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TMI Blog2001 (2) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... 1044 of 2000, 1353 of 2000, 1354 of 2000 and 1357 of 2000, the prayer is to declare that the levy of sales tax on rectified spirit/industrial alcohol is illegal and unconstitutional. 4. As the issues involved are common and arguments have been advanced in common on both sides, all these petitions are disposed of by this common order. 5. Mr. N. Muralikumaran, the learned counsel for the petitioner, argued the common points involved with reference to facts in O.P. No. 1010 of 2000, wherein, it was stated that the petitioners are running chemical industries and as raw materials, they have purchased ethyl alcohol/rectified spirit/industrial alcohol by paying single point tax at the point of sale vide entry 23 of Part B of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. For the purchases effected from various persons from the assessment year 1993-94 onwards payments have been effected to the State Government under the following heads: (a) Administrative fee. (b) Sales tax. (c) Surcharge. For example, during the assessment year 1993-94 in O.P. No. 1010 of 2000, the following amounts have been paid. (i) Administrative fee Rs. 2,81,250 (ii) Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f powers by the centre for the control, supply, distribution, price, etc., of industrial alcohol. Under section 18(g) of the Industries (Development and Regulation) Act, 1951 and the rules and orders made thereunder, that case was not concerned with the exercise of the legislative powers with reference to entry 54 of List II of the Seventh Schedule to the Constitution which related to the levy of taxes on the sale or purchases of goods (other than newspapers) subject to the provisions of entry 92A of List I. It is true that the concluding portion of the judgment in Synthetic and Chemicals Limited case [1991] 80 STC 270 (SC); AIR 1990 SC 1927 in (page 315 of STC) para 85 on page 1956, states as follows: (c) the State may charge excise duty on potable alcohol and sales tax under entry 52 of List II. However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the State on industrial alcohol. Based on this observation, the Allahabad High Court in an another judgment held that the levy of purchase tax on industrial alcohol was not in order. This case came up before a divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liquor referable to entry 6 of List II and regulating powers. (b) it may lay down regulations to ensure that non-potable alcohol is not diverted and misused as a substitute for potable alcohol. (c) the State may charge excise duty on potable alcohol under entry 51 and sales tax under entry 54 of List II. However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the State on industrial alcohol. (d) However, in case the State is rendering any service, as distinct from its claim of so-called grant of privilege, it may charge fees based on quid pro quo. See in this connection, the observations in Indian Mica's case [1971] Supp SCR 319. However, as rightly pointed out by the learned Senior Standing Counsel for Revenue, the impugned question that was for consideration in Synthetics Chemicals Ltd. case reported in [1991] 80 STC 270 (SC) was whether the vend fee collected on industrial alcohol under different legislations and rules in different States is valid. However, in the course of judgment, the Supreme Court also stated that sales tax cannot be collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fees or charges in question. The court further says: 'However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the State on industrial alcohol.' That was an abrupt observation without a preceding discussion, and inconsistent with the reasoning adopted by this Court in earlier decisions from which no dissent was expressed on the point. Coming, as it does, immediately after a reference to entry 52 of List II in connection with excise duty and sales tax when neither falls under that entry, the submission of the AdvocateGeneral that the observation regarding sales tax in para 86 (at page 315 of STC) of the judgment was per incuriam assumes great significance. The Supreme Court in the above decision at page 300, further observed as follows: ...............It is significant that the taxing power of the State on a matter falling within its competence under this entry, namely, sale or purchase of goods (other than newspapers) is, subject to the taxing power of Parliament under entry 92-A of List I, and other provisions of the Constitution, plenary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Control Order issued by the Central Government under sub-section (1) of section 3 of the Essential Commodities Act, operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between the two laws and the question of repugnancy does not come into play. Ultimately, the Supreme Court observed as follows: We are firmly of the view that the decision of this Court in Synthetics case [1991] 80 STC 270; (1990) 1 SCC 109 is not an authority for the proposition canvassed by the assessee in challenging the provision. This Court has not, and could not have, intended to say that the Price Control Orders made by the Central Government under the IDR Act imposed a fetter on the legislative power of the State under entry 54 of List II to levy taxes on the sale or purchase of goods. The reference to sales tax in paragraph 86 of that judgment (at page 315 of STC) was merely accidental or per incuriam and has, therefore no effect on the impugned levy. In the above judgment, honourable Justice R.M. Sahai, J., who has delivered a separate judgment has observed that the conclusion in Synthetic Chemicals Ltd. v. State of U.P. [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words occurring in para 85 (of SCC), (para 84 of AIR) of the judgment of Sabyasachi Mukarji, J. in Synthetics [1991] 80 STC 270; (1990) 1 SCC 109; AIR 1990 SC 1927. At the inception of (page 314 of 80 STC) (para 85 of SCC); (para 84 of AIR) of the said judgment, the following statement occurs: 'After the 1956 amendment to the IDR Act bringing alcohol industries (under fermentation industries) as item 26 of the First Schedule to IDR Act the control of this industry has vested exclusively in the Union. Thereafter, licences to manufacture both potable and non-potable alcohol is vested in the Central Government. Distilleries are manufacturing alcohol under the Central licences under IDR Act. No privilege for manufacture even if one existed, has been transferred to distilleries by the State.' 12.. It is obvious that the words 'both potable and' occur here as a result of some accidental or typographical error. The entire preceding discussion in the judgment repeatedly affirms that so far as potable alcohols are concerned, they are governed by entry 8 and are within the exclusive domain of the States. The aforesaid words cannot fit in with the said repeatedly affirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The administrative fee paid by the manufacturer on production of industrial alcohol on the basis of bulk litres might have been included in the cost of industrial alcohol when sale is made so as to levy sales tax. Therefore, for the computation of the sale value, administrative fee might have formed part of the sales tax. In fact, in the writ petitions, the petitioners have only given the payment of administrative fee, sales tax and surcharge during several years. No material has been placed on record to show that sales tax was collected on administrative fee as claimed by the petitioners. Thus, any disputed question of fact cannot be agitated in a writ petition. Further, the issue pertaining to collection of administrative fee or sales tax on administrative fee was purely an issue between the petitioners and the sellers. In such circumstances, the action brought in these writ petitions against the State of Tamil Nadu or the authorities functioning under the Government itself is not in order. In respect of dispute arising between the petitioners and the sellers, the proper course is to resort to any civil suit for remedy, if available, and not to file writ petitions against the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of alcohol or shown separately in the bills. The Supreme Court in Mafatlal Industries Limited v. Union of India [1998] 111 STC 467 at page 594 has observed as follows: Even if he quotes the price as X (costs) + Y (taxes) + Z (profit), what the buyer will pay is the price of the goods and nothing else. Thus, the sale price includes cost + taxes + profit. In such circumstances, we find that there is absolutely no case to declare that levy of sales tax on administrative fee collected from the petitioner is illegal or unconstitutional. We want to make it clear that the power of the judicial review under article 226 of the Constitution is not directed against the decision but it is confined to the decision making process. The court sits in judgment only on the correctness of the decision making process and not on the correctness of the decision itself. The various decisions cited by the learned counsel for the petitioners to support the view that writ petitions could be entertained even if alternative statutory remedy is available is not relevant in the present case where the levy of sales tax on industrial alcohol was found in order and that the petitioner has no case to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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