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TMI Blog1987 (3) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is in question in the appeals and petitions filed by the Government. With a view to cure the defects pointed out by the Full Bench of Five Judges and to validate the demands raised by the Government, the Andhra Pradesh Legislature enacted the Andhra Pradesh Excise Amendment Act X of 1984. Demands raised pursuant to the Amending Act were upheld by the High Court by a later judgment. The aggrieved Excise Contractors have filed appeals and they are also before us. In some cases the contractors who had originally succeeded because of the decision of the Five Judge Full Bench were again called upon to make good the deficit after the Amending Act was passed. They questioned the fresh demands but failed in the High Court. Their petitions for Special Leave to Appeal are also before us. Entry 51 of List II of the seventh schedule to the Constitution empowers the State to levy duties of Excise on alcoholic liquors for human consumption (not including medicinal and toilet preparations containing alcohol) manufactured or produced in the State' and counter availing duties on such alcoholic liquors manufactured or produced elsewhere in India. An Excise duty levied by the State on alco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise duty or Countervailing duty on excisable articles: (1) The Govt. may, by notification levy an excise duty on any excisable article manufactured or produced in the State at such rate, not exceeding the rates mentioned in the Schedule, as may be specified in the notification. (2) The Govt. may by notification, levy a countervailing duty on any excisable article manufactured or produced elsewhere in India and imported into the State at such rate as may be specified in the notification which may not exceed the rates on excise duty on similar excisable articles levied under sub-section(1). (3) Different rates may be specified in sub-section(1) and (2) for different kinds of excisable articles and different modes of levying duties under s.22. Section 22:-Modes of levying duties: The excise duty and the countervailing duty under s.21 shall be levied in one or more of the following modes: (a) rateably, on the quantity of any excisable article produced or manufactured in or issued from a distillery, brewery or manufactory or warehouse or imported into the State; (b) in the case of spirits or other liquors produced in any distillery, brewery or manufactory in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material times and accordingly,- (a) all acts, proceedings or things done or taken by the State Government or by any officer of the State Government or by any other authority in connection with the collection of such price shall for all purposes be deemed to be and to have always been done or taken in accordance with law; (b) no suit or other proceeding shall be maintained or continued in any court or before any authority for the refund of, and no enforcement shall be made by any court or other authority of any decree or order directing the refund of, any such price which has been collected and which would have been validly collected as if the provisions of the principal Act as amended by this Act had been in force at all material times. The first entry in the Schedule to the Act is as follows: No. Description of excisable articles Mode of levying duty Maximum rate of duty 1 Arrack On the quantity issued from the distillery or warehouse. Rupees eight per litre of the strength of proof spirit. We me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been collected and which would have been validly collected as if the provisions of the Principal Act as amended by the Act had been in force at all material times. The Andhra Pradesh(Arrack, Retail Vend Special Conditions of Licences) Rules, 1969 were made by the Government of Andhra Pradesh in exercise of the powers conferred by various provisions of the Andhra Pradesh Excise Act. Rule 7 obliges the licensee to buy arrack from a recognised distillery, warehouse or depot as may be allotted by the department at the issue price as notified by the Commissioner from time to time. Rule 11 provides for remittences of duty etc. into the Government treasury. Rule 15 deals with minimum guaranteed quantity of liquor. It is necessary to extract the first two clauses of rule 15 and they are as follows:- 15. Minimum guaranteed quantity of arrack-(1) No licensee shall purchase arrack less than the specified minimum guaranteed quantity in any month. If in any month, quantity less than the minimum guaranteed quantity fixed for that month is drawn, at the end of that month issue price to the extent of deficit purchase shall be deducted from the advance money paid by the licensee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auction immediately after the acceptance of tender or bid as the case may be. The earnest money and one month's rental are to be in addition to the deposit of rental prescribed by Rule 18. Rule 18(1) provides for the deposit by auction purchaser within fifteen days from the date of auction, two months' rental in cash or in fixed deposit certificates. Rule 21 provides for execution of counterpart agreement by the licensee in form 42. This is required to be done before taking out a licence in respect of lease granted to him for the sale of liquor. Rule 22 provides that the lease shall not take effect until the auction purchaser obtains a licence. Rule 24 prescribes that every auction purchaser shall be bound by all the provisions of the Excise Laws which are in force or which may come into force and of the rules or orders made from time to time by the Government or Commissioner or by the competent authority. The prescribed form for the counterpart agreement provides among other thing for an undertaking that the licensee shah abide by all the provisions of the Andhra Pradesh Excise Act and the Rules and Orders thereunder existing and also those that would be issued from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty was admittedly a part of issue price and that the legislature, while amending the Excise Act in 1984, had also recognised the distinctive duty element in issue price. He also invited our attention to Narasimha Rao v. Superintendent of Excise (supra). It is true that it is not disputed that the element of excise duty has entered the issue price but that does not mean that it continues to retain its character as Excise duty. In V. Narasimha Rao v. Superintendent of Excise (supra), the High Court of Andhra Pradesh, after refering to Rule 11 of the retail vend Rules, observed that it could be safely taken that the three items, namely, duty, cost and sales tax constituted the issue price. It is one thing to say that several elements enter into the determination of issue price but it is altogether a different thing to say that these erstwhile constituent elements retain their character and individually as such even after determination of issue price. In the statement of objects and reasons of the amending Act there is reference to 'issue price' together with excise duty' and 'issue price including excise duty'. In s.4 of the amending Act there is a reference to &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration for the grant of any lease under s. 17 was to be the excise duty payable in respect of that excisable article. The marginal note of s.23 is Excise duty in respect of lease . Rental we have seen has been defined in the Andhra Pradesh (Lease of fight to sell liquor in retail) Rules, 1969, as meaning the rent payable in respect of a shop or group of shops in consideration of the grant of lease for the sale of liquor . Rule 3 prescribes that every lease of right to sell liquor in retail shall be granted by auction. Rule 7 of the Andhra Pradesh (Arrack Retail Vend Special Conditions of Licences) Rules prescribes that the licensee shall purchase arrack from the distillery, warehouse or depot allotted by the Government and shall pay issue price as notified by the Commissioner from time to time. Rule 15 provides for the purchase of a specified minimum guaranteed quantity of arrack every month and for the adjustment of the issue price in case of any short-fall in the purchase of the minimum guaranteed quantity of liquor. Thus reading sections 17 and 23 of Andhra Pradesh Excise Act together with the Andhra Pradesh Excise (Lease of Right to sell liquor in retail) Rules, 1969 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority viz. the State Government to levy tax on excisable articles which had not been either imported, exported, transported, manufactured, cultivated or collected under any licence or manufactured in any distillery established or distillery or brewery licenced under the Act. The Court said, Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift. In so doing it was attempting to exercise a power which it did not possess. No tax can be imposed by any by-law or rule or regulation unless the statute itself under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. This was clearly a case where the State purported to levy excise duty on the unlifted quantity of liquor' and this could not be done under the authority of law. The second case on which the learned counsel relied was that of State of Madhya Pradesh v. Firm Gappulal etc., [1976] 2 SCR 1041. In that case there was no dispute that the demand made on the contractors was in respect of duty on liquor which had not been lifted. It was held that the demand could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rule imposing the condition to that effect was invalid. That decision was followed in State of Madhya Pradesh v. Firm Gappulal where also the licensees were required to pay what was described as 'Pratikar' which was nothing but excise duty on undrawn liquor. The same situation obtained in Excise Commissioner v. Ram Kumar because the real nature of the payment which the licensee were required to pay there, was excise duty on undrawn liquor. These decisions cannot held the respondents because the true position, as we stated earlier, is that the amount which the respondents are called upon to pay is not excise duty on undrawn liquor but is the price of a privilege for which they bid at the auction of the vend which they wanted to conduct. The learned counsel for the State of Andhra Pradesh relied on Har Shankar Ors., v. The Dy. Excise Taxation Commr. Ors., [1975] 1 SCC 737; Panna Lal v. State of Rajasthan (supra) and State of Haryana v. Jage Ram (supra). In Har Shankar's case, it was held by a Constitution Bench of the Court (Chandrachud, J. speaking for the Court) that since rights in regard to intoxicants belonged to the State, it was open to the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indeed is the amount in the nature of excise duty, which by reason of the constitutional constraints had to be primarily a duty on the production or manufacture of goods produced or manufactured within the country. The respondents cannot therefore complain that they are being asked to pay 'excise duty' or still head duty on quota of liquor not taken, lifted or purchased by them. The respondents agreed to pay a certain sum order the terms of the auction and the Rules only prescribe a convenient mode whereby their liability was spread over the entire year by splitting it up into fortnightly instalments. The Rules might as well have provided for payment of a lump sum and the very issuance of the licence could have been made to depend on the payment of such sum. If it could not be argued in that event that the lumpsum payment represented excise duty, it cannot be so argued in the present event merely because the quota for which the respondents gave their bid is required to be multiplied by a certain figure per proof litre and further because the respondents were given the facility of paying the amount by instalments while lifting the quota from time to time. What the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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