2016 (10) TMI 208 - HC - VAT and Sales Tax

Imposition of duty under M.P. VAT Act, 2002 or the M.P. Commercial Tax Act, 1994 - reopening of assessment - IMFL - Rectified Spirit - whether by virtue of Entry No.18 to Schedule-I of the M.P. Commercial Tax Act, 1994 or Entry No.47 to Schedule-I of the M.P. VAT Act, 2002, the manufactured product i.e. IMFL or Rectified Spirit being an excisable article is liable to be taxed under the Commercial Tax Act, 1994 or the VAT Act, 2002 as the case may be? - assessment year prior to 1.4.2013 - Held that - the decision in the case of Gwalior Alcobrew Pvt. Ltd. Vs. State of M.P. & Others 2016 (9) TMI 355 - MADHYA PRADESH HIGH COURT relied upon where it was held that foreign liquor manufactured in the State of M.P. and exported to other State is an excisable article and even though it is exempted from payment of excise duty but being an excisable good on which the State Government may levy excise duty under the Excise Act, recovery of Commercial tax or VAT tax is not permissible. Goods found to be not taxable - reopening of assessment not required - various other questions raised in the matters particularly with reference to Rectified Spirit not required to be answered - writ petitions allowed - decided in favor of petitioner.

Summary

Issues:
Challenges to orders imposing duty/tax under M.P. VAT Act, 2002 or M.P. Commercial Tax Act, 1994; Interpretation of tax liability for Indian Made Foreign Liquor (IMFL) and Rectified Spirit under respective Acts.

Analysis:
The petitions under Article 226 and 227 challenge orders by various tax authorities regarding duty/tax imposition under the M.P. VAT Act, 2002 or the M.P. Commercial Tax Act, 1994. The key issue revolves around whether IMFL or Rectified Spirit, manufactured products, are subject to taxation under specific entries of the Acts. Petitioners argue that being excisable articles under the M.P. Excise Act, these products are exempt from Commercial Tax and VAT. A prior judgment, Gwalior Alcobrew Pvt. Ltd. Vs. State of M.P. & Others, ruled in favor of petitioners, stating that despite being excisable, if exempt from excise duty, imposing Commercial tax or VAT is impermissible. This principle applies to all petitions pre-dating the amendment on 1.4.2013, ensuring their allowance and the quashing of related orders.

Regarding Rectified Spirit post-1.4.2013, a different tax liability scenario may arise, but for pre-amendment cases, the Gwalior Alcobrew Pvt. Ltd. judgment governs. Thus, all petitions are allowed based on this precedent, annulling assessment orders, Revisional Authority decisions, and show cause notices. While other questions, especially concerning Rectified Spirit, were raised, the court refrains from addressing them due to the non-taxable status established by the Gwalior Alcobrew Pvt. Ltd. ruling. These issues remain open for future consideration if necessary in subsequent cases. Consequently, all petitions are allowed, and the challenged actions are invalidated, culminating in the disposal of the petitions.