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TMI Blog2015 (8) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, however, conveniently ignores the fact that the Respondent State had made it incontrovertibly clear that it would permit the Appellant to sell rectified spirit at the common fixed rate of ₹ 6/- provided it transferred ₹ 1/- per litre to the State. If the Appellant was serious in questioning the legal capacity of the Respondent State recover the said ₹ 1/- per litre, it perforce had to challenge the Government Order dated 12.5.1992. Having failed to do so it cannot, thereafter, challenge the Demand dated 15.12.1993 which is predicted on the Government Order itself. There were three Appellants before the Division Bench of the High Court of Karnataka in the case of but only one of them, i.e. the Appellant before us, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to receive only ₹ 5/- per litre, and the balance ₹ 1/- per litre would be receivable by the Respondent State. For the period of 1.7.1992 to 30.6.1993, supplies of rectified spirit were made by the Appellant to various parties and the entire sum at the rate of ₹ 6/- per litre was recovered/received by the Appellant. It will be relevant to underscore that the supply of rectified spirit (ethyl alcohol) was made by the Appellant with full knowledge of the Government Order to which challenge has been made, namely, the payment of ₹ 1/- per litre to the State Government. The Appellant does not dispute that it is a captive distillery, since it produces molasses which is then distilled and converted into ethyl alcohol/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insofar as it empowers of the fixation of price of rectified spirit, is therefore, declared as unconstitutional and ultra vires the provisions of the State Act. 4. The manner in which the trade of arrack is conducted can be gleaned, inter alia, from a reading of Rule 13, which is also reproduced for convenience: Rule 13. Stock of rectified spirit. (1) The quantity of rectified spirit required for the warehouse shall be allotted by the Commissioner from time to time. It shall be drawn from the distillery on indents duly countersigned by the Warehouse Officer. The transportation charges shall be borne by the licensee. The distillery shall issue such quantity of rectified spirit as allotted by the Commissioner, to the warehouse at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the transportation charges are to be borne by the licencee. This arrangement, so far as transportation expenses are concerned, obviously does not arise where molasses is readily available in the very same premises where its conversion or distillation into rectified spirit takes place. The contention of learned counsel for the Appellant is that the State is not entitled to take away the extra profit of ₹ 1/- per litre which the Appellant earns because molasses is available in its own premises. This argument, however, conveniently ignores the fact that the Respondent State had made it incontrovertibly clear that it would permit the Appellant to sell rectified spirit at the common fixed rate of ₹ 6/- provided it transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contention. What we have before us is a simple case of recovery of dues, viz. at rates which had been declared well before the permission to supply rectified spirit was accorded to the Appellant. The position may have been different had the Respondent State failed to pass relevant orders or had it failed to inform the Appellant that, since it did not incur transportation costs, this amount, which had been predetermined at ₹ 1/- per litre, would be payable to the State. 5. There were three Appellants before the Division Bench of the High Court of Karnataka but only one of them, i.e. the Appellant before us, has decided to further challenge the Demand of ₹ 13,32,000/- being accorded at ₹ 1/- per litre sold by the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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