The State of Bihar is a "seller" of alcoholic liquor for human consumption within the meaning of Sec. 44AC and Sec. 206C of the Income-tax Act, 1961.

S.B.Sinha, J.

1. Whether the State of Bihar is a "seller" of alcoholic liquor for human consumption "within the meaning of Sec. 44AC and Sec. 206C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is the question involved in this writ application ?"

2. Admittedly, the State of Bihar, exercises control in respect of alcoholic liquor for human consumption from the stage of manufacture of spirit to that of consumption of alcoholic liquor by the consumers in terms of the provisions of the Bihar Excise Act, 1930, and the rules framed thereunder.

3. According to the petitioners, it merely realises a fee in lieu of transfer of the privilege to the persons intending to deal with the goods, but it does not transfer any "goods" in the nature of alcoholic liquor for human consumption to any person.

4. It is the case of the petitioners that alcoholic liquor oil along remains the property of the Wholesale dealers and thus the State or its officers are not owners thereof and cannot be "sellers" within the aforementioned provisions of the Act.

5. Respondent No. 2, however, issued a letter dated July 27, 1990, addressed to the Excise Commissioner, Bihar (petitioner No. 2), stating therein that the Excise Department is the seller and thus, it is bound by the terms of Section 206C of the Act. The petitioner, however, in its reply dated October 25, 1990, as contained in annexure 2 to the writ application denied its liability on the basis of an opinion of the learned Additional Advocate-General No. 1. Another letter dated December 13, 1990, was addressed by respondent No. 1 to petitioner No. 2, wherein it was reiterated that the Excise Department is the "seller", inter alia, on the ground that in terms of the provisions of Act, the other States including the State of U. P. are collecting tax in terms of Sec. 206C of the Act.

6. The petitioners again sought the opinion of the learned Additional Advocate-General No. 1 and in reply to respondent No. 1s aforementioned letter, the Deputy Commissioner of Excise by his letter dated March 14, 1991 (annexure 4), denied the petitioners liability by annexing a copy of the opinion received by him.

7. By reason of various orders/demands which are contained in annexure 5 series, however, assessment orders were passed and demands were made by respondents Nos. 3 to 9 holding that petitioners Nos. 4 to 11 who are Superintendents of Excise were required to deposit the amounts mentioned therein and they have failed to collect the amount of tax and credit the same to the Central Governments Account, in terms of the aforementioned provisions, they are bound to pay amounts mentioned in the respective orders/demands.

8. Mr. K.N. Jain, learned Additional Advocate-General No. 1, appearing on behalf of the petitioner, has taken us through various provisions of the Bihar Excise Act and the rules framed thereunder and submitted that from a perusal thereof, it would appear that the Excise Department is not dealing in liquor and thus, it is not and cannot be the seller within the meaning of Sec. 44AC of the Act and, consequently, it has no liability in terms of Sec. 206C thereof.

9. Learned counsel pointed out that the distillers transport "spirit" manufactured by them to the warehouses whereat the same is processed and thereafter sold to the retailers. It was submitted that the Excise Department merely regulates the transactions and realises the duties payable to the State of Bihar from the licensees.

10. Our attention was further drawn to the fact that the prices paid by the retail dealers are credited in a separate account and paid to the distillers by the State of Bihar.

11. According to Mr. Jain as at no point of time, the "goods" become the property of the State of Bihar, the question of its being a "seller" under the said Act does not arise.

12. It was further pointed out that one lock and key of the warehouses remained with the owner, as would appear from Rule 49 of the Rules framed by the Bo