Entry 19 of the Schedule applied to country spirit, regardless of its strength, and the heading of Class I did not limit the scope of the entry.

K. C. Agrawal, Actg. C.J.

1. For the excise year 1988-89, the petitioner M/s P. V. K. Distillery Limited, which is a public limited company and held licence in FORm PD 2, was selected by the Excise Commissioner on the basis of tenders submitted in FORm CL 23, for supplying spirit to bonded warehouses and wholesale depots. The petitioner had a distillery at Nandganj, district Ghazipur. It has bonded warehouses in Varanasi. The petitioner used to bring country spirit from Nandganj to bonded warehouses m Varanasi.

2. On the basis of a notification issued in exercise of the powers conferred by Clause (b) of sub-section (2) of Section 172, published in the official gazette dated 7th May, 1986, which came into effect from 8th May, 1986, octroi on goods and animals brought within the octroi limits of the Nagar Mahapalika, Varanasi, for consumption, use or sale therein, was to be levied at the rates shown in the Schedule, subject to the exemption given therein. Entry 19 of the Schedule, with which we are concerned in the present case, under Class I-Articles of food and drink for man and animals, reads as under :

"Wines, Liquors and alcohol, Indian or foreign preparation, i.e. all kinds of wine prepared like foreign mannered described in U. P. Excise Act and Rules whether fermented or distilled. Rs. 200.00 per quintal."

Another entry on which arguments were addressed to us is Entry 29, which reads : ''Mythelated spirit and denatured spirit. Rs. 6.00 per qtl."

3. The contention of the petitioner was that Entry 19 of the Schedule did not apply for levying and realising octroi on the country spirit which used to be brought by it from Ghazipur, obtained under the contract system from the Excise Commissioner, to its bonded warehouses at Varanasi for making it country liquor.

4. We may, briefly, refer to the relevant entries in the Constitution. Entry 8 of List II of the Seventh Schedule reads ;

"Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors." Entry 51 of List II of the Seventh Schedule confers power of imposition of excise duty. Entry 51 reads in its material particulars as under : "51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India :- (a) alcoholic liquors for human consumption." Entry 52, with which we are mainly concerned, in this case, is :

"Taxes on the entry of goods into a local area for consumption, use or sale therein."

Essential features of tax, which is known as octroi, are :

(a) entry of goods into a local area, and

(b) goods must enter for the purpose of consumption, use or sale therein.

5. The point of entry in a local area is the determinig factor to find as to whether the notification issued in pursuance of Entry 52 by a local authority is applicable or not. For the purpose of making the article imported, if some change is necessary or is required, that is not an essential feature.

6. As to what are the requisites for levying octroi has been laid down by the Supreme Court in Burmah-Shell Oil Storage and Distributing Company of India Ltd. v. Belgaum Borough Municipality, Belgaum, AlR 1963 SC 906.

In this case, the argument of the petitioner's counsel was that what was being brought by the petitioner within the Varanasi Municipality was not an item covered by Entry 19, and, therefore, no octroi was leviable. Entry 19 being in Class I bears the heading "Articles of food and drink for man and animals". It was necessary for levying octroi to establish that each one of the items mentioned in Entry 19, is fit for human consumption, and as country spirit of 80 per cent v/v imported by the petitioner into the Corporation limit, is not consumable, Entry 19 under the aforesaid Class I did not apply. In other words, the petitioner's case is that Entry 19 does not apply to country spirit of high strength.