1974 (5) TMI 110 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation and legality of the exception contained in entry 37 of Schedule B to the Punjab General Sales Tax Act.
2. Whether beer is considered "Indian-made foreign liquor" under entry 37 of Schedule B.

Issue-wise Detailed Analysis:

1. Interpretation and legality of the exception contained in entry 37 of Schedule B to the Punjab General Sales Tax Act:

The petitioner challenged the assessment of sales tax on the sale of Indian-made foreign liquors (beer, wine, and rum) during the assessment year 1966-67, arguing that entry 37 in Schedule B to the Sales Tax Act exempts all goods on which duty is or may be levied under the Punjab Excise Act. The petitioner contended that the exception for "Indian-made foreign liquor" should have been mentioned in column 2 of Schedule B, as per section 6 of the Sales Tax Act, which states, "No tax shall be payable on the sale of goods specified in the first column of Schedule B subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof."

The court clarified that the "conditions and exceptions" in section 6(1) of the Act relate to the conditions and exceptions in the transactions of sales of the goods described in column 1, not to any goods not covered by the relevant entry in column 1. The court examined various entries in Schedule B where conditions and exceptions were mentioned in column 2 to illustrate that the article exempted under column 1 and the article made subject to tax by being mentioned in column 2 is expected to be the same. The court concluded that reducing the field covered by an entry of exemption by excluding certain things does not amount to laying down "conditions and exceptions" for levy of sales tax on the same product. Therefore, the first argument of the petitioner was deemed misconceived and failed.

2. Whether beer is considered "Indian-made foreign liquor" under entry 37 of Schedule B:

The petitioner argued that beer is not "Indian-made foreign liquor" within the meaning of entry 37 of Schedule B. The court referred to section 3(14) of the Punjab Excise Act, which defines "liquor" as "intoxicating liquor, and includes all liquid consisting of or containing alcohol." It was undisputed that beer is a liquid containing alcohol and, therefore, falls within the statutory definition of liquor. The court also referred to subparagraph (2) of paragraph 2 of the Punjab Liquor Definitions, 1954, which defines "foreign liquor" to include all beer manufactured in India or abroad.

The court held that the statutory definition of "foreign liquor" includes all beer manufactured in India, and "Indian-made foreign liquor" is not specifically defined in the Act. The court rejected the petitioner's reliance on the Mysore High Court's decision in B.P. Krishnamurthy v. State of Mysore, noting that the Mysore Act had a special statutory definition of "country liquor" which did not apply in this case. Therefore, the second submission of the petitioner also failed.

Conclusion:

The court dismissed the petition, holding that the interpretation and legality of the exception in entry 37 were correctly applied, and beer is considered "Indian-made foreign liquor" under the relevant statutory definitions. The costs of the petition were to be borne by the parties as incurred.