Back
2007 Supreme(Kar) 30
Karnataka High Court
Judges : D.V.Shylendra Kumar
SREE BALAJI ENTERPRISES LESSEES: BANGALORE GRAPE WINERY (P) LTD. - Appellant
Versus
EXCISE COMMISSIONER IN KARNATAKA, JOINT COMMISSIONER OF EXCISE DISTILLERIES - Respondent
Writ Petition 34408 Of 2001
Decided On : 01/11/2007
The main legal point established in the judgment is that the charge for excise duty is effectuated only when the manufactured article is issued from any distillery or warehouse, as per the provisions of the Karnataka Excise Act, 1965, and the Karnataka Excise [excise Duties and Fees] Rules, 1968.
Headnote:
Excise Duty - Liability for Payment of Duty - Karnataka Excise Act, 1965 - Sections 22, 23 - The court discussed the liability for payment of duty on liquor destroyed in a fire accident. The petitioner contended that the charge is not complete until the goods manufactured are issued, and therefore, no liability arises for payment. The court examined the provisions of Section 22 and 23 of the Act, as well as Rule 2 of the Karnataka Excise [excise Duties and Fees] Rules, 1968, and concluded that the charge is effectuated only when the manufactured article is issued from any distillery or warehouse, and the demand for payment of duty on the destroyed liquor was quashed.
Fact of the Case:
The petitioner, a firm manufacturing Indian made liquor, disputed the liability to pay duty on liquor destroyed in a fire accident. The respondents sought to enforce the demand for duty payment based on the loss of revenue to the State due to the destruction of the liquor.
Finding of the Court:
The court found that the charge for excise duty is effectuated only when the manufactured article is issued from any distillery or warehouse, and as the liquor was destroyed before being issued, the charge was not complete, and therefore, no liability arose for payment of duty.
Issues: The main issue was whether the petitioner was liable to pay duty on the destroyed liquor, and whether the demand notice for duty payment was enforceable.
Ratio Decidendi: The court held that the charge for excise duty is effectuated only when the manufactured article is issued from any distillery or warehouse, as per the provisions of Section 22 and 23 of the Karnataka Excise Act, 1965, read with Rule 2 of the Karnataka Excise [excise Duties and Fees] Rules, 1968.
Final Decision: The court quashed the demand for payment of duty on the destroyed liquor, as the charge for excise duty was not complete at the time of destruction, and therefore, no liability arose for payment of duty.
( 1 ) WRIT petitioner is a firm which claims to be a lessee of one M/s. Bangalore Grape Winery [p] limited and licence holder for manufacture of Indian made liquor in bulk. It appears using the licence, the petitioner manufactures such liquor and marks it under the brand name of products of M/s. Shaw Wallace and Company with whom they have an independent arrangement The activity of manufacturing such liquor attracts liability for payment of duty under the provisions of the Karnataka Excise Act, 1965 [for short 'the Act'] in terms of the provisions of Sections 22 and 23 of the Act. The petitioner is paying such duty on the quantum of liquor so manufactured and issued in the factory premises at No. 13, Green Fields, Bannerghatta Road, Bangalore - 560 029.
( 2 ) THE present writ petition is regarding the dispute as to whether the petitioner was liable to pay duty in respect of certain quantum of such liquor which had underwent some process and which according to the respondents had become portable and which had been stored in storage tanks but which were destroyed in fire due to an accident that took place in the factory premises as on 10-6-1997 and if so as to whether the petitioner was still liable to pay the excise duty at the rate applicable to the type of liquor that were stored in such storage tanks at the rate prevailing at the relevant point of time though they had not been issued.
( 3 ) IT is because of this controversy, the petitioner has approached this Court for relief when the respondent-State sought to enforce the demand based on the liability for payment of duty in respect of the quantity that was stored in the storage tanks but which got destroyed in the fire accident that took place in the factory as on 10-6-1997. Some correspondences/communications emanating from the respondents also indicate that the quantum of such liquor which got destroyed had the details of names and quantity etc. , as per the communication of the petitioner addressed to the Joint Commissioner in terms of Annexure-D dated 12-6-1997, details of which read as under:
DETAILS OF BLENDED IML LOSS:
Sl. N BRAND TANK WISE BLEND No. o. Tank No. Quantity 01. Haywards Fine Whisky 1 6042 B. L. 02. Old Tavern Whisky 2 8294 B. L. 03. V. S. O. P. Exshaw Brandy 3 13610 B. L. 04. Golconda Brandy 4 5560 B. L. 05. Gold Medal Whisky 5 12159 B. L. 06. V. S. O. P. Exshaw Brandy 6 6658 B. L. 07. - 7 Nil 08. Golconda Brandy 8 625 B. L. 09. Haywards Fine Whisky 9 1576 B. L. 10. - 10 Nil . 11. - 11 Nil . 12. - 12 Nil . TOTAL BLEND 54,524 B. L.
( 4 ) SO far as quantity of such liquor that got destroyed is concerned, it appears there is not much dispute between the parties, but the dispute relates to the liability for payment of duty on such quantity of liquor destroyed.
( 5 ) THE respondents having admitted enforcing such liability in terms of the order/demand notice dated 23-9-2000 [copy at Annexure-J to the writ petition] calling upon the petitioner to remit the duty liability of Rs. 24,53,580/- on the premise that the petitioner having not taken proper care of the liquor and the carelessness of the petitioner having resulted in loss of this quantity of liquor in turn resulting in loss of revenue of this amount to the State, the petitioner was liable to pay that amount to the State that though the total loss to the State in sales tax and excise duty was to the tune of Rs. 63,07,487/-, the liquor having been destroyed before the sale, the liability was only in respect of the manufacture of liquor and therefore the petitioner was being called upon to remit the amount of Rs. 24,53,580/ -.
( 6 ) PETITIONER disputing such liability had preferred an appeal to the Karnataka Appellate Tribunal, bangalore, purporting to be an appeal in terms of the provisions of Section 61 (3) of the Act. Unfortunately for the petitioner, the Appellate Tribunal being of the view that the
