1988 (2) TMI 469 - SC - Indian Laws

Summary

Issues Involved:
The issues involved in this case are:
1. Whether establishment charges demanded from the respondent under the Andhra Pradesh Excise Act, 1968 constitute excise duty or fee.
2. Whether the demand for establishment charges is justified without any quid-pro-quo.

Issue 1: Establishment Charges as Excise Duty or Fee:
The respondent challenged the demand of establishment charges, arguing that it did not constitute excise duty as per Entry 51 of the Seventh Schedule to the Constitution of India. The High Court ruled in favor of the respondent, restraining the Excise Department from collecting the charges. The appellant contended that the demand was a price for the privilege to manufacture and sell wine, exclusive to the Government. The Court noted that the Act and Rules allowed the Government to impose conditions, including payment of salaries and allowances for excise officers by the licensee. The Court referred to previous judgments highlighting that the charges were a consideration for parting with privileges, not excise duty.

Issue 2: Justification of Demand without Quid-Pro-Quo:
The appellant argued that the demand for establishment charges was justified as part of the privilege granted to the respondent. The Court acknowledged that the respondent had the choice not to take the license if unwilling to pay the required price for the privilege. Referring to previous cases, the Court emphasized that the charges were the price for privileges granted by the State, not excise duty. The Court held that the demand, even if labeled as establishment charges, was legal and justifiable as part of the consideration for the privilege granted.

Conclusion:
The Supreme Court set aside the High Court's judgment, ruling in favor of the appellant. The Court dismissed the respondent's writ petition and upheld the legality of the establishment charges demanded under the Andhra Pradesh Excise Act, 1968. The Court emphasized that the charges were a legitimate consideration for the privileges granted by the State, not constituting excise duty.