The main legal point established in the judgment is the State's authority to collect differential excise duty from licensees holding stocks of Indian made foreign liquor at the close of the former period, as provided under the proviso to S.18(3) of the Kerala Abkari Act. The court emphasized the nature of excise duty as an indirect tax ultimately borne by the consumer, and the licensees' obligation to pay the difference of duty of excise as per the proviso to S.18(3) of the Act.

K. Narayana Kurup, J.

The State of Kerala, the Board of Revenue and the officials of the Excise Department are the appellants in these appeals who figured as respondents in the Original Petitions. The appeals are directed against the judgment of the learned Single Judge dated 11.6.1997 in O.P. No. 5111 of 1996 and connected cases. The respondents herein are Licensees under S.18 A of the Kerala Abkari Act (Act 1/1077) (for short'the Act'). They challenged the levy and collection of differential duty of excise payable by them. The proviso to S.18(3) of the Act authorises the department to levy differential duty of excise from licensees in respect of all stocks of Indian made foreign liquor held by them at the ctose of the former period. It was the case of the respondents/ petitioners before the learned Single Judge that mode of levy of excise duty as provided in clauses (a) to (g) in S.17 of the Act are mutually exclusive, that the department having opted the mode as provided in S.17(f) of the Act, they cannot levy the differential excise duty by any other mode. According to them, the above proviso is not applicable in the instant case and even if it is applicable the proviso is ultravires the Constitution and charging section ( S.1 7(f) of the Act) and is liable to be set aside. The State justified the levy relying on the proviso which enables the department to levy and collect the differential duty of excise as between two licence periods from the licensees who hold the stock during the last day of the previous period. A learned Single Judge of this Court while sustaining the proviso to S.18(3) of the Act, however, held that the department cannot levy and collect differential duty from the licensees and in that view allowed the Original Petitions and hence these appeals.

2. We heard counsel on both sides. Before proceeding to discuss the legal issues arising in these appeals we think it desirable to have a survey of the various statufory provisions governing the field. S.17 of the Act is the charging section which is as follows:

"17. Duty on liquor or intoxicating drugs:

A duty of excise or luxury tax or both shall, if the Government so direct, be levied on all liquor and intoxicating drugs

(a) permitted to be imported under S.6; or

(b) permitted to be exported under S.7; or

(c) permitted under S.11 to be transported; or

(d) manufactured under any licence granted under S.12; or

(e) manufactured at any distillery, brewery, winery or other manufactory established under S.14; or

(f) issued from a distillery, brewery, winery or other manufactory or warehouse licensed or established under S.12 or S.14; or

(g) sold in any part of the State:

Provided that no duty or galtonage fee or vend fee or other taxes shall be levied under mis Act on rectified spirit including absolute alcohol which is not intended to be used for the manufacture of potable liquor meant for human consumption,

Explanation:- For the purpose of this section and S.18, the expression "duty of excise", with reference to liquor or intoxicating drugs, include countervailing duty on such goods manufactured or produced elsewhere in India and brought into the State".

Section 18 of the Act prescribes the rate of excise duty payable by the licensees. The duty was increased from Rs. 20/- per proof litre to Rs. 200/- per proof litre as per an amendment introduced by Ordinance No. 2/96 and later replaced by Act 4/96 which was preceded by a policy published by the Government evidenced by Ext. P1 dated 14.2.1996. The revised rate had come into force with effect from 1.4.1996.

S.18 so far as it is relevant to the context is extracted below:

"18. How duty may lie imposed:-1 Such duty of excise may believed:

(a) in the case of spirits or beer, either on the quantity produced in or passed out of a distillery, brewery or warehouse licensed or established under S.12 or S.14 as the case may be or in accordance with such scale of equivalents, calculated on the quantity of materials used or b