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SUPREME COURT OF INDIA
H.R. KHANNA AND JASWANT SINGH, JJ.
M/s. McDowell and Co. Ltd., Appellant
Versus
Commercial Tax Officer, VII Circle, Hyderabad, Respondent.
(1) Civil Appeals Nos. 248-251 of 1976
AND
(2) Civil Appeals Nos. 934-936 of 1976
Kapitan Chemicals, Appellant v. Govt. of A.P. and others, Respondents.
AND
(3) Civil Appeal No. 693 of 1976
M/s. Central Wines, Hyderabad, Appellant
Versus
The Deputy Commissioner, Commercial Taxes, Respondent.
Civil Appeals Nos. 248-251; 934-936 and 639 of 1976,
Advocates Appeared
Mr. Soli Sorabji, Sr. Advocate (Mr. K. J. John, Advocate with him) for Appellant (In CAs. Nos. 248-251 of 1976). Mr. A. Subba Rao, Advocate for Appellant in CAs. Nos. 934-936 of 1976. M/s. Babul Reddy and K. J. John, Advocates for Appellant in CA No. 693 of 1976. Mr. Niren De, Attorney General for India, P. P. Rao, Sr. Advocate and M/s. D. V. Sastry and T. V. S. N. Chari, Advocates for Respondents in CAs. 248-251 of 1976 and CAs. 934-936 of 1976. Mr. T. V. S. N. Chari, Advocate for Respondent in CA No. 693 of 1976.
Andhra Pradesh General Sales Tax Act, 1957 – Section 14(1),2(1)(a) - Sales tax - Excise duty - Andhra Pradesh Indian Liquor (Storage in bond) Rules – Rule 10(1) - Three sets of writ petitions filed by the appellants to challenge certain orders of sales tax authorities made in respect of re-determination of their turnover for certain years under Andhra Pradesh General Sales Tax Act, 1957 shall be disposed of by this judgment, as they raise a common question as to whether excise duty deposited directly in a State treasury or a sub-treasury by purchasers of the Indian made foreign liquor called Indian liquors before removing said liquor from a distillery and the countervailing duty remitted directly to a State Treasury or a sub-treasury by purchasers of the aforesaid specie of liquor before removing it from a bonded warehouse can properly be said to form part of turnover of the manufacturer and of the owner of the bonded warehouse respectively and as such liable to sales tax under the Act - Circumstances which have given rise to these appeals lie in a short compass and may be briefly stated, appellants in the first two sets of Appeals carry on the business of manufacture of Indian liquors in their distilleries established in Andhra Pradesh under licenses issued to them by Commissioner of Excise under the Andhra Pradesh Excise Act, 1968 and the rules made thereunder and sell their finished products to wholesale dealers who in turn sell them to retail dealers – Held, in the instant cases, the excise and countervailing duties did not go into common tills of the appellants and did not become a part of their circulating capital - Court are of the view that Sales Tax authorities were not competent to include in the turnovers of the appellants the excise duty and the countervailing duty which was not charged by them but was charged by and paid directly to the excise authorities by the buyers of the liquors, as stated - Full Bench decision of the High Court of Andhra Pradesh in the Govt. of Andhra (Now Andhra Pradesh) v. East India Commercial Co. Ltd. (8 S.T.C. 114) relied upon by the Revenue is clearly distinguishable - In that case, it was the actual collection of certain sums as dharmam or charity by the dealer from the purchasers on the occasion of sales that made the learned Judges to hold that they constitute part of the turnover - In M/s. George Oakes (P.) Ltds case (AIR 1962 SC 1037) (supra) also, the tax in question was collected by the registered dealer – Court have on hesitation in holding that the excise duty and the countervailing duty paid directly by the buyers of the Indian liquors as stated above did not constitute a part of the turnovers of the appellants - For the foregoing reasons, court allow the appeals and set aside the impugned judgments and orders - Appeals allowed.
Judgment
JASWANT SINGH, J - This batch of appeals by special leave which are directed against three separate judgments of the High Court of Andhra Pradesh at Hyderabad dismissing three sets of writ petitions Nos. 1195 to 1198 of 1975, 3931, 3944 and 4929 of 1975 and 6790 of 1974 filed by the appellants to challenge certain orders of the sales tax authorities made in respect of re-determination of their turnover for certain years under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the Act) shall be disposed of by this judgment, as they raise a common question as to whether the excise duty deposited directly in a State treasury or a sub-treasury by the purchasers of the Indian made foreign liquor called Indian liquors before removing the said liquor from a distillery and the countervailing duty remitted directly to a State Treasury or a sub-treasury by the purchasers of the aforesaid specie of liquor before removing it from a bonded warehouse can properly be said to form part of the turnover of the manufacturer and of the owner of the bonded warehouse respectively and as such liable to sales tax under the Act.
2. The circumstances which have given rise to these appeals lie in a short compass and may be briefly stated: The appellants in the first two sets of Appeals Nos. 248 to 251 of 1976 and 934 to 936 of 1976 carry on the business of manufacture of Indian liquors in their distilleries established in Andhra Pradesh under licenses issued to them by the Commissioner of Excise under the Andhra Pradesh Excise Act, 1968 (Act 17 of 1968) and the rules made thereunder and sell their finished products to the wholesale dealers who in turn sell them to retail dealers. Under Rule 76 of the Andhra Pradesh Distillery Rules. 1970, removal of any liquor manufactured or stored without pre-payment of the excise duty specified in Rule 6 is forbidden. Rule 77 of the Rules Prohibits issue of any liquor until its quantity and strength have been duly verified by the distillery officer. Rule 79 of the Rules authorises the distillery officer on payment of excise duty to grant a distillery pass for removal of the liquor fit for human consumption to the persons specified in the said rule including a person holding a licence for sale of liquor by wholesale or retail. Under Rule 81 of the Rules, every application for a distillery pass for removal of liquor has to be addressed in writing to the distillery officer and has to be accompanied by a challan in original for payment of excise duty therefore and a general or special permit for the purpose of removal of the liquor Rule 82 of the Rules enjoins the distillery officer upon tender of cash payment of excise duty by the applicant to fill up the challan for presentation with the cash at a treasury or sub-treasury of the district in which the distillery is situate, and the applicant for distillery pass to present the treasury receipt in token of his having made payment of the duty whereafter the distillery officer has to affix the said receipt to the counterfoil of form D-6. Rule 83 of the Rules casts responsibility upon an applicant for a distillery pass to make a correct calculation and full payment of the excise duty upon the liquor desired to be removed. Rule 84 of the Rules requires the distillery officer to issue the liquor under a pass in form D-6 sending a duplicate thereof to the Excise Superintendent of the district of destination on being satisfied that the applicant is entitled under the Rules to remove the liquor and has made payment of the requisite excise duty. Accordingly every buyer of the Indian liquor from either of the appellants distilleries during the years in question obtained the distillery pass for release of the liquor after making payment of the excise duty and presented the same at the concerned distillery whereupon a bill of sale or invoice was prepared by the distillery showing the price of the liquor. The said bill did not include the excise duty pai
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