BALASUBRAHMANYAN, J.

This revision petition under section 38 of the Tamil Nadu General Sales Tax Act, 1959, is brought by E.I.D. Parry (India) Limited, Madras (hereinafter called the assessees), against an order of the Sales Tax Appellate Tribunal, Madras.

The assessees carry on business as distillers. They manufacture methylated spirit, denatured spirit and rectified spirit in their distilleries in the State and sell them to various persons and institutions. The different stages of manufacture and sale of these spirits are governed and regulated by the Rules framed by the State Government under the Tamil Nadu Prohibition Act, 1937. The regulation of the trade, under the relevant Rules, takes the form of a net work of licensing procedures. The system of licences is also at the same time ultilised by the Rules for the purpose of raising revenues for the State. Periodical licence fees on holders of licences are imposition of one kind. Levy of excise duties on spirits at one stage or other in the course of trade forms another source of public revenue. In addition to those exactions, the gallonage fees are levied on the quantity of spirits handled by the trade. The gallonage fees, for instance, are payable to the State Government on spirits sold by the licensed distilleries to their customers.

The assessees, who ply their trade in this milieu, sell their spirits to the licensed wholesalers and retailers as well as to other persons and institutions authorised to obtain supplies from the distilleries. While effecting such sales, what the assessees do is not only to charge the customers the price of the spirits sold but also a further amount towards recovery of the appropriate gallonage fees payable to the Government on the quantity delivered under the sale. In making out their sales invoices, they separately depict the collection of gallonage fees, as distinct from the sale price for the spirits.When the assessees' sales turnover for 1970-71 came to be determined for the purpose of assessment under the Tamil Nadu General Sales Tax Act, 1959, the question arose as to how the gallonage fees collected by the assessees from the purchasers have to be dealt with for purposes of assessment of the assessees' turnover in spirits. The assessing authority took the view that these collections must be reckoned as forming part of the assessees' taxable turnover, in the sense that they formed part of the aggregate amount for which they sold their goods. The assessees objected to this view of the collections of gallonage fees. But the assessing authority overruled their objections and included the amounts in the final assessment. The amounts so included came to Rs. 10, 16, 857.32. The tax effect of such inclusion was Rs. 30, 505.72.

The assessees appealed against his assessment, but without success. At the stage of second appeal, the Sales Tax Appellate Tribunal went into some of the statutory rules governing the levy and collection of gallonage fees, but their view of the Rules only confirmed the assessing officer's tax treatment of the gallonage fees as part of the assessees' sales turnover. While confirming the assessment in this manner, the Tribunal felt themselves bound by a decision of a Division Bench of this Court reported in Spencer & Co. v. Joint Commercial Tax Officer.

In this tax revision case, the assessees' learned counsel, Mr. V. K. Thiruvenkatachari, argued that the gallonage fee is a revenue exaction laid on the purchasers of spirits, and not a levy on the distilleries, who sell them. He said that under the terms of the statutory rules, all that the distilleries do is to collect the gallonage fees from the concerned purchasers and remit them to the Government treasury. He said that this was an obligation imposed by the law on the distilleries. He said they had no choice at all in the matter. He accordingly urged that the gallonage fees could not be held to form part of the consideration for the sale of goods.The learned Addi