The liability to pay establishment charges and the verification of payment of excise duty and VAT on transitional stocks are essential in determining the treatment of transitional stocks in bonded and wholesale warehouses.

JUDGMENT :

Heard Mr. D. Deka, learned counsel appearing on behalf of the petitioner. Also heard Mr. R.R. Gogoi, learned Standing Counsel, Excise, appearing on behalf of the respondents.

2. The instant writ petition is taken up for disposal at the motion stage taking into account that the issue involved in the writ petition is covered by the judgment of this Court dated 09.05.2023, rendered in WP(C) 4575/2021 (M/s Barak Warehouse Pvt. Ltd. and Anr. Vs. The State of Assam and Ors.).

3. The facts as could be discerned from the instant writ petition is that the petitioner herein, which is a company incorporated under the provisions of the Companies Act, 1956, was issued a licence for carrying out its business as a bonded warehouse in terms of the Assam Bonded Warehouse Rules, 1965. However, prior to coming into effect of the Assam Excise Act, 2000 (hereinafter referred to as “Act of 2000”) and change of the definition of “bonded warehouse”, an issue arose as to how the transitional stocks would be treated.

4. This Court finds it relevant to take note that in terms of the Assam Excise Rules, 2016 (for short “the Rules of 2016”), the term “bonded warehouse” as defined in Rule 1(A)(xvi) meant the premises or any part of the premises within a manufactory and/or within a canteen store depot warehouse approved and licensed for deposit or storage of spirits on which duty had not been paid. On the other hand, Rule 1(A) (xvii) defined “wholesale warehouse” to mean those premises or any part of the premises approved and licensed for deposit or storage of spirits on which duty/levy had been paid and from where Indian Made Foreign Liquor (IMFL)may be supplied by wholesale. By this change to the definition of “bonded warehouses” in terms with Rule I(A)(xvi) of the Rules of 2016, there was a stipulation that the bonded warehouse should be situated within the manufactory. However, as the petitioner’s bonded warehouse was not situated within the manufactory, the petitioner’s bonded warehouse came within the meaning of “wholesale warehouse”.

5. Taking into account the said change in the definition of “bonded warehouse” and “wholesale warehouse”, an important issue arose as regards the transitional stocks inasmuch as in “bonded warehouses”, the Indian Made Foreign Liquor (IMFL) were stored or deposited without payment of the duty whereas in “wholesale Warehouses” the deposit or storage of IMFL had to be with payment of duty/levy.

6. Under such circumstances, the Governor of Assam passed an order on 29.08.2016. A perusal of the said order reflects that a joint team was constituted as per the said order who shall take stock of all such transitional taxable under-bond stock of liquor/spirit in the erstwhile bonded warehouse (now wholesale warehouse) as on the date preceding the date of coming into force of the Act of 2000 and the Rules of 2016, including the stock in transit, the value of such stock as per the Book of Accounts and were required to calculate and record the Government levies involved on such stock, including the ad-valorem levy and VAT as per the Rules of 2016 and the Assam VAT Act of 2003, respectively. In the said order, more particularly, at Clause 9, it was mentioned that the Excise establishment posted at the erstwhile bonded warehouses (now wholesale warehouse) shall not be withdrawn till the entire amount of arrear ad-valorem levy and VAT on the transitional taxable under-bond stock of liquor including the stock in transit is deposited and the licensee concerned shall be liable to reimburse to the Government the salary etc. of such excise establishment till they are withdrawn by the Government on a no-dues certificate issued by the concerned Superintendent of Excise or Deputy Superintendent of Excise and the concerned Superintendent of Taxes. It is on the basis of Clause 9 that an amount of Rs. 49,90,710.00 has been demanded from the petitioner by the respondent No. 3 as arrear establishment charges with effect from September, 2017 to