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TMI Blog2007 (1) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory premises at No. 13, Green Fields, Bannerghatta Road, Bangalore - 560 029. 2. The present writ petition is regarding the dispute as to whether the petitioner was liable to pay duty in respect of certain quantum of such liquor which had underwent some process and which according to the respondents had become portable and which had been stored in storage tanks but which were destroyed in fire due to an accident that took place in the factory premises as on 10-6-1997 and if so as to whether the petitioner was still liable to pay the excise duty at the rate applicable to the type of liquor that were stored in such storage tanks at the rate prevailing at the relevant point of time though they had not been issued. 3. It is because of this controversy, the petitioner has approached this Court for relief when the respondent-State sought to enforce the demand based on the liability for payment of duty in respect of the quantity that was stored in the storage tanks but which got destroyed in the fire accident that took place in the factory as on 10-6-1997. Some correspondences/communications emanating from the respondents also indicate that the quantum of such liquor which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was liable to pay that amount to the State; that though the total loss to the State in sales tax and excise duty was to the tune of Rs. 63,07,487/-, the liquor having been destroyed before the sale, the liability was only in respect of the manufacture of liquor and therefore the petitioner was being called upon to remit the amount of Rs. 24,53,580/-. 6. Petitioner disputing such liability had preferred an appeal to the Karnataka Appellate Tribunal, Bangalore, purporting to be an appeal in terms of the provisions of Section 61(3) of the Act. Unfortunately for the petitioner, the Appellate Tribunal being of the view that the appeal itself was not tenable, particularly, as no appeal is provided for under Section 61(3) of the Act in respect of the demand/order raised or passed by the Commissioner and the appeal having been dismissed in limine, the present writ petition mainly for getting over the liability in terms of the demand notice at Annexure-J. 7. Writ petition was admitted and respondents were put on notice as early as on 9-4-2002 and the matter had been heard on several occasions and in fact had been disposed of once and was restored to file and has come up for final he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the law in this regard is very well settled; that the writ petition is without any merit and is liable to be dismissed. 10. I have heard Sri. Basavaprabhu S. Patil, learned Counsel for the petitioner and Sri. Keshava Reddy, learned Additional Government Advocate appearing for the respondent-State. 11. Though several grounds are urged in the writ petition, what is essentially contended by Sri. Patil, learned Counsel for the petitioner is that there is no liability on the petitioner for payment of any excise duty even in terms of the provisions of the charging section; that the charge is not complete till the goods manufactured are issued and assuming that it had passed the stage of manufacture having got destroyed before it was issued, the charge is not effectuated and therefore no liability arises for payment in terms of the demand notice and it is liable to be quashed. 12. Learned Counsel for the petitioner in this regard has drawn the attention of the court to the charging section - Section 22 of the Act, the manner of collection - Section 23 of the Act and Rule-2 of the rules providing for rate of duty etc.,. 13. Sections 22 and 23 of the Karnataka Excise Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in Column 3 thereof when such excisable articles are - [a] xxx [b] issued from any Distillery, Warehouse or other place of storage established or licensed in the State under any of the provisions of the Karnataka Excise Act, 1965; Provided that no such duty shall be imposed on the excisable articles - (i) Which have been imported into India and liable for such import duty under the Indian Tariff Act, 1934 [Central Act 32 of 1934] or the Customs Act, 1962 [Central Act 52 of 1962]. Or (ii) Which have been previously imported, transported or manufactured on payment of [excise duty or litre fee or both] at rates not less than those specified in the schedules A and B. 15. Submission is that the charging provision should be strictly construed and should be given effect to only in the manner indicated therein and in no other manner and in terms of the charging section, the rate is to be provided by the State by prescribing the same and that it has been so prescribed in terms of the rules and Rule-2 in turn effectuates the charge only when the manufactured liquor is issued from any distillery or warehouse or other place of storage established or licenced in the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Counsel for the petitioner that the reference and reliance placed by the respondents to provisions of Rule-18 of the Karnataka Excise [Distillery and Warehouse] Rules, 1967 is of no significance particularly for making good the loss of duty suffered by the State on the premise that the liquor destroyed is the property of the State as the rules are not applicable to the present situation; that in the first instance, the liquor destroyed was not the property of the State and the law for payment of duty cannot be one by way of loss of revenue to the State but a demand raised which can be enforced if the liability had arisen and not otherwise; that assuming that it would have been loss to the State as in the event of liquor being not destroyed before being issued, the State would have collected such duty from the petitioner, that the demand in terms of Annexure-J cannot be enforced on that premise unless the liability had crystallised and the amount of duty had become payable. 20. Per Contra, Sri Keshava Reddy, learned Additional Government Advocate appearing for the respondents has very strongly urged that the demand in terms of Annexures-J L is one which is sustainable; that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being no dispute or there cannot be any dispute about the manufacture and the rate of duty, the demand is only to be sustained. 23. It is also submitted in the alternative that in the matter of interpretation of the taxing statute, particularly, having regard to the object of the rule being one of raising revenue to the State, any interpretation should be to further the object of raising revenue and sustaining the revenue and cannot be one for relieving an assessee from the liability towards payment of tax or duty. 24. Learned Additional Government Advocate in this regard places reliance on the following decisions, namely, [a] R.C. Jall Parsi v. Union of India and Anr. reported in AIR1962SC1281 [b] RE, Sea Customs Act [1878], Section 20(2) reported in AIR 1963 SC 1760 [c] The Commissioner of Wealth Tax, Bihar and Orissa, Patna v. Kripashankar Dayashankar Worah' reported in [1971]81ITR763(SC) . 25. It is also contended that the language of Rule-2 of the rules cannot be understood in the manner to either destroy the effect of the charging section or in any manner to reduce the rigor of the charging section; that it is only for furthering the object of the charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of Sections 22 and 23 of the Act. While Section 22 is the charging Section, Section 23 indicates even as per the heading 'ways of levying such duties', the Rule, which is noted above, again speaks of levy of duty on the excisable article specified in column (2) of the Schedule-A and B appended to the Rules, that the rates being specified in column (3) of the schedule and is further linked to the event of such excisable articles being issued from any distillery, warehouse and other places of storage in terms of the language of Clause-(b) of Sub-rule (1) o Rule 2 of the Rules. Whether it is for the purpose of Section 22 or 23, as there was no other rule indicating that to be separately for the purpose of each Section, this rule should be taken to be as one providing the manner of levy for the purposes of both Sections 22 and 23 of the Act. 28. Section 22 by itself does not complete the charge, as the rate of duty is not prescribed in the Section, but is as prescribed by the state government. It is for such prescription, the rule is framed and the rule also in turn links the levy to Clause-(b) of Sub-rule (1) of Rule 2 of the Rules i.e. the article manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of Section 22 read with Rule 2 to the extent that any action taken should be fully in compliance with the statutory provisions i.e. even Rule (2), the decision can be said to be valid and not beyond. The reliance placed by the learned Counsel for the petitioner on the decision of the Supreme Court in the case of Modi Distillery and Ors. [supra] while may not advance the case of the petitioner for the present purpose, as there is no dispute on the aspect of the competency of the legislature or point of levy if whether can be one which can have a bearing on the levy being on the manufacture of article at the stage when it has become potable or identified for other industrial use. 30. Even the decision of the Supreme Court in the case of Deccan Sugar Abkari Co., Ltd. [supra] may not be of much assistance to the petitioner in the present case, as the question involved in the present case is not one regarding the competence of the legislature to levy excise duty, as it is not in dispute that the article which is sought to be subjected to duty is potable alcohol. 31. While there is force in the submission made by the learned Counsel for the petitioner that the levy in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision, if the charge should have been complete on the manufacture of potable liquor, it could have been certainly relied upon even assuming that the recovery point had been postponed or deferred to a later stage and the demand in terms of Annexure-J could have been sustained. Unfortunately, I find that the charging section remained incomplete without the aid of Rule 2 and the schedule appended to the Rules. Section 22 remained incomplete without the rate being prescribed and the prescription of the rate again being linked to Rule (2) of the Rules i.e. the schedule itself being in the context of Rule (2), there is no escape from the language of Rule (2). Though the learned AGA would vehemently urge that the understanding of the Rule should not be to detract from the effect of the charging section in creating the liability, such argument could have been accepted if the charging section could have been effectuated independent of the Rules. Unfortunately, it is not so possibly for the purpose of Section 22 and there is no escape from the link into the provisions of Rule 2 for completing the charge. It is here that the rule of interpretation may come in if there was such a scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot effectuated. It so happened in the present case i.e. even before this situation as even before the issue of manufactured liquor, it destroyed. If such is the language of the Section, the only inference that can be is such is the intendment and the legislature did not intend to effectuate the charging section even before. 36. It is for the legislature to choose its language and give effect to the same for the purpose of an enactment. It is not for the courts to rewrite or exclude any part of the statute only for the purpose of achieving the object of the Act. In fact the only situation where by a process of interpretation, a provision can be excluded, is if by such exclusion, the statute can be saved from the vice of any unconstitutionality. Such is not the situation in the present case and therefore the submission that the Clause-(b) of Sub-rule (1)o Rule 2 of the Rules should be excluded by a process of interpretation cannot be accepted. 37. Though the learned AGA had vehemently urged that Rule (2) of the Rules is only a procedural provision and for the purpose of the provision of Section 23 of the Act, as noticed earlier, there is no other rule which supplement Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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