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1983 Supreme(All) 149
IN THE HIGH COURT OF ALLAHABAD
H. N. Seth and A. Banerji, JJ.
AJUDHIYA DISTILLERY - Appellant
Versus
EXCISE COMMISSIONER - Respondents
Civil Misc. Writ 647 Of 1976
Decided On : 07/13/1983
S.K.SURI
The liability to pay purchase tax on alcohol under Section 3(1)(c) of the U. P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939, lies on the purchaser and not the seller.
Headnote:
PURCHASE TAX - U. P. SALES OF MOTOR SPIRIT, DIESEL OIL AND ALCOHOL TAXATION ACT, 1939 - SECTION 3(1)(C) - PURCHASE TAX ON ALCOHOL - LIABILITY OF PURCHASER - SELLER NOT LIABLE TO PAY PURCHASE TAX.
Fact of the Case:
The petitioner, a manufacturer of alcohol, challenged the imposition and realization of purchase tax on alcohol by the District Excise Officer. The petitioner argued that it was a seller and not a purchaser of alcohol and that no purchase tax was realized by it from the purchaser.
Finding of the Court:
The court held that the purchase tax on alcohol was the liability of the purchaser and no part of the liability to pay the tax lay on the seller. The court found that the imposition and realization of the purchase tax on the petitioner was bad in law and liable to be struck down.
Issues: 1. Whether the purchase tax on alcohol was the liability of the purchaser or the seller. 2. Whether the petitioner had an alternative remedy by way of appeal.
Ratio Decidendi: 1. The court interpreted Section 3(1)(c) of the U. P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939, and held that the purchase tax on alcohol was the liability of the purchaser and not the seller. 2. The court held that the petitioner did not have an adequate or suitable alternative remedy, so as to deny him the relief obtainable under Article 226 of the Constitution.
Final Decision: The court allowed the writ petition, quashed the impugned notice and order, and directed the respondents to refund the amount of purchase tax realized from the petitioner.
( 1 ) THIS writ petition under Article 226 of the Constitution of India has been filed by the petitioner, M/s. Ajudhiya Distillery, Moradabad, challenging the imposition and the realisation of purchase tax on alcohol from the petitioner by the District Excise Officer, respondent No. 2.
( 2 ) THE petitioner manufactures alcohol and sells the same in bulk to such parties as are permitted to purchase the same by the respondent No. 2. There is a tax on alcohol at the point of such sale, imposed under the U. P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939. In the present case the respondent No. 2 seeks to realise an amount of Rs. 9,264. 80 from the petitioner as purchase tax. A notice to this effect was given to the. petitioner. The tax pertained to purchase of alcohol for the period 1st November, 1975, to 20th April, 1976. The petitioners case was that the notice demanding the tax was bad in law and no amount was due from the petitioner, who was a seller and not the purchaser of alcohol. The petitioners case further was that no purchase tax was realised by it from the purchaser. The petitioner made a representation to respondent No. 2 but it was of no avail. The respondent No. 2 by his order dated 18th November, 1976, directed the petitioner to deposit the said amount as purchase tax by 4th December, 1976. Consequently, the petitioner filed the present petition.
( 3 ) ALTHOUGH the respondents were granted time to file a counter-affidavit, none has been filed. The facts stated in the petition remained uncon trover ted. However Mr. K. C. Dhuliya, learned standing counsel for the State, has appeared and argued the case on behalf of the respondents. We have heard the learned counsel for the parties.
( 4 ) ORIGINALLY, the United Provinces Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939 (U. P. Act No. 1 of 1939), did not contain any provision for a tax on the sale of alcohol. By an amendment brought about by Ordinance No. 9 of 1974 and later by U. P. Act 12 of 1974 alcohol was added as one of the taxable commodities in the aforesaid Act. This amendment, apart from amending various provisions of the 1939 Act, imposed sales tax on the first sale of alcohol payable by the selling dealers. The vires of the Amending Act was challenged in a writ petition in this Court and by a judgment dated 11th July, 1975-Kesar Sugar Works Ltd. v. State of U. P. 1976 UPTC 538 this Court allowed the writ petition and struck down the Ordinance No. 9 of 1974, and the U. P. Act No. 12 of 1974 in so far as they related to alcohol. Subsequently, by an Act (U. P. Act No. 8 of 1978), the provisions of Section 3 of the 1939 Act were amended. This Act received the assent of the President on the 17th April, 1976 (sic) and was published in the Gazette the very next day. The, relevant portions of amended Section 3 (1) (a), (b) and (c) are quoted below :
Section 3 (1) (a) : There shall be levied on the first sale of motor spirit in the State. . . and such tax shall be payable to the State Government in the prescribed manner by the dealer effecting such sale; (b) There shall be levied on the first sale of diesel oil in the State. . . and such tax shall be payable to the State Government in the prescribed manner by the dealer effecting such sale; (c) There shall be levied at the point of first purchase of alcohol in the State a tax at the rate of 40 paise per litre for the first million litres and at the rate of 20 paise per litre for the remainder payable by the purchaser, and such tax shall be collected and paid in the prescribed manner to the State Government.
( 5 ) A perusal of the above provisions shows that the tax on the first purchase of alcohol has been levied, secondly, it has been made payable by the purchaser, thirdly, the tax shall be collected and paid in the prescribed manner to the State Government. In the case of motor spirit and diesel oil, the tax has been imposed on the first sale of the same and is a t
