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TMI Blog1997 (1) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... t had issued the Punjab Excise Fiscal Orders, 1932, for the purposes of levying taxes, duties and fees under the Act. The Governor of Punjab, in exercise of the powers conferred by sections 31, 32 and 58 of the Act, amended the Punjab Excise Fiscal Orders, 1932 from time to time for varying the rates of taxes, duties and fees on excisable articles. Rules were also framed under section 58 of the Act for the purposes of carrying out the provisions of the Act and for the collection of the excise revenue. An import fee was imposed with effect from April 1, 1992 at the rate of 60 paise per bottle of 650 ml. by notification dated March 31, 1992 issued by the Department of Excise and Taxation of the Government of Punjab in exercise of the powers conferred by sections 31, 32 and 58 of the Act. By the said notification, the Punjab Excise Fiscal Orders, 1932, were amended and import fees at the aforesaid rate was levied on all imports of beer. The rate of import fee at 60 paise per bottle remained in force for the years 1992-93 and 1993-94. The rate of import fee was increased to Re. 1 per bottle with effect from April 1, 1994 and was subsequently reduced to 50 paise per bottle from April 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is required to be paid under the Act subject to such conditions as the State Government may impose. Section 31 of the Act provides for the levy of duty on the excisable articles. There is, however, no mention of any import fee which could be levied under the said section. Section 31 of the Act reads as under: "31. Duty on excisable articles.-An excise duty or a countervailing duty, as the case may be, at such rate or rates as the State Government shall direct, may be imposed, either generally or for any specified local area, on any excisable article,- (a) imported, exported or transported in accordance with the provisions of section 16; or (b) manufactured or cultivated under any licence granted under section 20 ; or (c) manufactured in any distillery established, or any distillery or brewery licensed under section 21: Provided as follows: (i) duty shall not to be so imposed on any article which has been imported into India and was liable on importation to duty under the Indian Tariff Act, 1894, or the Sea Customs Act, 1878. Explanation.-Duty may be imposed under this section at different rates according to the places to which any excisable article is to be removed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no grievance against payment of licence fee. The petitioner is also required to pay countervailing duty at the rate of Rs. 48,048 on one truck of beer containing 800 boxes of 12 bottles each. The petitioner has no grievance against the payment of the aforesaid countervailing duty also inasmuch as the same amount is required to be paid by way of excise duty by the manufacturers of the State of Punjab. Since the petitioner has been subjected to pay import fee at the rate of Rs. 28,800 per truck load of 800 boxes of beer, this payment is said to be unauthorized, illegal and in contravention of the provisions of the Act. 10.. As has already been discussed, section 31 of the Act empowers the State Government to levy excise duty or a countervailing duty on the excisable articles. Even the articles imported, exported or transported may be subjected to the imposition of such duty. Section 58(2)(d) empowers the State Government to make rules so as to regulate the import, export, transport or possession of any excisable article. There is thus no power with the State Government to impose import fee besides the levy of excise duty or countervailing duty. What clause (d) of section 58(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om outside the State and the burden placed by excise duties on alcoholic liquors produced in the State. Countervailing duties can, therefore, be imposed on imported liquors only if goods similar to those which are imported are actually manufactured or produced in the taxing State. If this condition is satisfied, countervailing duty may be imposed on the imported goods whether they are consumed within the taxing State or not. If no alcoholic liquors similar to those imported into the State are manufactured or produced in the State, the right to impose countervailing duties of excise on the imported goods to counter-balance the burden on the State-produced goods will not arise. 14.. Entry 51 of List 11 in the Seventh Schedule to the Constitution thus empowers the State to levy excise duty and countervailing duties. This entry does not empower the State to levy any fee. 15.. Power to levy fee has been conferred by entry 66 of List 11 in the Seventh Schedule to the Constitution. The said entry reads as under: "66. Fees in respect of any of the matters in this List, but not including fees taken in any court." 16.. There is no dispute to the principle that the authority levying a fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised under any provisions of the Act, is found to have force. 21.. The second ground of challenge arises from articles 301, 303 and 304 of the Constitution. Article 301 lays down that, subject to the other provisions of Part XIII of the Constitution, trade, commerce and intercourse throughout the territory of India shall be free. Article 303 puts a restriction on the legislative powers of the Union and of the States with regard to trade and commerce. Neither the Parliament nor the Legislature of a State shall have power to make any law giving any preference to one State over another or making any discrimination between one State and another by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. The Parliament may, however, make any law giving any preference or making any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. 22. Article 304 of the Constitution is, however, relevant to the controversy in hand. The said article reads as under: "304. Restrictions on trade, commerce and intercourse amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. It, however, also incorporates the restrictions which have been specified in clause (a) of article 304 of the Constitution. Section 33-A of the Act reads as under: "33-A. Saving for duties being levied at commencement of the Constitution.-(1) Until provision to the contrary is made by Parliament, the State Government may continue to levy any duty which it was lawfully levying immediately before the commencement of the Constitution under this chapter as then in force: (2) The duties to which this section applies are: (a) any duty on intoxicants which are not excisable articles within the meaning of this Act; and (b) any duty on an excisable article produced outside India and imported into Punjab/Haryana whether across a customs frontier as defined by the Central Government or not. (3) Nothing in this section shall authorise the levy by the State Government of any duty which, as between goods manufactured or produced in the State and similar goods not so manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the State, discriminates between goods manufactured or produced in one locality and simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Duty of excise on foreign liquor imported into the State was levied at first at Rs. 40 per L.P. gallon and from April 1, 1961, at Rs. 70. Since the original duty at Rs. 40 was fixed by notification issued in 1937, that was said to be protected, having been issued under the existing law. However, notification of 1961 was held to be not an existing law and the additional burden imposed was held to be violative of article 301 of the Constitution. It was held that the notification of 1961 might be saved only if it fell within the exceptions contained in articles 302, 303 and 304 of the Constitution. Articles 302 and 303 were not attracted. Power to legislate under article 304 was also not available because no foreign liquor was manufactured or produced in the State. That notification did not comply with the requirements of the Constitution contained in article 304, clauses (a) and (b). Notification of March, 1961, enhancing the levy by Rs. 30 was held as invalid. However, earlier notification of 1937 remained operative in view of article 305. 30.. While discussing "countervailing duties", it was observed by the Supreme Court in Kalyani Stores' case AIR 1966 SC 1686 as under: "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying different rates of tax between goods imported into the State of Gujarat and goods manufactured within that State must be struck down. It was observed that, while State Legislature may enact a law imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State, the imposition must not be such as to discriminate between goods so imported and goods so manufactured. It was further held that article 304(a) enables the Legislature of a State to make laws affecting trade, commerce and intercourse and thereby it enabled the imposition of taxes on goods from other States if similar goods in the State are subjected to similar taxes, so as not to discriminate between the goods manufactured or produced in that State and the goods which are imported from other States. 32.. A similar question happened to be again examined by the Supreme Court in Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82. It was observed therein that the object of article 301 was to prevent discrimination against imported goods by imposing tax on such goods at the rate higher than that borne by local goods. The question as to whether the levy of the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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