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2022 (6) TMI 140 - HC - VAT and Sales TaxMaintainability of petition - remedy of revision under Section 11 of the Uttar Pradesh Excise Act, 1910 - present petition was filed directly before this Court, on the plea of lack of jurisdiction - Levy of Consideration Fee/ Pratiphal Shulk - alleged excess loss of High Strength Malt Spirit (HSMS) - legislative competence of the State of U.P. to enact any law to subject loss of imported HSMS- to Consideration Fee/ Pratiphal Shulk - HELD THAT - In face of the first issue raised being purely legal, and in absence of any dispute as to fact, the objection raised by the State - to availability of pleadings (in the writ petition) - to support the first ground of challenge raised, is not accepted - Here, as a fact, the impost of Consideration fee/'Pratiphal Shulk is not on the quantities of HSMS received by the petitioner, at its distillery. Rather, that impost has arisen on the excess and therefore, unaccounted loss of HSMS, while that imported article was transported inside the State of Uttar Pradesh. The text of the show-cause-notices dated 22.09.2018 and 26.09.2018 (Annexure No. 7 to the writ petition), clearly refers to the facts - against two transactions of 24,400 and 24,596 Bulk litres of Malt Spirit of strength 68% and 67.6% v/v, imported from William Grant, as cleared by the Customs authorities, 24346 and 24593 Bulk litres, were received at the petitioner's distillery, bearing strength 66.2% and 66.6% v/v, respectively. Whether it was permissible for the State revenue authorities to impose Consideration fee/'Pratiphal Shulk', against alleged loss of revenue on foreign liquor, springing from excess loss of the commodity HSMS, during its transportation from a bonded warehouse at I.C.D. Dadri, Gautam Budh Nagar, to the petitioner s distillery at Modi Nagar? - HELD THAT - The applicable provisions - Section 15 and 16 of the Act have been quoted in paragraph 40 above. Clearly, those provisions are regulatory laws and not levy provisions. Therefore, under the Scheme of the Act, intoxicant, or liquor (as defined under Section 3 and 11 of the Act) including HSMS, stood covered under the regulatory provisions under the Act. Thus, amongst others, by virtue of Section 15 of the Act, HSMS could not be imported or transported within the State of Uttar Pradesh, except in accordance with the provisions of Section 16 of the Act. That provision of the Act mandatorily prescribes issuance of Pass, amongst others, for import and/or transportation of intoxicant including liquors, inside the State of U.P. - Section 12(2) of the Act only excludes the applicability of Section 12(1) of the Act, to intoxicants imported in India against Customs duty payment under Central enactments. Plainly, it has no application to Section 15 16 of the Act. There is no similar exclusion clause under those regulatory law provisions. For the imposition of tax or Customs duty liability, on imported HSMS, it must be accepted and recognised, the goods were imported across the customs frontiers of the country at I.C.D. Dadri, in Gautam Budh Nagar. Therefore, no amount of Excise duty may have been imposed under the Act, on those goods till they remained HSMS - Merely because no Excise duty could be levied under the Act on HSMS, there is no reason to accept those goods imported into the country would be exempt from operation of the regulatory law, inside the State of Uttar Pradesh though similar goods originating in any part of the country, would be subject to such regulatory law when imported into the State of Uttar Pradesh. The words import , importer and imported used in Paragraphs 608, 609, 610, 613 etc. of the Excise Manual must be read in their complete/wider/natural sense - to include within their sweep, a transaction of transportation (inside the State of Uttar Pradesh) of goods imported into India. That context (of regulatory law), requires, a departure to be made from the narrower statutory meaning of the word import , as contained in Section 3(17) of the Act. In other words, to preserve the efficacy of the regulatory law, it must be given - the word import used in the regulatory provisions of the Act and the Excise Manual must be given a wider more generic meaning than the narrower meaning given under Section 3(17) of the Act. That interpretation is permissible and necessary to be adopted by virtue of the opening words of Section 3 of the act namely, In this Act, unless there is something repugnant in the subject or context . Therefore, Consideration fee/ Pratiphal Shulk may be levied on excess loss of HSMS, whether imported from outside the country or procured from another State of India. Therefore, the injunction sought against that levy, by looking at the provision of law providing for levy of Consideration fee/ Pratiphal Shulk on excess loss of HSMS when transported within the State, from a distillery inside the State of Uttar Pradesh, is misconceived and inapplicable. The geographical place where the goods HSMS commenced their journey (upon being cleared from home consumption) remained inside the State of Uttar Pradesh, i.e., at Dadri, in Gautam Budh Nagar. Yet, HSMS had not been produced inside the State of Uttar Pradesh. In fact, they were imported into the country, at the I.C.D., Dadri, in Gautam Budh Nagar. Therefore, those goods became available for home consumption, under the umbrella of local regulatory laws of the State of Uttar Pradesh, only. Keeping these facts in mind, for the purpose of levy of Consideration fee/ Pratiphal Shulk , on excess transportation loss of HSMS, the applicable law for computation of that regulatory fee would remain the laws of the State of Uttar Pradesh, only. It would not be right to say - the Act and the Excise Manual create levy of Consideration Fee/'Pratiphal Shulk' only on dispatches made from the distillery and not to the distillery. All transportation of liquor within the State, is covered within the regulatory sweep of Sections 15 16 of the Act. The petitioner applied and the respondents granted Pass to the petitioner (to transport HSMS from I.C.D. Dadri, in Gautam Budh Nagar to petitioner s distillery at Modi Nagar, Ghaziabad), on Form FL-22, against bond. That procedure was not contrary to the law. The petitioner was bound by the terms of the Pass read with the Excise Manual. Petition dismissed.
Issues Involved:
1. Legislative competence of the State of Uttar Pradesh to levy Excise duty on imported High Strength Malt Spirit (HSMS). 2. Applicability of regulatory provisions for transportation of HSMS within the State. 3. Validity of the levy of Consideration Fee/‘Pratiphal Shulk’ on excess transit loss of HSMS. 4. Procedural propriety in the recovery of disputed amounts before the expiry of the limitation period for filing a revision. Issue-wise Detailed Analysis: 1. Legislative Competence of the State of Uttar Pradesh to Levy Excise Duty on Imported HSMS: The petitioner argued that the State of U.P. lacked legislative competence to levy Excise duty on HSMS imported from outside the country, citing Entry 51 read with Entry 8 of List-II of the Seventh Schedule of the Constitution of India. The petitioner contended that HSMS, being imported from Scotland, was not subject to Excise duty under the Uttar Pradesh Excise Act, 1910, as it was not manufactured or produced within the State. The court noted that the State of U.P. could not levy Excise duty on HSMS imported across the customs frontier of the country after payment of Customs duty. However, the court clarified that the impost of Consideration Fee/‘Pratiphal Shulk’ was not on the quantities of HSMS received but on the excess and unaccounted loss of HSMS during transportation within the State. 2. Applicability of Regulatory Provisions for Transportation of HSMS within the State: The court examined Sections 15 and 16 of the Act, which mandate obtaining a Pass for the import and transportation of intoxicants within the State. The court found that the petitioner was obligated to transport HSMS from I.C.D. Dadri to its distillery at Modi Nagar against a valid Permit/Pass issued under the Act, despite the goods being imported from outside the country. The court emphasized that the regulatory provisions under the Act applied to all intoxicants, including HSMS, transported within the State. 3. Validity of the Levy of Consideration Fee/‘Pratiphal Shulk’ on Excess Transit Loss of HSMS: The court upheld the levy of Consideration Fee/‘Pratiphal Shulk’ on the excess transit loss of HSMS, finding it to be a regulatory measure to ensure no quantity of excisable goods is dealt with except in compliance with the regulatory law enacted by the State. The court noted that the petitioner had executed a bond for the transportation of HSMS, which included a liability to pay duty on any excess loss during transit. The court also referred to the amended Rule 5 of the Distillery Rules, which prescribed permissible limits of loss during transportation, and found that the excess loss of HSMS during transportation from I.C.D. Dadri to the petitioner’s distillery was subject to Consideration Fee/‘Pratiphal Shulk’. 4. Procedural Propriety in the Recovery of Disputed Amounts Before the Expiry of the Limitation Period for Filing a Revision: The court observed that the statutory authorities should have waited for the expiry of the period of limitation available to the petitioner to file a revision before recovering the disputed amount. The court emphasized the importance of adherence to the rule of law and the need for State authorities to discharge their powers and functions with exactitude as advised by the law. The court expressed regret over the delay in concluding the proceedings and emphasized the need for trust between the State and its citizens. Conclusion: The court dismissed the writ petition, upholding the levy of Consideration Fee/‘Pratiphal Shulk’ on the excess transit loss of HSMS and emphasizing the applicability of regulatory provisions for transportation of intoxicants within the State. The court also highlighted the procedural impropriety in the recovery of disputed amounts before the expiry of the limitation period for filing a revision.
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