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Andhra Pradesh High Court
Judges : A.GOPAL RAO, C.V.RAMULU
Anabeshahi Wine and Distilleries Private Ltd. - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 03-14-72
EXCISE - ESTABLISHMENT CHARGES OF SUPERVISORY STAFF - WHETHER "EXCISE DUTY" OR "FEE" - ANDHRA PRADESH EXCISE ACT (XVII) OF 1968, SECTIONS 2 (1), 21, 28 (2) - ANDHRA PRADESH DISTILLERY RULES, 1970, RULE 15 - CONSTITUTION OF INDIA, 1950, SEVENTH SCHEDULE, LIST II, ENTRIES 8, 51, 66 - LIST III, ENTRY 7.
Fact of the Case:
The petitioner, a distillery licensee, challenged the demand for establishment charges of supervisory staff posted at its factory premises under Section 28 (2) of the Andhra Pradesh Excise Act, 1968, and Rule 15 of the Andhra Pradesh Distillery Rules, 1970. The petitioner contended that the demand was illegal and without jurisdiction, as it was not an "excise duty" within the meaning of the Act or a "fee" for services rendered.
Finding of the Court:
The court held that the establishment charges of the supervisory staff were not "excise duty" within the meaning of the Andhra Pradesh Excise Act, 1968, as they were not levied on the production or manufacture of alcoholic liquors for human consumption. The court also held that the charges were not a "fee" because no services were rendered by the supervisory staff to the petitioner, and the expenditure incurred by the government for posting the staff was not related to the fee charged.
Issues: 1. Whether the establishment charges of the supervisory staff were "excise duty" within the meaning of the Andhra Pradesh Excise Act, 1968? 2. Whether the charges were a "fee" for services rendered to the petitioner?
Ratio Decidendi: 1. The court interpreted Entry 51 of List II of the Seventh Schedule to the Constitution of India, which authorizes the state government to levy excise duty on alcoholic liquors produced or manufactured in the state. The court held that the establishment charges of the supervisory staff were not "excise duty" because they were not levied on the production or manufacture of alcoholic liquors, but rather on the posting of staff to supervise the petitioner's factory. 2. The court distinguished between a "tax" and a "fee", holding that a tax is a compulsory exaction of money by a public authority for public purposes, while a fee is a Quid pro Quo for services rendered. The court found that the establishment charges were not a "fee" because no services were rendered by the supervisory staff to the petitioner, and the expenditure incurred by the government for posting the staff was not related to the fee charged.
Final Decision: The court allowed the writ petition and issued a writ of mandamus restraining the Excise Department from demanding or collecting the establishment charges of the supervisory staff posted at the petitioner's factory premises.
( 1 ) AFTER obtaining a Distillery Licence under the Andhra Pradesh Distillery Rules, 1970 (hereinafter called "the Rules"), made by the Government of Andhra Pradesh in exercise of the powers conferred on it by Section 72 of the Andhra Pradesh Excise Act, 1968 (hereinafter called "the Act"), the petitioner, Anabeshahi Wine and Distilleries Private Ltd. , Hyderabad, has been carrying on the business of manufacture and sale of wine and other ailed products in its factory, located at Hyderabad. In pursuance of Section 28 (2) of the Act, the Excise authorities posted one Inspector, one Sub-Inspector and four constables at the petitioners Factory premises and required the petitioner to pay their entire salaries, allowances and pension contributions. The demand of salaries etc. , of the departmental employees is without jurisdiction and illegal. Representations made by it to the Excise authorities against the said demand had no effect on them, but resulted in threats of cancellation of its license. The petitioner, therefore, filed this writ petition under Article 226 of the Constitution of India. for the issue of a writ of mandamus restraining the Excise Department from demanding or collecting the salaries etc. , of the departmental employees posted at its factory.
( 2 ) THE legality of the demand is mainly challenged by the petitioner on two grounds. They are: (1) By virtue of Entry 51, in List Ii of the 7th Schedule to the Constitution of India, no duty other than excise duty could be levied or collected under the Andhra Pradesh Excise Act; and (2) the demand of the establishment charges of the supervisory staff is neither an "excise duty" within the meaning of the Act, nor a "fee".
( 3 ) THE Government, In its counter, opposed the writ petition. According to the Government, the staff is not posted only to ensure proper collection of excise duty, but for the convenience of the licensee to whom certain facilities are granted. Neither Section 28 (2) of the Act, nor Rule 15 of the Rules is ultra vires of Entry 51 in List II of the 7th Schedule. After having agreed to pay, the petitioner cannot repudiate its liability. for the services rendered to the petitioner, the Government is levying establishment charges of the supervisory staff. Apart from Entries 8 and 66 of list II of the 7th Schedule. entry 7 in List III of the 7th Schedule also gives power to the State Legislature to demand an collect the establishment charges from the petitioner.
( 4 ) THE two principal contentions that are raised in this writ petition, are: (1) the establishment charges of the supervisory staff are not "excise duty", and hence the power to levy such charges is outside the ambit of entry 51 in List Ii of the 7th Schedule; and (2) no service s are rendered to the licensee by the supervisory staff posted at its factory premises, so as to justify the Government to collect the establishment charges from the petitioner as a "fee".
( 5 ) ALL public charges, by whatever name they be called, viz. , tax, duty cess, or fee, amount to deprivation of property of a person. Under Article 265 of the Constitution, no tax shall be levied or collected except by authority of law.
( 6 ) NO doubt, the establishment charges of the supervisory staff are demanded from the petitioner under Section 28 (2) of the Act and Rule 15 of the Rules made in pursuance of the power granted to the State government by Section 72 of the Act. But, the petitioner contends that Section 28 (2) of the Act is ultra vires of the powers of the State Legislature conferred on it by Entry 51 in list Ii of the 71st Schedule. If Section 28 (2) of the Act is ultra vires of the power of the State Legislature. then automatically. Rule 15 under which the establishment charges could be levied on the petitioner would also be ultra vires of the powers of the State Legislature.
( 7 ) ENTRY 51 in List II of the 7th Schedule, reads as follows:----"51: Duties of excise on the following goods manufactured
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