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SUPREME COURT
, J
Commnr. of Income Tax and Another v. Distillers Co. Ltd.
Headnote: Read headnote
1. Leave granted.
2. Respondent carries on business of arrack bottling, manufacture of industrial alcohol and their marketing. He obtained a licence from the State of Karnataka for the aforementioned purposes in terms of the provisions of Karnataka Excise Act, 1965 . Indisputably, the matter relating to manufacture and bottling of arrack is governed by the said Act and the rules framed thereunder by the State of Karnataka known as Karnataka Excise (Manufacturing & Bottling of Arrack) Rules, 1987 (for short "the Rules"). Rule with which we are concerned herein is sub-rule (3) of R.14 which reads as under:
"(3) Arrack after blending shall be matured in such manner and for such period as may be specified by the Commissioner from time to time."
3. The Commissioner of Excise, however, issued a circular stating:
"It is hereby specified that the arrack shall be matured in wooden v
Payments characterized as penalties for regulatory non-compliance are not deductible under the Income Tax Act if not paid within the assessment year.
The demand for excise duty on the designated quantum of rectified spirit was found to be a contractual obligation rather than genuine excise duty, ruling that contractors could not evade payment desp....
The State had no legislative competence to levy Excise Duty on rectified spirit not fit for human consumption, and the imposition of Excise Duty on presumptive production of liquor was ultra vires to....
Excise duty is levied on the production of liquor, and destruction of unfit stocks does not exempt the bonded warehouse from duty liability.
The court ruled that penalties under Section 67 of the Abkari Act cannot be imposed for changes in a company's Board of Directors without a change in ownership or alteration of foundational documents....
The court held that liquor vendors are not 'buyers' under Section 206C of the Income Tax Act, thus exempting the appellant from TDS obligations.
Penalties under Section 67 of the Abkari Act require a change in ownership or deed; absence of such change renders penalties unjustified.
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