2010 Supreme(Bom) 16

High Court of Judicature at Bombay
THE HONOURABLE MRS. JUSTICE RANJANA DESAI & THE HONOURABLE MR. JUSTICE A.A. SAYED
Karan Dileep Nevatia, Proprietor of M/s. Kunal Vintners and M/s. Sundeep Vintners
Versus
The Union of India, through the Commerce Secretary, Ministry of Commerce & Industry & Others
WRIT PETITION NO.7852 OF 2008
Decided on : 05-01-2010

Headnote:Constitution of India - Article 253 - Bombay Prohibition Act, 1949, Section 58-A, 139(1)(d-1) and 143(2)(b) - Licence "FL-1" - Levy of special fees - Notifications issued by State Government - Legality and constitutional validity of - Challenged by petitioner - Held - Classification between domestic mines and imported mines founded on intelligible differentia - Impugned Notification cannot be said to be discriminatory - Cannot be struck down on ground that they violative of Article 253 of Constitution - No case of hostile discrimination made out on part of State - Petition dismissed. - It is now necessary to deal with the argument of Counsel for the petitioner that the impugned Notifications are arbitrary and discriminatory and do not provide for any valid classification between the domestic and imported wines. In this respect, learned ASO has drawn our attention to the judgment of the Supreme Court in Avinder Singh v. State of Punjab and another, 1978 DGLS (soft) 258 : AIR 1979 SC 321 judgment of the Madras High Court in A. Venugopal and others v. State of Tamil Nadu and others, AIR 1999 Mad 431 and in Sony India Limited v. The Commercial Tax Officer. The State of Tamil Nadu, (2007) 5 Mh LJ 881. He submitted that classification of foreign wines as a distinct class for the purpose of taxation is not discriminatory as the State has a wide discretion in that behalf. He submitted that the Courts should not interfere with that discretion unless within the rank of its selection the taxation law operates unequally. He submitted that such is not the case here and therefore this submission deserves to be rejected. In its written submissions, the State of Maharashtra has placed reliance on the judgment of the Madous High Court in Sony India Ltd in support of its contention that the classification between the imported wines and domestic wines is founded on an intelligible differentia and the differentia has a rational relation to the object sought to be achieved by the statute and therefore the impugned Notifications can not be struck down on the ground that they are discriminatory. Mr. Kotwal submitted that in this case, the issue involved was about differential rates of taxation between India made Foreign Liquor popularly known as IMFL consisting of whisky, brandy, gin, etc. vis-a-vis traditionally produced local wines e.g. Mahuwa. Todday, Arrack etc. He submitted that the words ’Foreign liquor’, assuming Mr. Kotwal is right in so submitting that does not make Avinder Singh inapplicable to this case. There is no indication in the said judgment that the words Foreign liquor were used to identify imported foreign liquors. The Supreme Court held that Indian Made Foreign Liquor is a distinct category and absence of micro classification within the broad genus does not attract the argument of inequality. The principle which the Supreme Court reiterated and which needs to be noted is that the state can on larger considerations of fiscal policy chooses to levy higher taxes or duty on certain objects. Thus there is nothing wrong in treating Indian Made Foreign Liquor as a class and imposing a higher duty/tax on it. The State has great latitude in fiscal matters and that is an area where the Courts do not trade unless compelling circumstances requires them to do so do not perceive the presence of such circumstances in this case.

       Assuming that in view of the fact that the judgment of the Madras High Court in Soni India Limited is set aside by the Supreme Court, it cannot be relied upon by the State of Maharashtra in our opinion, the judgments of the Supreme Court in East India Tomacco Co. v. Cr. Khandige Sham Bhatt and Avinder Singh, clearly support the case of the respondents. Undisputedly, the State has wide discretion to impose higher taxes or levies. Several fiscal considerations are involved in the Government’s decision to impose higher tax on certain items. The Courts are therefore, not expected to interfere with the discretion of the state unless a very strong case of hostile discrimination is made out and unless the taxing statute operates unequally within the range of its selection. No such case is made out by the petitioner.