IN THE HIGH COURT OF KERALA AT ERNAKULAM
TRC No. 402 of 1998()
1. M/S.SOUTH TRAVANCORE DISTILLERIES & A.
... Petitioner
Vs
1. STATE OF KERALA
... Respondent
For Petitioner :SRI.C.N.RAMACHANDRAN NAIR
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.T.SANKARAN
Dated :18/06/2007
O R D E R
H.L.Dattu,C.J. & K.T.Sankaran,J.
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T.R.C.Nos.402/1998, 211/1999, 212/1999, 213/1999,
214/1999, 215/1999, 216/1999, 217/1999,
218/1999, 219/1999, 220/1999 and 221/1999
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Dated, this the 18th day of June, 2007
ORDER
H.L.Dattu,C.J.
In all these Tax Revision Cases the assessee is the same.
Therefore, they are clubbed, heard and disposed of by this common order.
2. Provisional assessments for the years 1990-91 to 1993-94
and for the months of April to November, 1997 have been completed by the
assessing authority. Aggrieved by those provisional assessment orders, the
assessee had carried the matter up to the Sales Tax Appellate Tribunal. Even
before the Tribunal the assessee did not succeed. Therefore, the assessee
has filed these Tax Revision Cases before us.
3. The assessee has raised the following questions of law for
our consideration and decision. They are as under:
“(i). Whether on the facts and circumstances of the case and
in view of the scope of ‘turnover tax’ as explained in the
Minister’s Budget Speech of 1987, was the Tribunal justified in
holding that excise duty collected and remitted by Beverages
Corporation under the amended provisions of the Abkari Laws
constitute turnover of the petitioner for the purpose of levy of
turnover tax under Section 5(2A)/5(2C) of the KGST Act, 1963?
(ii) Should not the Tribunal have held that turnover tax under
Section 5(2A)/5(2C) on the actual turnover of the dealer i.e the
amount reaching the till of the dealer and not on any fictional or
deemed price which is not received by the petitioner?
(iii) Whether on the facts and circumstances of the case and
particularly in view of Section 5(2A)/2(C) read with item 53 of the
First Schedule to the KGST Act should not the Tribunal have
held that turnover tax on excise duty is payable only by
TRC.No.402/1998 &
connected cases. – 2 –
Beverages Corporation and by subsequent sellers of Indian
Made Foreign Liquor and not by the manufacturers namely the
petitioner who are not liable to pay excise duty?”
4 .The Supreme Court in the decision reported in State of
Kerala v. Maharashtra Distilleries Ltd. [(2005) 141 STC 358] while considering
a similar issue raised in these Tax Revision Cases at paragraph 82 has stated
as under:
“In view of our finding that the duty imposed is not a duty
of excise but represents the privilege price charged by the
Government from KSBC as a consideration for parting with its
exclusive privilege to sell liquor by wholesale in the State of
Kerala, the respondents are not liable to include that duty paid by
the Beverages Corporation in their turnover. However, the
position changed radically with effect from January 5, 1999. The
High Court noticed this fact in paragraph 67 of the judgment,
namely – that with effect from January 5, 1999 in view of the
amendment to Foreign Liquor Rules, the KSBC could not
purchase IMFL from the manufacturers/distillers without payment
of duty. In view of the amendment, the KSBC had to pay duty
before it could lift the stock of IMFL from the manufacturers’
warehouse to its own licensed premises. Thus the KSBC paid to
the manufacturers the duty payable in respect of IMFL and
consequently the amount of duty paid formed part of the
consideration for which the property in goods passed to the
KSBC. We have earlier noticed the amendments made to the
Foreign Liquor Rules which leave no room for doubt that with
effect from January 5, 1999 the manufacturers/distillers
(respondents herein) were bound to include in their turnover the
amount paid to them by the KSBC by way of duty levied under
the Abkari Act together with the price of the liquor purchased
from them. The learned Judges noticed this fact but granted
relief in broad terms as prayed for by the respondents. In our
view the High Court fell into an error in doing so. It ought to have
held that in any event with effect from January 5, 1999 the
respondents-manufacturers/distillers were bound to include in
their turnover the amount of duty paid to them by the KSBC since
that formed part of the consideration for sale of IMFL to the said
Corporation. We, therefore, hold that from January 5, 1999, the
date with effect from which the KSBC started paying duty to the
manufacturers/distillers before lifting the stock of IMFL to its own
licensed premises, the amount of duty paid formed part of the
consideration paid by the Corporation to the manufacturers and
consequently it formed part of the turnover of the
manufacturers”.
TRC.No.402/1998 &
connected cases. – 3 –
5. The law declared by the apex Court would apply to the
assessments made prior to 5.1.1999.
In view of the above, the questions of law raised by the
assessee require to be answered in favour of the assessee and against the
Revenue.
Ordered accordingly.
All pending interlocutory applications are dismissed.
H.L.Dattu
Chief Justice
K.T.Sankaran
Judge
vku/-