2021 (11) TMI 171 - HC - VAT and Sales Tax

Levy of Excise Duty or VAT - transit loss suffered in the transportation of Grain Extra Neutral Alcohol - HELD THAT - In UPPER GANGES SUGAR AND INDUSTRIES LTD. VERSUS STATE OF U.P. AND ORS. 2005 (4) TMI 639 - ALLAHABAD HIGH COURT , it had been held if the State has no power to levy excise duty by whatever name called on rectified spirit as it is not a potable liquor, the State cannot claim to have legislative competence to levy excise duty by giving it another name. Also, it may be noted, no private law between the parties arising from a contract may override or negate the Constitutional provision or the statutory law. The Government Order dated 18.03.2016 (Annexure no.22 to the writ petition) insofar as it authorises respondent-State authorities to levy excise duty/penalty over transit loss of Grain Extra Neutral Alcohol is quashed. Demand of excise duty/penalty imposed on Grain Extra Neutral Alcohol are also quashed - It is further directed, subject to applicability of the rule against unjust enrichment, any amount paid against demand raised from the petitioner by way of excise duty/penalty on Grain Extra Neutral Alcohol, after 01.07.2017 may be refunded to it within a period of one month. Petition allowed.

Summary

Issues:
1. Amendment application seeking amendments to pleadings, grounds, and relief claimed.
2. Impleadment application.
3. Challenge to imposition of excise duty on Grain Extra Neutral Alcohol post enforcement of UPGST Act 2017 and Central GST Act 2017.
4. Legislative competence of the State to impose tax on Extra Neutral Alcohol.
5. Quashing of Government Order authorizing levy of excise duty/penalty on transit loss of Grain Extra Neutral Alcohol.

Analysis:
1. The judgment addressed two applications - one for amendment and the other for impleadment. The court allowed the amendment application seeking changes to the pleadings and relief claimed, citing a previous decision on a similar controversy. The impleadment application was also allowed, directing the necessary action to be taken.

2. The main issue revolved around the imposition of excise duty on Grain Extra Neutral Alcohol post the enforcement of specific Acts. The court referred to a previous order in a similar matter and concluded that the State lost its legislative competence to impose such duties post a constitutional amendment. The court declared the imposition of excise duty on such alcohol as ultra vires and quashed related notifications and assessment orders.

3. The judgment further discussed the legislative competence of the State to impose taxes on Extra Neutral Alcohol. Referring to past judgments, the court emphasized that the State cannot claim to have the authority to levy excise duty on such alcohol if it is not considered potable liquor. The court held that contractual agreements cannot override constitutional provisions or statutory laws in this regard.

4. Lastly, the court addressed the quashing of a Government Order that authorized the levy of excise duty/penalty on transit loss of Grain Extra Neutral Alcohol. The court ruled in favor of the petitioner, quashing the demand of excise duty/penalty and directing refunds for amounts paid post a specific date. The writ petition was allowed with no costs imposed.

This comprehensive analysis covers the various issues addressed in the judgment, providing a detailed overview of the court's decisions and reasoning.