1988 (2) TMI 426 - SC - VAT and Sales Tax

Levy and realisation of octroi duty by the Nagar Mahapalika Bareilly in Uttar Pradesh by a bid in the auction held for retail vend of country liquor for excise year 1987-88 ending on March 31 1988 - Held that - Appeal dismissed. Having regard to the nature of the duty and the type of the goods with which are concerned the rectified spirit is dutiable at the rate of Re. 0.05 per litre and not on the basis that it was foreign wine or liquor.

Summary

Issues:
Levy and realization of octroi duty by Nagar Mahapalika, interpretation of notification regarding octroi duty rates on rectified spirit, classification of goods for octroi duty purposes.

Analysis:
The Supreme Court heard a petition regarding the levy and realization of octroi duty by Nagar Mahapalika, Bareilly, Uttar Pradesh. The case involved a licensee who obtained a necessary license under the U.P. Excise Act for retail vend of country liquor. The issue was the rate at which octroi duty should be imposed on rectified spirit brought into the territory. The municipality argued that rectified spirit falls under the category of foreign imported liquor or wines, subject to a higher octroi duty rate of Re. 1 per liter. However, the respondents contended that rectified spirit should be taxed at the lower rate of Re. 0.05 per liter under a specific Gazette notification. The Court referred to a previous decision stating that the term "liquor" includes all liquids containing alcohol, not just those for beverage purposes. The Court also considered the ordinary meaning of terms like "liquor" and "wine" to determine the appropriate octroi duty rate for rectified spirit.

The Court analyzed the Gazette notification listing different classes of articles for octroi duty purposes. Class III included rectified spirit under the category of articles for lighting, fuel, washing, and lubricants, taxed at Re. 0.05 per liter. On the other hand, Class VI covered foreign imported liquor and wines, taxed at a higher rate of Re. 1 per liter. The Court emphasized that the duty is imposed at the point of entry, based on the nature of the goods at that time. The Court cited a Rajasthan High Court decision supporting the view that rectified spirit should be taxed at the lower rate, not as foreign wine or liquor. Ultimately, the Court upheld the High Court's decision, dismissing the petition challenging the octroi duty rate on rectified spirit.

In conclusion, the Supreme Court affirmed the High Court's decision regarding the octroi duty rate on rectified spirit, stating that it should be taxed at Re. 0.05 per liter based on the nature of the goods at the point of entry. The Court's analysis focused on interpreting the Gazette notification, classifying goods for octroi duty purposes, and determining the appropriate tax rate for rectified spirit brought into the territory.