1975 (11) TMI 145 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Competence of the State Government to levy sales tax on the turnover pertaining to countervailing duty paid by purchasers.
2. The point of incidence of countervailing duty.
3. The statutory liability of the importer or manufacturer to pay excise duty or countervailing duty.

Issue-wise Detailed Analysis:

1. Competence of the State Government to levy sales tax on the turnover pertaining to countervailing duty paid by purchasers:

The petitioner, a wholesale liquor dealer, contended that the State Government is not competent to levy sales tax on the turnover pertaining to countervailing duty paid by the purchasers. The petitioner argued that the excise duty paid by the purchasers should not form part of the turnover of the petitioner-dealer since the duty is paid directly by the purchasers and not included in the bill of sale issued by the petitioner.

However, the court held that the statutory liability to pay excise duty and countervailing duty is on the petitioner as per the provisions of the Andhra Pradesh Excise Act, 1968, and the Andhra Pradesh Foreign Liquor and Indian Liquor Rules, 1970. The mere payment of excise duty by the purchasers does not alter the legal position, and the excise duty paid by the purchasers forms part of the turnover of the petitioner-assessee.

2. The point of incidence of countervailing duty:

The court examined the point at which the incidence of countervailing duty arises. It was determined that the incidence of countervailing duty occurs at the point of importation of alcoholic liquor or any other excisable article from outside the State into Andhra Pradesh. The court rejected the petitioner's argument that the liability to pay countervailing duty arises only at the point of removal of the liquors stored in the bonded warehouse. The court clarified that the liability to pay countervailing duty accrues at the point of importation, although the actual payment may be postponed until the removal of the liquor from the bonded warehouse.

3. The statutory liability of the importer or manufacturer to pay excise duty or countervailing duty:

The court affirmed that the statutory liability to pay excise duty or countervailing duty lies with the importer or manufacturer, in this case, the petitioner. The court referred to the decision in Shaw Wallace & Co. Ltd. v. State of Andhra Pradesh, which held that the manufacturer of liquor is statutorily liable to pay excise duty at the point of manufacture or production, not at the point of removal from the factory or bonded warehouse. Similarly, the importer is liable to pay countervailing duty at the point of importation, and this liability is not absolved by the payment of duty by the purchasers.

The court also addressed the petitioner's reliance on rules 10, 11, and 12 of the Andhra Pradesh Indian Liquor (Storage in Bond) Rules, 1969, and the decision in Writ Petitions Nos. 3698, 3707, and 3797 of 1972. The court clarified that these rules and the decision do not alter the statutory liability of the importer to pay excise duty or countervailing duty. The court concluded that the liability to pay countervailing duty arises at the point of importation, and the statutory liability to pay the duty lies with the importer, irrespective of any agreements with purchasers.

Conclusion:

The court dismissed the writ petition, holding that the State Government is competent to levy sales tax on the turnover pertaining to countervailing duty paid by the purchasers. The court affirmed that the incidence of countervailing duty arises at the point of importation, and the statutory liability to pay the duty lies with the importer or manufacturer. The petitioner's arguments were rejected, and the court upheld the original assessment order of the Commercial Tax Officer. The writ petition was dismissed with costs, and the petitioner's plea was found to be without merit.