rate of duty applicable on the date of removal, is a clear indication that the levy is applicable only on the removal of goods from the warehouse and not prior to that. When the provisions of the statute provide for the applicability of a rate of duty on a particular event, that event is the material taxable event and no duty can be lawfully imposed prior to that event taking place. Learned counsel for the petitioner has placed reliance on the judgment in the case of Sree Balaji Enterprises, Bangalore versus Excise Commissioner in Karnataka, Bangalore and others [(2007) SCC Online Kar 16]. He has submitted that in the context of levy of State Excise Duty on potable liquor, the Karnataka High Court held that the charge of duty does not get effectuated until the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njustly 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 granted under Entry 51, List II, Seventh Schedule of the Constitution of India which permits levy of excise and countervailing duties on "alcoholic liquors for human consumption". In the facts of the present case, Respondents are seeking to effectively charge CVD on alcohol which was not fit for human consumption. It is further submitted that the refund is available if duty is collected without authority of law. If any amount has been paid to the State and there is no liability under the Act, the retention of the said amount by the State would be in contravention of Article 265 of the Constitution of India. In support of the aforesaid contention, he has relied upon the judgment rendered by this court in the case of M/s WS Retail Services Pvt. Ltd. Versus The State of Jharkhand and others passed in W.P (T) No. 2429/2018 wherein this Court relying on a host of judgments, held that the State cannot refuse to refund amounts paid by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Seventh Schedule of the Constitution of India which authorizes the State to make laws with respect to - Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India: (f) alcoholic liquors for human consumption: alcoholic liquors for human consumption: 13. Under the aegis of the said entry, the Bihar and Orissa Excise Act, 1915 (as adopted in the State of Jharkhand) ("the Act") is a valid piece of legislation. Section 2(6a) defines excise duty and countervailing duty, as any such excise duty and countervailing duty mentioned in Entry 51 of List II of the Seventh Schedule to the Constitution of India. Section 9(1) restricts import into the State, unless certain conditions are fulfilled viz., (a) permission must be obtained from the State Government, (b) fulfilment of conditions stipulated by State Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 countervailing duty from the appellant in the established facts and circumstances of the case was perfectly justified. 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. The Full Bench of the High Court was, therefore, perfectly justified in finding that the challenge to the demand made by the appellant had no merits. This appeal has no merits. It, accordingly, fails and is dismissed but with no order as to costs." In M/s. Mohan Meakin Breweries Ltd. versus. Excise and Taxation Comnr., Chandigarh and others (1976) 3 SCC 421 (Paras 8, 9 and 11), the Appellant therein imported liquor from its distilleries in Uttar Pradesh and Himachal Pradesh to its bonded warehouse in Chandigarh. During import, certain portion of the liquor was wasted. Countervailing duty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 collection is provided. In any event, CVD is different to excise duty and cannot be equated with excise duty. Further, the judgments relied upon by the Respondents do not find reference in this particular judgment. The judgment rendered by this Court in the case of M/s WS Retail Services Pvt. Ltd. versus The State of Jharkhand and others [W.P (T) No. 2429/2018] was in the context of JVAT Act inter-alia holding that claim for refund would be maintainable even if there is no provision under the JVAT Act. The same is clearly inapplicable for the reason that the petitioner is not entitled to any refund in this case, since it is their liability to pay countervailing duty at the time of import. 17. Another contention raised by the petitioner is that it has paid the countervailing duties on behalf of Respondent No. 3 and therefore, in any event, it is not liable to pay countervailing duty- the same having been deposited on behalf of Respondent No. 3. This is completely devoid of any merit for the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 manufacturer outside the state, can only sell to a wholesaler inside the State by obtaining a distributor licensee and for this purpose, he will have to import the goods on payment of countervailing duty. It is thus the liability of the manufacturer as an importer to pay countervailing duty for subsequent sale to the wholesaler. The import permit issued for the relevant period under consideration itself states that "PASS FOR THE IMPORT FROM THE PROVINCE OF FOREIGN/COUNTRY/COUNTRY/SPICED COUNTRY LIQUOR MADE IN INDIA OR OF RECTIFIED SPIRIT ON WHICH DUTY HAS BEEN PAID". The dealer to whom the permit is issued, name of the consignor and the name of consignee, all reflects the name of the petitioner. It is thus evident that the petitioner is the importer and it is his liability to pay countervailing duty. Further, there exists no provision in the Act for refund of countervailing duty to the manufacturer outside the State, neither has such occasion ever arisen. This is in consonance with the scheme of countervailing duty i.e. it is le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RANSPORT 9. Restrictions on import (1) No intoxicant shall be imported unless - (a) the State Government has given permission, either general or special, for its import; (b) such conditions (if any) as the State Government may impose have been satisfied; and (c) the duty (if any) payable under Chapter V has been paid or a bond has been executed for the payment thereof. 2. .................. 3. .................. 12. Passes for import, export and transport (1) No intoxicant exceeding such quantity as the State Government may prescribe by notification, either generally or for any specified local area, shall be imported, exported or transported, except under a pass; Provided that in the case of duty-paid foreign liquor other than denatured spirit, such passes shall be dispensed with unless the State Government by notification, otherwise directs with respect to any local area. (2) The passes required by Sub-Section (1) may be granted by the Collector. (3) Such passes may be either general for definite periods and particular kinds of intoxicants or special for specific occasions and particular consignments only. CHAPTER V DUTY 27. Power to impose duty on impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se established, authorised or continued under this Act, or (iv) by a rate assessed on the area covered by, or on the quantity or outturn of, the crop cultivated or collected under a licence granted in respect of the provisions of Section. 13 Clause (b) or Clause (c); (j) on spirit or beer manufactured in any distillery or brewery licenced, established, authorised or continued under this Act.- (iii) by a rate charged upon the quantity produced in or issued from the distillery or brewery, as the case may be, or issued for sale from a Warehouse established, authorised or continued under this Act, or (iv) in accordance with such scale of equivalents, calculated on the quantity of materials used, or by the degree of attenuation of the wash or worth, as the case may be, as the State Government may prescribe; and (k) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retail vend of any intoxicant may be granted, and the number of such licences which may be granted for any local area; (f) for prohibiting the grant of licence for the retail sale of any intoxicant at any place or within any local area described in the rules or for defining the places in the vicinity of which shops for the retail sale of any intoxicant shall not ordinarily be licenced. (g) for prohibiting the grant to specified classes of persons of licences for the retail sale of any intoxicant (h) for declaring, either generally or in respect of areas described in the rules, the persons or classes of persons to whom any intoxicant may or may not be sold; (i) for regulating the procedure to be followed and prescribing the matters to be ascertained before any licence for the wholesale or retail vend of any intoxicant is granted for any locality; (j) for restricting the exercise of any of the powers conferred by Clause (a) of Sub-section (1) of Section 68 and by Sections 69 and 70; (k) for declaring the Excise Officers to whom and the manner in which information or aid should be given under Section 75. (l) for the grant of expenses to witnesses; (m) for the grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass issued by the latter; and (iv) the liquor has been brought by the route and within the period specified in the pass: Provided that no import of India made foreign liquor shall be made from the 'Sale to trade' - and 'off' in West Bengal who keeps a stock of duty-paid India-made foreign liquor. [8-A. Import of India made foreign liquor in any quantity from any distillery, brewery, bonded warehouse or bonded laboratory by any person including a distributor's licence for sale of such liquor to the holders of sale" "sale to the trade" license and to holders of license for troops and military bodies is permitted only in import pass granted by the Collector of the district of import on prepayment of duty as well as import pass fee prescribed by the Board of Revenue into the treasury of the importing district provided the conditions specified in Rule 8 are mutatis mutandis satisfied.]" 23. The undisputed facts from the pleadings on record reveal that the petitioner supplied beer in the State of Jharkhand kept in the warehouse of the Respondent No. 3 from its factories situated outside the State. Substantial quantity of which said to be 1,84,725 cases of beer valued at Rs. 14.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 27(1)(a), it is apparent that the incidence of levy / imposition of countervailing duty is the factum of import itself. Countervailing duty, as is understood, in essence a duty levied on imported article to counterbalance the duties of excise levied on goods manufactured within the State. It is levied at the time of import itself to ensure a level playing field with excisable articles manufactured in the State. In this regard, the 1st proviso to Section 28 provides that the rate of tax is to be realized on the date of removal of liquor from the warehouses for sale. In the case of S. K. Pattanaik v State of Orissa (Supra), the Apex Court while dealing with the same provisions of Bihar and Orissa Excise Act, 1915, more particularly Section 27 and 28 thereof, held as under: "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 simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioner in the case of Kiran Spinning Mills (supra) are inapplicable to the facts of the present case as the said decision was rendered in respect of the provisions of the Customs Act. The Apex Court in the light of the provisions of the Customs Act, had held that the process of import is complete only when the goods are cleared from the customs barrier and not when the goods enter the territory of India. Whereas there is no quarrel as to the four essential elements on the levy of any tax, as laid down by the Apex Court in the case of Govind Saran Ganga Saran (Supra), in the facts of the instant case, taxable event of levy of countervailing duty happens on the liquor being imported into the territory of Jharkhand. Therefore, there is no uncertainty or vagueness in defining the taxable event. Proviso to Section 28(1) only indicates the rate of tax which is to be levied at the time of removal for sale from the warehouse. The decision in the case of Sree Balaji Enterprises, Bangalore (Supra) also does not fit into the case of the petitioner as the dispute was whether excise duty i.e. goods manufactured inside the State could be levied when the goods were destroyed. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of spirit produced or manufactured and stored. A comprehensive look at the scheme of Sections 17 to 19 and 28 and 29 of the 1910 Act and the enunciations of this Court leave nothing to doubt that in respect of the liquor that had undergone the process of distillation, exigibility to excise duty had occurred at the end of the distillation process or when it was issued from the distillery. The point of quantification of this duty, even if linked in point of time to the date of issue for sale in terms of proviso to Section 29, does not relate to the "event of chargeability" that had occurred as soon as the liquor was distilled and received in the bottling tank or had been otherwise issued from distillery. In other words, the liquor that was lying stored in the bonded warehouse had already become subject to the excise duty, with postponement of actual charging of the duty as per the rate applicable on the date and time of issue for sale from the warehouse. It gets perforce reiterated that taxable event was production or manufacture, and not sale, of the liquor. In this view of the matter, the submission that the levy in question is not authorised by law, and is hit by Article 265 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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