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TMI Blog2016 (9) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... emedy of appeal – maintainability – Held that: - it is well settled principle of law that if any action is found to be contrary to law or unsustainable, then relegating a party to take recourse to the alternate remedy is not necessary. The case relied upon here is Paradip Port Trust Vs. Sales Tax Officer and other [1998 (3) TMI 585 - SUPREME COURT OF INDIA] – there is no reason to relegate the petitioners to take recourse to the alternate remedy available of filing appeal, once it is found that imposition of tax under the Commercial Tax Act/ VAT Act is unsustainable. Power to reopen reassessment - Re-assessment proceedings in accordance with law? – Held that: - once it is found that the imposition of duty is itself unsustainable it is not necessary to go into various other questions canvassed at the time of hearing including the power to reopen the assessment, the limitation for reopening assessment, non fulfillment of conditions statutory in nature etc – petition allowed – decided in favor of petitioner. - W. P. No. 2366/2016 - - - Dated:- 26-8-2016 - Shri Rajendra Menon, The Acting Chief Justice And Shri Anurag Shrivastava, JJ. Shri R. K. Khanna, learned Senior Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no where in the assessment order is it indicated specifically that the assessment is in view of a judgment rendered by the M.P. Commercial Tax Appellate Board on 31.1.2007 in the case of Vindhyachal Distilleries Ltd. Vs. Commissioner, Commercial Tax, M.P. - (2009) 15 STJ 51 (MP- Bd), even though it seems to be the reason for reopening the assessment. On the basis of the assessment notice so issued, proceedings were held, objections were filed by the petitioner and after the reassessment order was passed vide Annexure P/7 on 30.12.2013, petitioner preferred a revision petition before the Additional Commissioner respondent No.3 and the revision petition having been dismissed, vide order passed on 19.8.2014, this writ petition has been filed under Article 226 and 227 of the Constitution. 3. Shri R. K. Khanna, learned Senior Counsel who appears for the petitioner challenged the orders impugned, mainly on the following grounds :- (a) That the Indian Made Foreign Liquor exported from Madhya Pradesh is exempted or not liable from payment of Central Sales Tax in view of Entry 18, Schedule I of the M.P. Commercial Tax Act, wherein exemption is provided to all goods on which duty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act; meaning of the word liquor , spirit as appearing in Section 2(13) and 2(17) of the Excise Act; duty chargeable under the Excise Act as contemplated under Section 25, Section 28 and Notifications issued by the Government on 28.3.2008 by virtue of sub section (1) of Section 28 of the M.P. Excise Act in the matter of imposing export fee on foreign liquor; Rule 12 of the M.P. Foreign Liquor Rules, 1996 and Entry 51 of the State list i.e. list 2 to the VIIth Schedule, Constitution of India, to argue that the assessment made and the order impugned are unsustainable. He referred to the words appearing in Entry 18 to Schedule I of the M.P. Commercial Tax Act and Entry 47 to Schedule I of the VAT Act and emphasized that if the intention of the legislature or the Law makers as is evident from these entries are given its true meaning, then goods subjected to tax/duty under the M.P. Excise Act or if tax or duty may be levied on the goods under the M.P. Excise Act, the same is exempted from payment of tax/duty under the Commercial Tax Act or the VAT Act. He submitted that if the judgment in the case of Alembic Distributors Ltd. and Anr. Vs. Assistant Commissioner of Sales Tax - [196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Board Appeal No.A177/CTAB/13 (Central) Dated 1.3.2016. 5. Learned Senior Counsel took us through the judgments in the case of Alembic Distributers Ltd. and Anr. (supra); McDowell Co. (supra); S. K. Pattnaik (supra); R. C. JallParsi (supra) and argued that mere remission/exemption/ refund or adjustment of the duty paid by the assessee, does not mean that duty was not levied or that the goods are not amenable to levy under the M.P. Excise Act. He argued that the words used in the entry in question i.e. is or may be levied would mean that an excisable article liable for payment of duty under the Excise Act, but on which even if no duty is levied, is exempt from payment of tax under the sales tax or commercial tax Act, an excisable article subjected to payment of duty when sold within the State cannot become a non excisable article merely because of its export will not become a non excisable article. Learned Senior Counsel invites our attention to Section 25 of the Excise Act to say that excise duty can be levied by the State Government on all excisable article other than medical and toilet preparation, irrespective of the fact that the goods are imported, exported or transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of Shri R. K. Khanna, learned Senior Counsel cannot be accepted. It is said that there is a difference between IMFL exported in the course of Inter State Trade and Commerce and when sold within the State. Both these IMFL constitute two different class and if for a purpose of imposing duty they are classified differently, this is permissible in law. Learned Counsel took us through the provisions of Section 17 of the Excise Act which deals with license required for sale of intoxicants; Section 26 with regard to levy of duties, Section 28 dealing with Form and conditions of license etc. Section 62 and sub section (2)(d), (j) of M.P. Excise Act with regard to rule making power of the State Government, the M.P. Foreign Liquor Rules, 1966, Rule 8 pertaining to various categories of license granted like, FL9, FL9A, etc. Rule 12 in the matter of export of foreign liquor, Rule 9 with regard to registration of leviable duties on sale within the State, markings on goods exported with the mark for sale within the State of M.P. or outside to say that there exists a marked difference between IMFL, exported outside the State and sold within the State, the procedure for export of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is maintainable in view of availability of an alternate remedy ? (c) Whether the re-assessment proceedings conducted in the matter is in accordance with law ? 9. We are of the considered view that if the first question, whether Indian Made Foreign Liquor exported from the State is exempted from payment of Commercial Act / VAT Act, in view of Entry 18 to Schedule I of M.P. Commercial Tax Act or Entry 47 to Schedule I of VAT Act, is answered in favour of the petitioner, the imposition of duty/ tax itself would be illegal and then the petition will have to be allowed without even adverting to consider the other issues involved or canvassed before us and therefore, we propose to deal with this aspect of the matter at the very outset. 10. To evaluate this questions, we are required to take note of certain statutory provisions as are contained in the M.P. General Sales Tax Act, the M.P. Commercial Tax Act, 1994, the M.P. VAT Act, 2002 and the M.P. Excise Act, 1950. However, before considering the statutory provisions, we may take note of an admitted fact which was canvassed by Shri Khanna, learned Senior Counsel before us, it is said that right from the year 1958 upto 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (Excise Duties) Act, 1955 (No.16 of 1955); and (ii) liquor sold by a dealer other than a dealer who holds C.S.-2/C.S.2B/F.L.1/ F.L.1AAAA license under the Madhya Pradesh Excise Act, 1915. Section 15 of the M.P. Commercial Tax Act, 1994 provides that No tax shall be payable on the sales or purchase of goods specified in the second column of Schedule I, subject to the restriction and exceptions, if any, set out in the corresponding entry in the third column thereof. 12. After coming into force of the VAT Act of 2002, Section 16 of the VAT Act provided for tax free good and this Section contemplates that no tax shall be payable on the sale or purchase of goods specified in Schedule I, subject to conditions and exceptions, if any, set out in the corresponding entry in the third column and the relevant entry in this regard is Item 47 . All the provisions, i.e. Entry 23 Schedule-I of the M.P. General Sales Tax Act, Entry 18 to Schedule-I of the Commercial Tax Act and Entry 47 to Schedule-I of the VAT Act provided that goods on which duty is or may be levied under the M.P. Excise Act of 1955 other than Medicinal and Toilet Preparations are exempted from payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined therein, the State Government under Section 25 of the Excise Act may, if it so directs, levy excise duty on such excisable article and under the proviso to this Section, the State Government is empowered to exempt any excisable article from payment of duty/ tax. License permits and passes granted under the Excise Act are controlled by the provisions of Section 28 and enable the State Government to prescribe such restriction and conditions and such form for the purpose of granting license, permit and passes etc. Various notifications have been issued from time to time fixing the duty for manufacturing, bottling, and various other aspects, these notifications were referred to and it was argued that exercising the powers available under Section 25 i.e. the charging Section read with Section 28 of the Excise Act, excise duty is being charged on foreign liquor and spirit including payment of export fee in cases of export. At this stage, it would be appropriate to take note of Rule 12 of the M.P. Foreign Liquor Rules, 1996 as this rule is very relevant with regard to the issue in question. Rule 12 of the M.P. Foreign Liquor Rules, 1996 reads as under :- 12. Export of Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not actually paid but on which a duty may or can be levied under the M.P. Excise Act, such goods are also exempt from payment of tax or duty. According to him, it is evident from the words used in the statute, that it is not necessary that only such goods are exempted on which excise duty is in fact paid. There may be cases where duties is leviable under a statute but for various reasons the Government may not be levying duty, even such goods are exempted from payment of duty. This was rebutted by Shri Kourav by saying that grant of exemption is of no consequence. If duty is leviable then only the protection under the entry would be available. If the duty is not at all leviable and when there is no liability to tax, no exemption can be claimed and therefore, IMFL exported according to Shri Kourav, it is not a tax free good. 16. It is a cardinal principle of interpretation of statute that a rule or a statutory provision has to be read in a manner to give effect to the legislative intent and if on a bare reading, the intention of the rule maker or its meaning is clear, effect should be given to the provisions by interpreting it in a manner which goes in furtherance to the intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. (Emphasis Supplied) 18. It is therefore, clear from the aforesaid principle, that it is not necessary that excise duty should be actually levied on goods to attract application of the entry. It is sufficient, if there is power under the relevant act to impose such a duty. This principle in our considered view, squarely applies to the present case also. 19. In the case of Karnataka Cement Pipe Factory Industrial Estate (supra) a Bench of the Karnataka High Court has held that an excisable good will not become a non excisable good only because it is granted exemption from payment of duty, the High Court was interpreting certain provisions of the Central Excise Act and the rules framed thereunder wherein the words used were as being subject to a duty of excise . In the case of S. K. Pattnaik (supra), the Hon'ble Supreme Court considered certain questions while interpreting the provisions of Bihar and Orissa Excise Act. In this case the appellant imported into the State of Orissa Indian Made Foreign Liquor and stored it in the licensed bonded warehouse from where the liquor was to be released for sale. It seems that when the liquor was so stored in the wareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable under the provisions of Section 15 or 16 of the Commercial Tax Act or the VAT Act is not applicable. In this regard, we may also take note of certain observations made by the Hon'ble Supreme Court in the case of McDowell Co. (supra). In Para 25, 27, 28 and 29 various judgments of the Supreme Court with regard to leviability of excise have been considered and the matter is so dealt with :- 25. The Federal Court In The Province of Madras v. Messrs. Boddu Paidanna Sons,(1) held: There is in theory nothing to prevent the Central Legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards. whether it be sold, consumed, destroyed, or given away.A taking authority will not ordinarily Impose such a duty, because it is much more convenient administratively to collect the duty tax in the case of most of the Indian Excise Acts) when the commodity leaves the factory for the first time, and also because the duty is intended to be an indirect duty which the manufacture or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example, been destroyed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the duty but only relates to the machinery for collection based on administrative consideration and the incident for payment of excise duty is directly relateable to manufacture but its collection can be postponed or deferred to a later stage and even exemption granted from collection. The Allahabad High Court in the case of Mohan Meakin Breweries Ltd. Vs. State of Uttar Pradesh Ors. - (1977)6 CTR All 181 considered similar issues and after taking note of the law laid down by the Supreme Court in the case of R. C. Jall Parsi Vs. Union of India, so also various provisions of the Uttar Pradesh Excise Act of 1910 found that under Section 28 of the Uttar Pradesh Excise Act duty may be imposed on any excisable article exported in accordance with the provisions of the Act or manufactured, found that duty can be levied on manufacture of the product, however, after taking note of the similar rule applicable in the State of U.P. i.e. to Rule 12 as applicable in the State of M.P., held against the Revenue by holding that merely because the State Government did not levy the duty, the goods will not become non excisable or non duty leviable. 21. In the case of Lilasons Breweries Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is therefore, clear from a complete reading of the statutory provisions and the Rules made under the Excise Act that Foreign Liquor manufactured in Madhya Pradesh is a excisable good, duty is leviable on such good under the Excise Act, when a IMFL manufactured in Madhya Pradesh is sold in Madhya Pradesh duty is charged but when it is exported out of Madhya Pradesh, the manufacturer and the exporter has to either deposit the duty in full or furnish certain security or guarantee equal to the amount of duty payable, then export the goods, pay duty in the exported State and then claim refund as contemplated under the provisions of Rule 12 and 13 of the M.P. Foreign Liquor Rules and if the verification report as contemplated under Rule 13 is not produced within a reasonable time, the amount paid gets forfeited. The aforesaid factual aspect, if analyzed in the backdrop of various legal provisions as are detailed herein above, clearly shows that IMFL manufactured in Madhya Pradesh and sold outside the State, is an excisable artcle on which duty may or can be levied by the State but instead of levying duty the State has granted certain benefits or exemption on fulfillment of certain condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 has been framed, so that the manufacture is required to pay excise duty only once, i.e. either in the State of M.P. or in the State where it is exported. The Rule as formulated goes to show that the intention of the rule makers were that foreign liquor manufactured in State of M.P. and exported to any other State even though a excisable good is exempted from payment of excise duty in M.P. subject however, to the condition that they pay excise duty in the State to which the good are exported, that being the intention of the rule maker, it has to be held that it becomes a tax free good and as the words used in the entries are goods on which duty may be levied under the Excise Act , this would and could only mean that duty could be levied on the goods in question but the State Government thought it appropriate not to levy duty and once it is a good on which duty could be levied the exemption has to be granted. 25. Before parting, we may also consider the argument advanced by Shri Kourav in the matter of existence of alternate remedy. The question of existence of alternate remedy has already been considered by the Supreme Court in the case of Paradip Port Trust (supra); Balco Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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