{"id":253756,"date":"2005-05-06T00:00:00","date_gmt":"2005-05-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005"},"modified":"2018-04-12T09:15:01","modified_gmt":"2018-04-12T03:45:01","slug":"state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","title":{"rendered":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005"},"content":{"rendered":"
Supreme Court of India<\/div>\n
State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005<\/div>\n
Author: B Singh<\/div>\n
Bench: Hegde, N. Santosh (J), Variava, S.N. (J), Singh, Bisheshwar P. (J), Sema, Hotoi Khetoho (J), Sinha, S.B. (J)<\/div>\n
           CASE NO.:\nAppeal (civil)  2249-2257 of 2000\n\nPETITIONER:\nState of Kerala and Ors.\n\nRESPONDENT:\nMaharashtra Distilleries Ltd. and Ors\n\nDATE OF JUDGMENT: 06\/05\/2005\n\nBENCH:\nN. Santosh Hegde & S.N. Variava & B.P. Singh & H.K. Sema & S.B. Sinha\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
B.P. Singh, J.\n<\/p>\n
Leave granted in Special Leave Petition (C) No. 1032 of 2003.\n<\/p>\n
In these two batches of appeals, a common question arises, inter alia for
\nconsideration by this Court, namely – Whether the incidence of excise duty,
\nhaving regard to the provision of the Kerala Abkari Act and the relevant
\nRules, falls upon the manufacturer\/distiller such as the respondents herein
\nand therefore includable in their turnover for the purpose of levy of
\nturnover tax, or whether the incidence of excise duty falls on the Kerala
\nState Beverages (Manufacturing and Marketing) Corporation Limited, a
\nGovernment company which alone is liable to pay the excise duty on Indian
\nMade Foreign Liquor, and consequently the said component is not includable
\nin the turnover of the respondents\/distillers?\n<\/p>\n
These appeals came up for hearing before a 3 Judge Bench of this Court.
\nAfter hearing the parties for sometime, by order dated October 17, 2001, it
\nwas observed that the point involved was an important one and it would be
\nappropriate if the cases are heard by a Larger bench. The referring Bench
\nobserved thus :-\n<\/p>\n
\t“The question which arises for consideration in these cases is,
\n\twhether the excise duty levied under the provisions of the Kerala
\n\tAbkari Act on Indian Made Foreign Liquor which is manufactured
\n\tforms part of the turn over of the manufacturer for the purpose of
\n\tlevy of turn over tax under the relevant provisions of the Kerala
\n\tSales Tax Act?\n<\/p>\n
\tThe liquor which is manufactured by the respondents has to be sold
\n\tto the Beverages Corporation which can be regarded as sole selling
\n\tagent or the canalizing agency. The liquor manufactured is removed
\n\tto the bonded warehouse of the Beverages Corporation. At the time
\n\twhen the liquor is removed from that bonded warehouse, the excise
\n\tduty is paid by the Beverages Corporation.\n<\/p>\n
\tIn the notices which were sent to the respondents, it was stated
\n\tthat this excise duty which was paid by the Beverages Corporation
\n\treally forms part of the turn over of the respondents in the sale
\n\tof liquor by them to the Beverages Corporation and, therefore, turn
\n\tover tax was payable on this element as well. The contention of the
\n\tState was that this excise duty was really an obligation of the
\n\tmanufacturer and merely because the obligation was discharged by
\n\tthe Beverages Corporation would not mean that the same would not
\n\tform part of the turn over of the manufacturer.\n<\/p>\n
\tThe High Court, on a challenge being made by the respondents,
\n\tdecided in their favour and came to the conclusion that this excise
\n\tduty which was in fact paid by the Beverages Corporation would not
\n\tbe regarded as being part of their turn over for the purpose of
\n\tlevy of turn over tax.\n<\/p>\n
\tMr. T.L.V. Iyer, learned senior counsel has drawn our attention to
\n\ta decision of this Court in the case of Mohan Breweries &
\n\tDistilleries Ltd. v. Commercial Tax Officer, Madras and Ors<\/a>.,
\n\t[1997] 7 SCC 542. In that case this Court was concerned with the
\n\tlevy of turn over tax in respect of liquor which was produced and
\n\tsold to the State Marketing Corporation. It is the contention of
\n\tMr. Iyer that the provisions of the law in Tamil Nadu relating to
\n\tthe levy of this tax is more or less parimateria with the
\n\tcorresponding provisions of law in Kerala. In particular, reliance
\n\twas placed on paragraph 7 of the aforesaid decision which reads as
\n\tfollows:\n<\/p>\n
\t`7. Excise duty is levied upon goods manufactured or produced
\n\t(Entry 84 of List I and Entry 51 of List II of the Seventh Schedule
\n\tto the Constitution). Its incidence falls, therefore, on the
\n\tmanufacturer or producer of the goods. The collection of excise
\n\tduty may be deferred to such later stage as is, administratively or
\n\totherwise, most convenient’.\n<\/p>\n
\tBasing itself on the aforesaid observations, this Court concluded
\n\tthat even if Rule 22 of the Tamil Nadu Rules provides for
\n\trealization of the excise duty from the Corporation that was only a
\n\tconvenient method of collection, the primary obligation to pay
\n\texcise duty being only of the manufacturer. Mr. Iyer, therefore,
\n\tcontended that following the said decision the appeals should be
\n\tallowed.\n<\/p>\n
\tMr. F.S. Nariman, learned senior counsel for the respondents has
\n\tdrawn our attention to three Constitution Bench decisions of this
\n\tCourt. In the case of A.B. Abdulkadir and Ors. v. The State of
\n\tKerala and Anr<\/a>., [1967] Supp. 2 SCR 741, where at page 751 it was
\n\tobserved as follows :\n<\/p>\n
\t`It may also be accepted that generally speaking the tax is on the
\n\tmanufacturer or the producer, though it cannot be denied that laws
\n\tare to be found which impose a duty of excise at stages subsequent
\n\tto the manufacture or production.’<\/p>\n
(emphasis added)<\/p>\n
\tIn R.C. Jall v. Union of India<\/a>, [1962] Supp. 3 SCR 436, at page
\n\t451, it was contended that the excise duty cannot be legally levied
\n\ton the consignee who had nothing to do with the manufacture or
\n\tproduction of coal. This argument was repelled and at page 451, it
\n\twas observed as follows :\n<\/p>\n
\t`Excise duty is primarily a duty on the production or manufacture
\n\tof goods produced or manufactured within the country. It is an
\n\tindirect duty which the manufacturer or producer passes on to the
\n\tultimate consumer, that is, its ultimate incidence will always be
\n\ton the consumer. Therefore, subject always to the legislative
\n\tcompetence of the taxing authority, the said tax can be levied at a
\n\tconvenient stage so long as the character of the impost, that is,
\n\tit is a duty on the manufacture or production, is not lost. The
\n\tmethod of collection does not affect the essence of the duty but
\n\tonly relates to the machinery of collection for administrative
\n\tconvenience.’<\/p>\n
\tIn M\/s. Guruswamy & Co. Etc. v. State of Mysore and Ors., [1967] 1
\n\tSCR 548, at page 562, another Constitution Bench held as follows :\n<\/p>\n
\t`These cases establish that in order to be an excise duty (a) the
\n\tlevy must be upon `goods’ and (b) the taxable event must be the
\n\tmanufacture or production of goods. Further the levy need not be
\n\timposed at the stage of production or manufacture but may be
\n\timposed later.”\n<\/p>\n
(Emphasis added)<\/p>\n
\tRelying upon the aforesaid observations of this Court, in cases
\n\treferred to hereinabove, Mr. Nariman contends that the observations
\n\tof this Court in Mohan Breweries’ case (supra) seem to run counter
\n\tto the earlier decisions of the Constitution Benches. He submits
\n\tthat the Constitution Benches have laid down in no uncertain terms
\n\tthat an excise duty need not necessarily be regarded as being a
\n\tlevy only on the manufacturer and it is possible for a law to
\n\tprovide that excise duty may be levied not on the manufacturer but
\n\tat a later point of time. He, therefore, contends that the
\n\tobservation to the contrary in Mohan Breweries ` case does not
\n\treflect the position in law correctly and he submits that in the
\n\tpresent cases, on a correct interpretation of Sections 17 and 18 of
\n\tthe Abkari Act of Kerala, it must be held that the levy of excise
\n\tduty, is not on the manufacturer but is at the stage when the
\n\tliquor is removed by the Beverages Corporation from the warehouse
\n\tand therefore the same cannot form part of the respondents’ turn
\n\tover.\n<\/p>\n
\tIn our opinion, the point involved is an important one and it would
\n\tbe appropriate if this and the connected cases are heard by a
\n\tlarger Bench.\n<\/p>\n
\tWe direct, the papers be laid before Hon’ble the Chief Justice for
\n\tappropriate orders.”\n<\/p>\n
That is how these appeals have been placed by the Hon’ble Chief Justice
\nbefore this Bench for disposal.\n<\/p>\n
The first batch of appeals arise out of writ petitions filed in the years
\n1998 – 1999 which were disposed of by a common judgment and order of a
\nDivision Bench of the High Court dated 27th November, 1999 in OP Nos.
\n23008-23903\/98, 818, 2255, 2264, 12893, 3283; 7437 and 19686\/99 whereby the
\nHigh Court allowed the writ petitions filed by the respondents\/distillers
\nholding inter alia that under the Scheme of the Kerala Abkari Act and the
\nRules, the incidence of excise duty on the manufacture of Indian Made
\nForeign Liquor was required by law to be borne by the Kerala Beverages
\nCorporation to whom the liquor was sold at a price which did not include
\nthe element of excise duty. Consequently the State of Kerala and its
\nofficers were not entitled to levy turnover tax on the
\nrespondents\/distillers by including in their turnover the excise duty
\npayable on the liquor manufactured and sold by the respondents\/distillers
\nto the Kerala State Beverages Corporation. The High Court also declared
\nthat Section 2(xxvii) of the Kerala General Sales Tax Act authorizing the
\nlevy of turnover tax on the amounts of excise duty paid by the Kerala State
\nBeverages Corporation on the distillers was unconstitutional and void.\n<\/p>\n
After the judgment of the High Court in the first batch of writ petitions,
\nand while the appeals against the said judgment and order were pending
\nbefore this Court, on 1.4.2001 the State of Kerala amended Section 5(2C) of
\nthe Kerala General Sales Tax Act, by the Finance Act<\/a> of 2001, by adding an
\nexplanation which was brought into effect retrospectively from July 1, 1987
\nwhich reads as follows :-\n<\/p>\n
“Explanation : For the removal of doubt it is hereby clarified that any
\ndistillery in the State which sells liquor manufactured by it within the
\nState to the Kerala State Beverages Corporation shall be liable to pay
\nturnover tax on the turnover of sale of liquor by it to the said
\nCorporation and the turnover for the purpose of this sub-section shall
\ninclude any duty of excise liable on such liquor at the hands of such
\nmanufacturer whether such duty is paid by the manufacturer or by the said
\nCorporation.”\n<\/p>\n
Since the Sales Tax authorities issued notices to the
\nrespondents\/distillers proposing to provisionally assess the turnover tax
\npayable by the manufacturers from April 2001 at various rates, the
\nrespondents\/distillers filed several writ petitions challenging the
\nvalidity of Section 5(2C) of the Kerala General Sales Tax Act read with
\nSection 3A of the Kerala Finance Act, 2001 as being unconstitutional, both
\nin its retrospective and prospective operation. They also challenged the
\nconsequent actions initiated against them by the Sales Tax authorities. A
\nDivision Bench of the Kerala High Court allowed these writ petitions by a
\ncommon judgment and order of August 9, 2002 in OP Nos. 3736, 5139, 1705,
\n4464, 6075, 6113, 6116, 6122, 6239, 6336, 7639, 7666 of 2002 and 31153 of
\n2001. The Division Bench disposing of the aforesaid writ petitions did not
\nagree in principle with the law as laid down in the earlier judgment
\ndisposing of the first batch of writ petitions and was of the view that the
\nincidence of excise duty fell squarely on the respondents\/distillers and as
\nsuch was includable in their total turnover for purpose of computation of
\nturnover tax under the Kerala General Sales Tax Act. However, the Division
\nBench held itself bound by the earlier decision rendered by the High Court
\nand, therefore, following the earlier decision held that by adding an
\nexplanation to Section 5(2C)<\/a> by the Kerala General Sales Tax Act the
\nconstitutional lacuna pointed out in the earlier judgment had not been
\nremoved by appropriate amendment to the Kerala Abkari Act. By merely adding
\nthe explanation to Section 5(2C) of the Kerala General Sales Tax Act, the
\nexcise duty element paid by the Corporation could not be added to the
\nturnover of the respondents\/distillers since it had been held in the
\nearlier judgment that excise duty was leviable only on the purchaser,
\nnamely, the Kerala State Beverages Corporation.\n<\/p>\n
In this view of the matter the High Court allowed the writ petitions and
\ndeclared that the explanation appended to Section 5(2C) of the Kerala
\nGeneral Sales Tax Act was unconstitutional and invalid both in its
\nprospective operation from 1st April, 2001 and in its retrospective effect
\nfrom 1st July, 1987.\n<\/p>\n
OP No. 14771\/2002 out of which C.A. No. 7954 of 2003 arises was also
\ndisposed of in the same terms by the High Court by its order dated August
\n12, 2002.\n<\/p>\n
To appreciate the rival contentions of the parties it is necessary to refer
\nto the relevant provisions of the Kerala Abkari Act and the relevant Rules
\nas also the provisions of the Kerala General Sales Tax Act, 1963. The
\nprovisions have to be viewed in the light of the policy decision of the
\nGovernment of Kerala to create a State monopoly in manufacture, wholesale
\npurchase and sale of Indian Made Foreign Liquor (IMFL) with effect from
\n1.4.1984. A Government company was incorporated, namely Kerala State
\nBeverages (Manufacturing and Marketing) Corporation Limited (Kerala
\nBeverages Corporation). Necessary amendments to the Abkari Act and the
\nrelevant Rules were made with a view to effectuate this policy. The
\nrespondents\/distillers could not, in view of the monopoly created in favour
\nof the Kerala State Beverages Corporation, sell IMFL manufactured by them
\nto anyone, and had to deliver the same to the Kerala State Beverages
\nCorporation for which purpose they had to submit tenders each year for the
\nvarious brands of IMFL manufactured by them. The Kerala State Beverages
\nCorporation was granted licence in Forms BW1 and FL9 under the Bond Rules.
\nThe IMFL supplied by the respondents\/distillers was stored in bonded
\nwarehouses maintained by the Kerala State Beverages Corporation in
\naccordance with the Bond Rules. The Kerala State Beverages Corporation also
\nexecuted an agreement in Form – A under which it was obliged to observe the
\nprovisions of the Abkari Act and not to remove goods without payment of
\nduty. The price paid by the Kerala State Beverages Corporation to the
\nrespondents\/distillers did not include the element of excise duty which was
\nlater paid by the Kerala State Beverages Corporation when the liquor moved
\nout of its warehouses.\n<\/p>\n
In view of the policy to create a State monopoly, and having regard to the
\nScheme of the Kerala Abkari Act and the relevant Rules, the
\nrespondents\/distillers contended that the Kerala Abkari Act did not impose
\na liability on the respondents\/distillers to pay excise duty since such a
\nliability was imposed only on the Kerala State Beverages Corporation which
\nactually paid excise duty payable on the IMFL. Consequently the element of
\nexcise duty did not form part of the turnover of the respondents\/distillers
\nand was therefore not includable in the total turnover of the
\nrespondents\/distillers for purpose of computation of turnover tax payable
\nby them under the Kerala General Sales Tax Act.\n<\/p>\n
The Kerala Abkari Act was formerly known as Cochin Abkari Act enacted in
\nthe year 1902. It applied to the territories comprised within the State of
\nCochin but with effect from 11th July, 1967, by Act 10 of 1967, the
\nprovisions of the Act were extended to the whole of the State of Kerala.
\nChapter IV of the Act deals with manufacture, possession and sale of
\nliquor. The relevant part of Section 12<\/a> reads as follows :-\n<\/p>\n
“12. (1) Manufacture of liquor or intoxicating drug prohibited except under
\nthe provisions of this Act:- No liquor or intoxicating drug shall be
\nmanufactured.\n<\/p>\n
  …..                         …..\t…\n<\/p>\n
except under the authority and subject to the terms and conditions of a
\nlicence granted by the Commissioner in that behalf, or under the provisions
\nof Section 21<\/a>;\n<\/p>\n
  …..                         …..\t…\n<\/p>\n
Section 14<\/a> deals with establishment and control of distilleries, Beverages,
\nwarehouses etc. and provides as follows :-\n<\/p>\n
“14. Establishment and control of distilleries, breweries, warehouses, etc.
\n:- The Commissioner may, with the previous approval of the Government :-\n<\/p>\n
(a) establish public distilleries, breweries or wineries, or authorize the
\nestablishment of private distilleries, breweries, wineries or other
\nmanufactories in which liquor may be manufactured under a license granted
\nunder this Act;\n<\/p>\n
(b) establish public warehouse or authorize the establishment of private
\nwarehouses wherein liquor may be deposited and kept without payment of duty
\nunder a license granted under this Act;\n<\/p>\n
(c) discontinue any public or private distillery, brewery, winery or other
\nmanufactory or warehouse so established;\n<\/p>\n
(d) prescribe the mode of supervision that may be necessary in a
\ndistillery, brewery, winery or other manufactory or warehouse so
\nestablished, or in any other manufactory where preparation containing
\nliquor or intoxicating drugs are manufactured, to ensure the proper
\ncollection of duties; taxes and other dues payable under this Act or the
\nproper utilization of liquor or intoxicating drugs;\n<\/p>\n
  …..                         …..\t…\n<\/p>\n
Chapter V of the Act deals with duties, taxes and rentals. Sections 17<\/a> and
\n18<\/a>, which are relevant, provide as follows :-\n<\/p>\n
“17. Duty on liquor or intoxicating drugs :- A duty of excise or luxury tax
\nor both shall, if the Government so direct, be levied on all liquor and
\nintoxicating drugs<\/p>\n
(a) \tpermitted to be imported under Section 6<\/a>; or<\/p>\n
(b)\tpermitted to be exported under Section 7<\/a>; or<\/p>\n
(c)\tpermitted under Section 11<\/a> to be transported ; or<\/p>\n
(d)\tmanufactured under any licence granted under Section 12<\/a>; or<\/p>\n
(e)\tmanufactured at any distillery, brewery, winery or other
\nmanufactory established under Section 14<\/a>; or<\/p>\n
(f)\tissued from a distillery, brewery, winery or other manufactory or
\nwarehouse licensed or established under Section 12<\/a> or Section 14<\/a>; or<\/p>\n
(g)\tsold in any part of the State ;\n<\/p>\n
Provided that no duty or gallonage fee or vend fee or other taxes shall be
\nlevied under this Act on rectified spirit including absolute alcohol which
\nis not intended to be used for the manufacture of potable liquor meant for
\nhuman consumption.\n<\/p>\n
Explanation :- For the purpose of this section and Section 18<\/a>, the
\nexpression “duty of excise”, with reference to liquor or intoxicating
\ndrugs, include countervailing duty on such goods manufactured or produced
\nelsewhere in India and brought into the State.”\n<\/p>\n
“18. How duty may be imposed :- (1) Such duty of excise may be levied :\n<\/p>\n
(a) in the case of spirits or beer, either on the quantity produced in or
\npassed out of a distillery, brewery or warehouse licensed or established
\nunder Section 12<\/a> or Section 14<\/a> as the case may be or in accordance with
\nsuch scale of equivalents, calculated on the quantity of materials used or
\nby the degree of attenuation of the wash or wort or on the value of the
\nliquor as the case may be as the Government may prescribe ;\n<\/p>\n
  ....                              ....                              .....\n\n  ....                              ....                              .....\n  Section 18A<\/a> of the Act provides as follows :-\n\n<\/pre>\n
“18A. Grant of exclusive or other privilege of manufacture, etc., on
\npayment of rentals :- (1) it shall be lawful for the Government to grant to
\nany person or persons, on such conditions and for such period as may deem
\nfit, the exclusive or other privilege-\n<\/p>\n
(i)\tof manufacturing or supplying by wholesale; or<\/p>\n
(ii)\tof selling by retail; or<\/p>\n
(iii)\tof manufacturing or supplying by wholesale and selling by retail,
\nany liquor or intoxicating drugs within any local area on his or their
\npayment to the Government of any amount as rental in consideration of the
\ngrant of such privilege. The amount of rental may be settled by auction,
\nnegotiation or by any other method as may be determined by the Government
\nfrom time to time, and may be collected to the exclusion of, or in
\naddition, to the duty or tax leviable under Sections 17<\/a> and 18<\/a>.\n<\/p>\n
(2) No grantee of any privilege under sub-section (1) shall exercise the
\nsame until he has received a licence in that behalf from the Commissioner.\n<\/p>\n
(3) In such cases, if the Government shall by notification so direct, the
\nprovisions of Section 12<\/a> relating to toddy and toddy producing trees shall
\nnot apply.”\n<\/p>\n
We may notice at this stage that Section 17<\/a> has been amended with effect
\nfrom April 1, 2003, to the effect that the words “if the Government so
\ndirects”, and clauses (b), (c), (f) and (g) stand deleted.\n<\/p>\n
In exercise of powers conferred by Section 29 of the Abkari Act the
\nGovernment of Kerala has framed Rules for the establishment and working of
\nDistilleries, Warehouses and Excise Depots for regulating the issue and
\ntransport of spirits known as the Kerala Distillery and Warehouse Rules,
\n1968. Rule 47 which deals with removal of spirits from distilleries and
\nwarehouses provides as follows :-\n<\/p>\n
“47. Removal of spirits from distilleries and warehouses. – Spirits may be
\nissued from distilleries and warehouses.\n<\/p>\n
(1)\tUnder bond<\/p>\n
(a)\tfor export to any other State in India or to any place out of India
\nor to any other licensee subject to such restrictions and to payment of
\nsuch amounts as may be prescribed by the Government from time to time.\n<\/p>\n
(b)\tfor transport to another distillery or warehouse, licensed under
\nthese rules or to the warehouse licensed under the Foreign Liquor Storage
\nin Bond Rules, 1961.\n<\/p>\n
(2) On payment of duty or gallonage fee or vending fee or other taxes, for
\nconsumption within the State to licensees authorized to purchase the same.\n<\/p>\n
(3) Without payment of duty and without bond or on payment of such reduced
\nrates of duty, taxes or fee as may, from time to time, be prescribed by the
\nGovernment (in the case of spirits other than denatured spirits) if sold to
\nofficers of Government or other persons specially exempted from payment of
\nduty or taxes or fees in full or part and empowered to purchase them.\n<\/p>\n
(4) From distilleries, only, free of duty but on payment of gallonage fee
\nor vending fee or taxes as may be prescribed by the Government, after
\ndenaturation under the rules prescribed under the Act.”\n<\/p>\n
Rule 50 deals with removal under Bond and reads as follows :-\n<\/p>\n
“50. Removals under bond. – When spirits are removed from the distillery or
\nwarehouse without payment of duty, the distiller or warehouse keepers shall
\nexecute bond for the payment of duty on them at the prescribed rate in case
\nof his failure to account for them to the satisfaction of the Commissioner.
\nIn the case of spirits exported, bond shall be executed with one or more
\nsureties.”\n<\/p>\n
The relevant part of Rule 52 provides as follows :-\n<\/p>\n
“52. To whom issues for local consumption may be made. – (1) Indian Made
\nForeign Spirit may be issued for consumption within the State only to the
\nFL9 licensees in the State.\n<\/p>\n
  ….                              ….                              …..\n<\/p>\n
Foreign Liquor Rules, 1953 have also been framed under Sections 10, 24 and
\n29 of the Cochin Abkari Act. Rule 13 sub-rule 9 which deals with issue of
\nlicenses in Form FL9 reads as follows :-\n<\/p>\n
“(9) License for possession and supply of foreign liquor in wholesale by
\nthe Bonded Warehouse Licensees to Foreign Liquor-1 Licensees, Foreign
\nLiquor-3 Hotel Restaurant Licensees, Foreign Liquor-4 Club Licensees,
\nForeign Liquor-4A Club Licensees, Foreign Liquor 11 Beer\/Wine parlour
\nlicensees and Foreign Liquor-12 Beer retail sale outlet licensees in the
\nState :- Licenses in Form FL9 shall be issued by the Excise Commissioner,
\nonly to the Kerala State Beverages (Manufacturing and Marketing)
\nCorporation Ltd., possession licenses in Form BW1 under the Foreign Liquor
\n(Storage in Bond) Rules, 1961 on payment of an annual rental of
\nRs.25,00,000 (Rupees twenty five lakhs only)……”\n<\/p>\n
The aforesaid sub-rule was amended by the Government of Kerala by
\nNotification dated 5th January, 1999. By the said amendment in the heading
\nthe words “by the Bonded Warehouse licensees” were omitted. Similarly in
\nthe first sentence the words “possessing licences in Form BW1 under the
\nForeign Liquor (Storage in Bond) Rules, 1961” were omitted. In Form FL9 in
\nthe heading, the words “BY THE BONDED WAREHOUSE” were omitted. This
\namendment was brought about by the Government to avoid duplication of work.
\nUnder the unamended provision the KSBC had to keep the stock of IMFL in the
\nBonded Warehouses and when the stock was taken out for supply to other
\nlicensees excise duty had to be paid by the aforesaid Corporation. This
\nsystem was done away with and by amendment of sub-rule 9 of Rule 13 the
\nKSBC was obliged to pay the excise duty on the IMFL to the manufacturer and
\nthereafter stock duty paid liquor for supply to other licensees.\n<\/p>\n
This fact has been noticed by the High Court in its judgment in the first
\nbatch of writ petitions. The Court after noticing the said amendment
\nobserved that with effect from 5th January, 1999, in view of the amendment
\nof the Foreign Liquor Rules, the KSBC had been purchasing IMFL from the
\nmanufacturers after payment of excise duty. All sales of liquor by the
\nmanufacturers to the Corporation took place after the excise duty had been
\nremitted by the KSBC with the result that the system of Bonded Warehouse in
\nso far as IMFL is concerned was done away with. The KSBC paid excise duty
\non IMFL before it purchased the same from the concerned manufacturer and
\ntherefore the amount of excise duty was paid by the Corporation when it
\npurchased IMFL from the manufacturer. The amount of excise duty paid formed
\npart of consideration for which the property in the goods viz. IMFL was
\npurchased by the Corporation from the manufacturer concerned. It was only
\nafter payment of the excise duty that the goods were consigned to the
\nconcerned FL9 licensed premises owned and controlled by the KSBC.\n<\/p>\n
The Rules next to be noticed are the Foreign Liquor (Storage in Bond)
\nRules, 1961 which have been framed under Sections 14(d) and 29(2) of the
\nCochin Abkari Act. Under the Rules “bonded warehouse” means a warehouse
\nwhere foreign liquor is stored in bond. Sub-section (vi) of Section 2<\/a>
\nexplains the words “to store foreign liquor in bond” as under :-\n<\/p>\n
“with all its grammatical variations means to store, deposit or keep
\nforeign liquor in a bonded warehouse without payment of the excise duty
\npayable thereon.”\n<\/p>\n
Rule 3 provides as follows :-\n<\/p>\n
“3 (a) Any person desiring to store in bond foreign liquor shall make an
\napplication for a licence in that behalf to the Commissioner of Excise
\nthrough the concerned officer-in-charge of the Excise Division. The
\napplication shall contain the following particulars namely :-\n<\/p>\n
\t(1) name and address of the applicant in the case of a firm or
\n\tcompany, the names and addresses of the partners or directors
\n\tshould be furnished ;\n<\/p>\n
\t(2) name and address of the place where foreign liquor is to be
\n\tstored or bond together with the description and the correct plan
\n\tof the building or rooms to be used as a warehouse in triplicate;\n<\/p>\n
\t(3) the maximum quantity of each kind of foreign liquor required to
\n\tbe stored in bond at any one time ;\n<\/p>\n
\t(4) the date from which the applicant desires to store foreign
\n\tliquor in bond ;\n<\/p>\n
\t(5) whether the applicant is prepared to deposit the amount of
\n\tsecurity fixed by the Commissioner of Excise as a guarantee for the
\n\tobservance of the provisions of the Act and the Rules and orders
\n\tmade hereunder;\n<\/p>\n
\t(6) whether the applicant holds a wholesale licence granted under
\n\tthe Cochin Foreign Liquor Rules.\n<\/p>\n
(b) the applicant shall execute an agreement in Form A undertaking to abide
\nby the provisions of the Act and the Rules and orders made thereunder and
\nthe conditions of the licence and also agreeing to pay the prescribed duty
\ntherefor.\n<\/p>\n
(c) the applicant shall take out a licence in Form FL.9 appended to the
\nRule for the levy of gallonage fee, etc. and for the issue of licences for
\nthe sale of foreign liquor, punished under Notification No. S.R.4
\n1859\/52\/RD dated 17.1.1953, as subsequently amended, for the supply of
\nforeign liquor in wholesale to the other foreign liquor licensees.\n<\/p>\n
\tProvided that nothing contained in sub-rule (c) shall be applicable
\n\tto the applicant for a licence in Form BW1(A).\n<\/p>\n
Rule 3(b) refers to the execution of an agreement in Form A. The relevant
\npart of Appendix incorporated therein is as follows :-\n<\/p>\n
\t“Now the condition of this bond is that if the obliger(s) shall
\n\tobserve all the provisions of Abkari Act, the Rules, Notifications
\n\tand Orders thereunder and the Foreign Liquor (Storage in Bond)
\n\tRules, 1961 and in particular shall deposit all Foreign Liquor
\n\tallowed to be imported to the bonded warehouse in a storeroom or
\n\tother place of storage approved by the Commissioner (hereinafter
\n\treferred to as “licensed premises”) and shall not remove or issue
\n\tfrom the licensed premises before the proper duty or fee, if any
\n\thas been paid, any Foreign Liquor except as provided for in the
\n\tsaid Rules.\n<\/p>\n
\tAnd if the obliger(s) pay\/pays into the Government Treasury all
\n\tdues whether excise duty or fees payable by the obliger(s) under
\n\tthe provisions of the Cochin Abkari Act 1 of 1077 and the Rules and
\n\tOrders made thereunder and complies with dirth (sic) all the
\n\tprovisions of the said Act, the said Rules and the Orders and
\n\tNotifications issued thereunder.\n<\/p>\n
\tThis obligation shall be void but otherwise and on breach in the
\n\tperformance of all or any of the terms and conditions herein
\n\tcontained the same shall be in full force.\n<\/p>\n
  ….                              ….                              …..\n<\/p>\n
Rules 11 and 14 are also relevant which read as follows :-\n<\/p>\n
“11. (1) Foreign liquor stored in the bonded warehouse shall be removed
\nonly to the premises licensed under the F.L. 9 licence referred to in sub-
\nrule (c) of Rule 3, held by the bonded warehouse licensee, and such removal
\nshall be only under cover of a pass granted in that behalf and on payment
\nof the Excise duty due. Foreign Liquor intended for export to foreign
\ncountries on the strength of the export authorization from the Government
\nof India shall also be brought and stored in the Bonded Warehouse and the
\nremoval therefrom shall be only under cover of a pass granted in that
\nbehalf. The pass shall be granted on the execution a bond to pay excise
\nduty at full rate payable on the quantity not exported as evidenced from
\nthe certificate from the “customs authority” of the port of export.\n<\/p>\n
Provided that nothing contained in sub-rule (1) shall be applicable to the
\nlicensee in Form BW 1(A).\n<\/p>\n
(2) If the licensee wants to issue or remove any quantity of foreign liquor
\nfrom the bonded warehouse, he shall make an application to the Officer-in-
\nCharge of the Excise Division through the Officer-in-Charge in that
\nbehalf.”\n<\/p>\n
“14. A licence in Form BW1 shall be granted to the Kerala State Beverages
\n(Manufacturing and Marketing) Corporation Limited and a licence in Form BW1
\n(A) shall be granted to the Canteen Stores Department, Ministry of Defence
\nfor the purpose of storage in Bond and supply of Foreign Liquor including
\nbeer in wholesale to the FL-9 licensees and FL-8 licensees respectively
\nunder the Foreign Liquor Rules, 1953.”\n<\/p>\n
Under the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 as amended
\nwith effect from 1st April, 1989, Rule 3(1A) provides as follows :-\n<\/p>\n
“3(1A). The Kerala State Beverages (Manufacturing and Marketing)
\nCorporation Limited shall have the exclusive privilege to obtain FL-9
\nLicence for the purpose of distribution of Foreign Liquor to Foreign Liquor
\n1 Licensee, Foreign Liquor 3 hotel (Restaurant) Licensees, Foreign Liquor 4
\nClub Licensees, Foreign Liquor 4A Club Licensees, Foreign Liquor 11
\nbeer\/wine parlour Licensees, Foreign Liquor 12 Beer Retail Sale Outlet
\nLicensees and Foreign Liquor, 6 Special Licensees in the State.”\n<\/p>\n
From the above provisions it will be seen that the Kerala State Beverages
\n(Manufacturing and Marketing) Corporation Limited have the exclusive
\nprivilege to obtain FL-9 licence for the purpose of distribution of IMFL. A
\nlicence in Form BW1 is also required to be granted only to the said
\nCorporation. The aforesaid Corporation has also executed an agreement in
\nForm A as contemplated by Rule 3(b) of the Bond Rules, 1961. To give effect
\nto the monopoly created in favour of the Kerala State Beverages
\n(Manufacturing and Marketing) Corporation Limited the
\nrespondents\/distillers are required to supply IMFL to the said Corporation
\nunder a rate contract. Offers are required to be made in sealed covers
\nwhich are subject to certain conditions. The format in which the offers are
\nto be made is titled `Data Sheet’ which includes all necessary particulars.
\nA clause in the data sheet provides as follows:-\n<\/p>\n
“The above rate includes freight, insurance, export duty, CST, B-deposit,
\npacking charges, handling charges, unloading charges, warehouse, other
\nlevies etc., but does not include Kerala Import Duty, Kerala Excise Duty
\nand Kerala Sales Tax.”\n<\/p>\n
As we have noticed earlier, with effect from January 5, 1999, by amendment
\nof the Foreign Liquor Rules, KSBC was required to pay to the
\ndistillers\/manufacturers, the duty element levied under Section 17<\/a>, before
\nremoving the IMFL to its licensed premises.\n<\/p>\n
We may now briefly refer to the facts of the cases before us. The
\nrepresentative facts are taken from the writ petition filed by M\/s. Kerala
\nDistilleries and Allied Products Ltd., now renamed as Maharashtra
\nDistilleries Limited as per the Scheme of Amalgamation sanctioned by the
\nHigh Court of Kerala. The aforesaid petitioner is engaged in the
\nmanufacture and sale of IMFL. It is registered as dealer both under the
\nKerala General Sales Tax Act. 1963 and the Central Sales Tax Act<\/a>, 1956.
\nPursuant to the policy of the Government creating a monopoly in favour of
\nthe Kerala State Beverages (Manufacturing and Marketing) Corporation
\nLimited, the petitioner has been submitting tenders as required for sale
\nand supply of IMFL. The prices quoted of the various brands of IMFL do not
\ninclude the sales tax or the excise duty since it was only the Kerala State
\nBeverages Corporation which was liable to pay the tax. Excise duty was not
\npaid by the petitioner (respondent herein) since the IMFL was required to
\nbe delivered to the Kerala State Beverages Corporation and no excise duty
\nwas payable by the petitioner (respondent herein). The offer made as per
\nthe requirement of the tender document clearly stipulated that the price
\nquoted did not include excise duty.\n<\/p>\n
Accordingly assessments were made from time to time on the basis that
\nliability to pay sales tax and excise duty was on the Kerala State
\nBeverages Corporation. The petitioner (respondent herein) paid turnover tax
\non the basis of price paid to it by the Kerala State Beverages Corporation.
\nIt, therefore, did not include the excise duty element while computing its
\ntotal turnover having regard to the entry at Sl. No.53 of the First
\nSchedule of the Kerala General Sales Tax Act. Some of the assessments were
\nfinalized upto the year 1995-96. However, Sales Tax authorities on 19th
\nJuly, 1998 called upon the petitioner to submit revised returns including
\nelement of excise duty paid by the Corporation. A notice was also issued
\nproposing to impose penalty for less payment of turnover tax having regard
\nthe fact that the turn over did not include the element of excise duty
\npayable on the IMFL. The petitioner filed its objections on 15th September,
\n1998 but without giving serious consideration, an order of the assessment
\nfor the period April to July, 1998 was made and order imposing penalty was
\nalso passed. Thereafter the Deputy Commissioner of Commercial Tax issued a
\nnotice on 28th September, 1998 for the years 1991-92 to 1995-1996 in
\nexercise of powers under Section 35 of the Kerala General Sales Tax Act on
\nthe ground that the assessments made were prejudicial to the interest of
\nthe revenue inasmuch as the assessing authority did not take into account
\nthe element of excise duty paid by the fourth respondent, namely the Kerala
\nState Beverages (Manufacturing and Marketing) Corporation Limited and did
\nnot levy turnover tax on the petitioner. A follow-up notice was issued
\ncalling upon the petitioner (respondent herein) to produce books of account
\nrelating to the years in question. In these circumstances the petitioner
\n(respondent herein) filed the writ petition praying for quashing of the
\nproceedings and for declaration that it was not liable to pay the turnover
\ntax on the amount of excise duty paid by the Kerala State Beverages
\nCorporation on IMFL sold by it to the Corporation. The levy of turnover tax
\non such amount of excise duty was sought to be quashed as being ultra vires
\nand beyond the legislative competence and therefore unconstitutional.\n<\/p>\n
The State in its counter-affidavit contended inter alia that the excise
\nduty paid by the Kerala State Beverages Corporation formed part of the sale
\nturnover of the manufacturer, since it is the obligation of the
\nmanufacturer to pay excise duty, though it may be discharged by others.
\nRelying upon the decision of this Court in Mohan Breweries and Distilleries
\nLimited v. Commercial Tax Officer, Madras and Ors<\/a>., [1997] 7 SCC 542 it was
\ncontended that excise duty element formed part of the total turnover which
\nwas chargeable to turnover tax under Section 5(2C) of the Kerala General
\nSales Tax Act, 1963.\n<\/p>\n
The Kerala State Beverages Corporation which was respondent No.4 in the
\nwrit petition accepted the fact that the excise duty on IMFL purchased by
\nit from the petitioner (respondent herein) was paid by it and the same is
\nincluded in its price which it realized as a wholesale dealer from its
\npurchasers, and the turnover of the Corporation is computed on that basis
\nand the turnover tax paid accordingly.\n<\/p>\n
The turnover tax was introduced with effect from July 1, 1987 by amendment
\nof the Kerala General Sales Tax Act, 1963. The turnover tax was then
\npayable only by those dealers who were not liable to pay sales tax on any
\ngoods under Section 5(1)<\/a> of the Act. However, by amendment of August 1,
\n1991 turnover tax was made payable by every dealer in foreign liquor on the
\nturnover as specified at all points. Section 5(2A)<\/a> of the Act was
\nrenumbered as Section 5(2C)<\/a> with effect from April 1, 1998 which provided
\nthat every dealer in Foreign Liquor (Indian Made) shall pay turnover tax on
\nthe turnover of goods as specified in entries against Serial Nos. 53 and 54
\nof the First Schedule @ 5 % on the turnover at all points.\n<\/p>\n
At this stage we may notice the relevant provisions of the Kerala General
\nSales Tax Act, 1963. “Turnover” has been defined under the Act and the
\nrelevant part thereof reads as follows :-\n<\/p>\n
” `turnover’ means the aggregate amount for which goods are either bought
\nor sold, supplied or distributed by a dealer, either directly or through
\nanother, on his own account or on account of others, whether for cash, or
\nfor deferred payment or other valuable consideration, provided that the
\nproceeds of the sale by a person of agricultural or horticultural products,
\ngrown by himself or grown on any land in which he has an interest whether
\nas owner, usufructuary, mortgage, tenant or otherwise, shall be excluded
\nfrom his turnover.”\n<\/p>\n
Section 5<\/a> provides for the levy of tax on sale\/purchase of goods with which
\nwe are not directly concerned but the relevant part thereof may be noticed
\n:-\n<\/p>\n
“5. Levy of tax on sale or purchase of goods :- (1) Every dealer (other
\nthan a casual trader or agent of a non-resident dealer) whose total
\nturnover for a year is not less than `two lakh rupees and every casual
\ntrader or agent of a non-resident dealer, whatever be his total turnover
\nfor the year, shall pay tax on his taxable turnover for that year.\n<\/p>\n
(i) in the case of goods specified in the First or Second Schedule, at the
\nrates and only at the points specified against such goods in the said
\nSchedules;\n<\/p>\n
…..                          …..                     …..”\n<\/p>\n
The relevant part of Section 5(2C)<\/a> reads as follows :-\n<\/p>\n
“5(2C) (i) Notwithstanding anything contained in this Act or the Rules made
\nthereunder every dealer shall pay turnover tax on the turnover of goods as
\nspecified hereunder, namely :-\n<\/p>\n
(a)\tby an oil company defined in the Explanation under serial number 97
\nof the First Schedule to this Act whose total turnover in a year exceeds
\nrupees fifty lakhs at the rate of three percent on the turnover from the
\n1st day of April, 1991 till 31st day of July, 1991 and thereafter at the
\nrate of four percent on the turnover ;\n<\/p>\n
(b)\tby any dealer in Foreign Liquor (Indian made) or Foreign Liquor
\n(Foreign made) as specified in entries against serial numbers 53 and 54 of
\nthe First Schedule at the rate of five percent on the turnover at all
\npoints;\n<\/p>\n
     ....                              ....\n     .....\"\n\n<\/pre>\n
The entry against Serial No.53, which is relevant is to the following
\neffect :-\n<\/p>\n
“53. Foreign liquor\t\tAt the point of sale by the   Kerala State<\/p>\n
     (Indian Made)\t Beverages (Manufacturing and Marketing)
\n     Corporation Limited and at the point of first sale in the State by
\n     a dealer who is liable to tax under Section 5<\/a> (except where the
\n     sale is to the Kerala State Beverages (Manufacturing and Marketing)
\n     Corporation Ltd.”\n<\/p>\n
In the first batch of writ petitions which were disposed of by a Division
\nBench by its judgment and order of November 27, 1999 it was held that Entry
\n51 of List II of the 7th Schedule of the Constitution of India is only the
\nsource of power for the legislature concerned empowering it to enact a law
\nfor the levy of excise duty on consumable alcohol manufactured within the
\nState. Excise duty, though an incidence of the manufacture of goods, it was
\nnot axiomatic that the manufacture of goods would immediately result in a
\nliability of excise duty merely on the wording of Entry 51 in List II. The
\nliability of excise duty depended on the charging provision in the statute
\nproviding for such levy.\n<\/p>\n
In the instant case, Bonded Warehousing Licence in Form FL9 had been issued
\nonly to the Beverages Corporation which was constituted as the sole
\nmarketing agency for the purchase and distribution of IMFL. Rule 11 of the
\nStorage in Bond Rules permitted removal of IMFL from bonded warehouse only
\nto premises licensed under FL9 Licence, under cover of a pass on payment of
\nexcise duty due. Levy of excise duty was, therefore, traceable to Section
\n17(f)<\/a> of the Act. These two provisions have to be read together.\n<\/p>\n
The Beverages Corporation had executed a bond under which it had bound
\nitself to pay excise duty payable on the IMFL. Therefore, the statutory
\nprovisions read together do not contemplate payment of excise duty on IMFL
\nby the manufacturer within the State at any stage prior to the removal from
\nthe warehouse of the Beverages Corporation. Under such circumstances it was
\nimpossible for the manufacturers to pay the excise duty at any stage after
\nthe manufacture of goods and before its removal from the distillery to the
\nbonded warehouse of the Beverages Corporation in course of sale effected in
\nfavour of the said Corporation. The manufacturer lost control over the
\ngoods in question and property passed on from the distillery to the
\nBeverages Corporation.\n<\/p>\n
The levy of excise duty in terms of Section 17(f)<\/a> of the Act read with Rule
\n11 of the Storage in Bond Rules constituting the charging provision of the
\nexcise duty under the Abkari Act came into operation at a stage after the
\nproperty in the goods, namely the IMFL manufactured by the distillers had
\nbeen transferred in favour of the Beverages Corporation. In other words the
\ncharging provision under the Act came into operation at a point of time
\nsubsequent to the transfer of property in goods in favour of the Beverages
\nCorporation. Under such circumstances it was difficult to accept the
\nargument that the amount payable by way of excise duty necessarily became
\npart of the turnover of the manufacturers.\n<\/p>\n
On such reasoning the High Court held that the manufacturers\/ distillers
\nwere not required to pay excise duty which never formed part of their
\nturnover. The finding of the High Court has been summarized in paragraph 41
\nof the judgment, which is as follows:-\n<\/p>\n
“(i) that a duty of excise is leviable under Section 17<\/a> either at the point
\nof manufacture or at the point of issue from a manufacturer or warehouse.
\nThe choice is that of the Government.\n<\/p>\n
(ii) that the duty may be imposed either on the quantity produced or passed
\nout from a distillery, brewery or warehouse.\n<\/p>\n
(iii) for ad-valorem the value is such at which the Fourth respondent
\npurchases from the suppliers.\n<\/p>\n
(iv) The petitioner does not have any license except for Compounding,
\nBlending and Bottling in Form No.1 in Form No.2 and Form 4.\n<\/p>\n
(v) The fourth respondent is the exclusive marketing organization in the
\nState of Kerala and all sales have to take place to the said organization.\n<\/p>\n
(vi) The fourth respondent alone holds license in FL9 and is alone
\ncompetent to have a Bonded Warehouse granted under BW1. They have executed
\nrequisite Bond in Form A and entered into an agreement with the Government
\nfor payment of duty of excise.\n<\/p>\n
(vii) Duty is imposed and collected when the 4th respondent removes goods
\nfrom its Bonded warehouse under Rule 11(1) of the Bond Rules. At that point
\nduty is paid by the fourth respondent in discharge of its statutory
\nliability to pay the duty.\n<\/p>\n
(viii) Under the provisions of Section 5<\/a> read with Serial No.53 of the
\nFirst Schedule of KGST Act, the sale by the fourth respondent is the first
\nsale attracting tax. In other words the sale by the petitioner to the
\nFourth respondent is not treated as a sale liable to tax.\n<\/p>\n
(ix) That there is no necessity to submit monthly\/ Quarter\/Half yearly or
\nAnnual Returns to the Excise Authorities on the part of the petitioner. In
\nother words the petitioner is not subjected to any assessment made under
\nthe provisions of the Kerala Abkari Act or Rules made thereunder.”\n<\/p>\n
The High Court, therefore, allowed the writ petitions.\n<\/p>\n
The State of Kerala preferred the instant appeals before this Court but
\npending the disposal of the appeals, it amended Section 5(2C) of the Kerala
\nGeneral Sales Tax Act by the Finance Act<\/a> of 2001 adding an explanation with
\na view to remove any doubt. We have earlier quoted the explanation which
\nwas brought into effect retrospectively from July 1, 1987 and which
\nclarified that any distillery in the State which sells liquor manufactured
\nby it within the State to the Kerala State Beverages Corporation shall be
\nliable to pay turnover tax on the turnover of sale of liquor by it to the
\nsaid Corporation and the turnover for the purpose of this sub-section shall
\ninclude any duty of excise liable on such liquor at the hands of such
\nmanufacturer whether such duty is paid by the manufacturer or by the said
\nCorporation. In view of the amended provision, proceedings were again
\ninitiated by the Sales Tax authorities and the same were again challenged
\nbefore the High Court.\n<\/p>\n
 The second batch of writ petitions was disposed of by a common judgment
\n and order of the High Court dated August 9, 2002. The High Court while
\n disposing of the second batch of writ petitions considered the binding
\n precedents on the subject and observed that irrespective of the manner in
\n which the rules and agreements between the parties changed the point of
\n collection, excise duty in its true character is always a duty payable by
\n the manufacturer of an article and remains the liability of the
\n manufacturer. If as a result of the rules and the agreements it is
\n discharged by someone else such discharge must be held on account of the
\n manufacturer himself. The learned Judges referred to the decision of this
\n Court in Mohan Breweries and Distilleries Limited (supra) which according
\n to the learned Judges squarely governed the case. After noticing several
\n judgments of this Court the learned Judges were not inclined to agree with
\n the view of the earlier Bench on this aspect of the matter, but finding
\n themselves bound by the earlier decision, they proceeded to dispose of the
\n writ petitions on the basis that the manufacturers\/distillers were not
\n liable to pay turnover tax under the Abkari Act. It held that the earlier
\n judgment could not be said to have been rendered per incuriam because the
\n judgment was rendered after considering the binding judgments of the
\n Supreme Court. The High Court also noticed the fact that appeals were
\n pending before this Court against the judgment in the first batch of writ
\n petitions.\n<\/p>\n
Having held itself bound by the judgment of the High Court in the first
\nbatch of writ petitions, it held that the explanation to Section 5(2C)<\/a> of
\nthe Act did not advance the case of the State because once it is held that
\nthe provisions of the Abkari Act read with the Rules framed thereunder did
\nnot cast the liability for payment of excise duty on foreign liquor sold in
\nthe state of Kerala on the manufacturers and that the payment of excise
\nduty was the liability of the Beverages Corporation, the explanation added
\nto Section 5(2C)<\/a> did not change the legal position unless the Abkari Act
\nwas suitably amended so as to impose the liability of payment of excise
\nduty on the manufacturers\/ distillers. The explanation introduced by way of
\namendment was a futile attempt to revalidate the levy without curing the
\ninherent constitutional disability.\n<\/p>\n
It, however, negatived the plea of the manufacturers\/distillers that the
\nlevy of turnover tax under Section 5(2C)<\/a> of the Act in so far as it deals
\nwith foreign liquor can only be on the sale \/ turnover of the dealers as
\nspecified in Entry 60 of the First Schedule (corresponding to Entry 53). It
\nheld that the reference to Serial No. 60 (Serial No. 53 in the first batch
\nof writ petitions) of the First Schedule is only with a view to
\nascertaining the description of the type of foreign liquor sold. The words
\n“as specified hereunder” under Section 5(2C)<\/a> of the Act must be read as
\nqualifying the substantive goods and not as qualifying the substantive
\ndealer. This was because the said entry in the First Schedule describe the
\nperson on whom the levy falls and the points at which the levy falls. The
\nrates were also prescribed. Moreover sub-section (2C) started with a non
\nobstante clause “notwithstanding anything contained in this Act or the
\nRules made thereunder”. Thus the payment of turnover tax under sub-section
\n(2C) was not subject to restrictions enumerated in sub-section (1) and sub-
\nsection (2) of Section 5<\/a> of the Act. One such restriction pertains to the
\nnumber of points at which the levy can be made. On an interpretation of the
\naforesaid provision it recorded a categoric finding that the contention of
\nthe manufacturers\/distillers that the levy of turnover tax fall on the
\nBeverages Corporation and not on them was not acceptable.\n<\/p>\n
Learned counsel appearing on behalf of the State of Kerala drew our
\nattention to the provisions of the Abkari Act and the various other Rules
\nwhich have been noticed earlier in the judgment. He submitted that it is
\nnot in dispute that upto 1.4.1984 the excise duty on the manufacture of
\nliquor was being paid by the distillers\/manufacturers like the respondents.
\nWith effect from 1.4.1984 the KSBC came into existence and a monopoly was
\ncreated in its favour for wholesale marketing in foreign liquor. The
\nmanufacturers\/distillers were obliged to sell their products to the
\naforesaid Corporation which distributed the same to the retailers all over
\nthe State. In view of the powers conferred by Section 17 of the Abkari Act
\nNotifications levying the excise duty were issued from time to time which
\ncast the liability to pay excise duty on the distillers\/manufacturers under
\nthe Abkari Act. He has drawn our attention, in particular, to 2
\nNotifications being SRO No. 60\/61 dated 18.3.1961 and SRO No. 330\/96 which
\ncame into force on 1st April, 1996. The first of these Notifications shorn
\nof unnecessary details is to the effect that in exercise of the powers
\nconferred by Section 17 of the Abkari Act, the Government of Kerala
\ndirected that the duty under the said Section shall be levied on the
\nfollowing kind of liquors manufactured in the area where the said Act is in
\nforce or manufactured elsewhere in India and imported into the said area by
\nland or under bond by sea, at the rates mentioned against each kind of
\nliquor. The first item mentioned is Indian Made Foreign Spirits except
\nIndian Made Foreign Spirits consumed by Defence Services. The second
\nNotification is in similar terms wherein in exercise of powers conferred by
\nthe Sections 6, 7, 17 and 18 of the Abkari Act the Government of Kerala
\ndirected that the import and export fees, the excise duty and luxury tax
\nunder the said sections shall be levied on the following kinds of liquors
\nmanufactured in the State and exported outside the State under bond in
\nforce or manufactured elsewhere in India and imported into the State by
\nland, air or sea under bond, at the rates mentioned against each kind of
\nliquor. The first item mentioned under the heading – kind of liquor – is
\n“Indian Made Foreign Liquor including beer except those consumed by Defence
\nService”. He submitted that similar Notifications were issued in exercise
\nof powers conferred by Section 17 of the Abkari Act which leave no room for
\ndoubt that the levy of excise duty was on the manufacture of liquor in the
\nState. He, therefore, pointed out that having regard to the Notifications
\nissued in exercise of powers conferred under Section 17 of the Abkari Act,
\nwhat was levied was excise duty on IMFL manufactured in the State. The
\nliability to pay excise duty, therefore, was that of the manufacturer. He
\nrelied upon Rule 47 of the Kerala Distillery and Warehouse Rules, 1968
\nwhereunder no liquor could move out of the distillery premises except on
\npayment of excise duty or under bond executed by the distillery undertaking
\nto pay the excise duty. The incidence of execution of bond was itself proof
\nof the fact that the liability to pay excise duty was cast on the
\ndistillers or the manufacturers. Relying upon sub-rule (1) of Rule 16 of
\nthe Kerala Distillery and Warehouse Rules, 1968 it was submitted that the
\ndefinition of “warehouse” clearly meant that part of a distillery where
\nspirits for issue are kept. The warehouse referred to in Rule 47 related to
\nthe warehouse in the distillery where the distillery kept liquor produced
\nby it before it was removed therefrom. After the monopoly was created in
\nfavour of KSBC with effect from 1.4.1984 the liquor stored in the warehouse
\nof the distillery was removed under bond to the Corporation bonded
\nwarehouse licenced in Form BW1 under the Storage and Bond Rules.
\nCorporation also was required to execute a bond in Form A undertaking to
\npay the excise duty. He, therefore, submitted that the liability to pay
\nexcise duty was clearly on the manufacturers\/ distillers. The amendment
\nmade to the Rules only enabled the KSBC to procure IMFL from the
\nmanufacturers without payment of excise duty and stock the same in its
\nbonded warehouses. The liability to pay excise duty which was cast on the
\nmanufacturer was never shifted. That liability arose at the point of
\nmanufacture and there was no amendment to the relevant statutory provision
\nwhereby the liability to pay excise duty was shifted from the manufacturers
\nto the KSBC. As a matter of convenience the amended rules provided for
\npayment of excise duty, which was the primary liability of the
\nmanufacturers, by the KSBC and therefore it was the liability of the
\nmanufacturer which was discharged by the KSBC. Reliance was placed on a
\ndecision of this Court in Mohan Breweries and Distilleries Limited (supra)
\nand Modowell & Co. Ltd. v. C.T.O<\/a>., [1985] 3 SCC 230 and State of Kerala v.
\nMadras Rubber Factory<\/a>, [1998] 1 SCC 616 and Deputy Commissioner of Sales
\nTax (Law), Board of Revenue (Taxes), Ernakulam v. Hindustan Petroleum
\nCorporation<\/a>, [2000] 10 SCC 535. Reliance was also placed on a Full Bench
\ndecision of the Kerala High Court in Hindustan Petroleum Corporation v.
\nState of Kerala<\/a> : (1989) STC 106. Counsel also placed reliance on two
\nDivision Bench decisions of the Kerala High Court in TRC No. 92 of 1987
\nM\/s. South Travancore Distilleries and Allied Products, Trivandrum v. State
\nof Kerala, dated 2nd August, 1989 wherein it was held that the liability to
\npay excise duty was on the manufacturer which has not been shifted by law
\nfrom the manufacturer to the KSBC. The duty discharged by the KSBC would
\nstill formed part of the deposit and total sale turnover of the
\nmanufacturers. According to him this judgment was approved by this Court by
\ndismissal of CA No. 3020 of 1990 by order dated October 24, 1990. This
\nCourt held :\n<\/p>\n
“On our aforesaid finding that the demand of sales tax on excise duty which
\nwould have merged into price to be charged by the manufacturer to the
\nCorporation, the liability for tax on excise duty should be taken as final
\nagainst the appellant.”\n<\/p>\n
Reliance was placed on the decision of the Division Bench in OP No.9295 of
\n1989 decided on April 12, 1991. He, therefore, submitted that the law is
\nwell settled that excise duty is a tax on the manufacture of goods and this
\nliability falls on the manufacturer though its collection may be deferred
\nto a later stage upto the stage of consumption. He also relied upon various
\ndecisions of this Court in support of this proposition. He further
\nsubmitted that the use of the words “if the Government so directs” in
\nSection 17 of the Abkari Act only gives to the Government the discretion to
\nlevy or not to levy the excise duty. It has no relation to the stage at
\nwhich the excise duty was to be levied or collected. The liability arose
\nonce the Government directs to levy the duty and issues Notification in
\nthat regard. The collection may be at one or the other points referred to
\nin clauses (c) to (g). The charging section itself imposes the liability on
\nall those mentioned in clauses (c) to (g) all of which are related to
\nmanufacture. According to him all that is required is for the Government to
\nevince its intention by levying the duty by appropriate Notification. Such
\nNotifications have been issued from time and time and those Notifications
\nspecified that duty is imposed on the manufacturer of IMFL. That the excise
\nduty liability is of distiller is also evident from the fact that the duty
\npayable is on the value\/sale price of the liquor sold by the distillery to
\nthe KSBC and not on the basis of the sale price of the KSBC to retailers.
\nHe, therefore, submitted that the amendment of the Rules, particularly the
\n(Storage in Bond) Rules, did not shift the liability of the manufacturer
\nunder the Notification issued under Section 17 of the Abkari Act. It only
\nenabled the IMFL to be removed from the distillers warehouse to the
\npremises of the FL9 licensees namely, the KSBC under the cover of a pass
\ngranted in that behalf and on payment of excise duty. The excise duty
\nliability has never been obliterated or dispensed with by statutory
\nprovision. The liability continued and only the collection was postponed in
\ncases where the liquor was removed from the bonded warehouses of the
\ndistillers to the bonded warehouses of the KSBC without payment of excise
\nduty.\n<\/p>\n
He further submitted that in view of the Government’s order dated 5th
\nJanuary, 1999 the Foreign Liquor Rules were amended and, thereafter the
\nKSBC was obliged to pay the excise duty at the time of purchase itself so
\nthat what was stocked in the premises of the KSBC was duty paid IMFL. There
\ncould be no doubt that thereafter the excise duty element formed part of
\nthe sale price of the distillers yet the High Court in the first batch of
\nwrit petitions granted relief in very broad terms ignoring this aspect of
\nthe matter. He further submitted that the tax did not offend Article 311<\/a> of
\nthe Constitution of India and there was no violation of Article 304(1)<\/a>
\ninasmuch as there was no discriminatory levy on liquor imported from
\noutside the State, to which locally manufactured liquor was not subject. It
\nwas also submitted that what was levied under the Act was excise duty and
\nnot price paid for the privilege of grant of exclusive right to manufacture
\nand market liquor. Lastly it was submitted that Entry 53 of the First
\nSchedule to the Kerala General Sales Tax Act read with Section 5(2C)<\/a> of the
\nAct levied turnover tax on sales of IMFL at all points by the dealers.
\nEntry 53 did not govern Section 5(2C)<\/a> which began with a non obstante
\nclause and reference to Entry 53 in the aforesaid Section is only to the
\ndefinition of foreign liquor in that entry. The section applied to the
\ngoods referred to in Entry 53 and had no reference to the dealers by whom
\ntax was payable because the turnover tax on foreign liquor was payable by
\nall dealers on all points of sale.\n<\/p>\n
Mr. Nariman appearing on behalf of the respondents submitted that the levy
\nof duty on liquor was not referable to Entry 51 of List II but falls under
\nEntry 8 of List II of the Seventh Schedule. He submitted that a close
\nexamination of Section 17 of the Abkari Act will reveal that the Government
\nhas a discretion to impose the levy, and the taxable events are those
\nenumerated in clauses (a) to (g) which include levy on liquor permitted to
\nbe imported or exported or transported or manufactured under any licence
\ngranted under Section 12<\/a> or manufactured at any distillery, brewery, winery
\nor other manufactory established under Section 14<\/a> or issued from a
\ndistillery. brewery, winery or other manufactory or warehouse licensed or
\nestablished under Section 12<\/a> or Section 14<\/a>, or sold in any part of the
\nState. He submitted that the duty of excise is levied on the manufacture of
\nthe goods. The levy contemplated by clauses (a) to (g) of Section 17<\/a> is not
\nnecessarily connected with manufacture of liquor, as it also envisaged the
\nlevy of duty on liquor exported or transported under clauses (b) and (c) or
\neven issued from the distillery as contemplated by clause (f) or sold in
\nany part of the State as contemplated by clause (g). Levy under these
\nclauses cannot be characterized as levy of excise duty because they are not
\nrelated to the manufacture of goods. Section 18<\/a> prescribes how duty can be
\nimposed and in essence the basis of duty under the Abkari Act is either on
\nthe quantity produced in, or passed out of, a distillery, brewery or
\nwarehouse. The Section, therefore, gives a discretion to the State to
\nimpose such duty either on a distillery or brewery or warehouse. Excise
\nduty in essence is a duty on manufacture but Section 18(A)<\/a> of the Act also
\ncontemplates grant of exclusive or other privilege of manufacturing or
\nsupplying by wholesale on payment of rentals. Section 18(A)<\/a> is an enabling
\nprovision and apparently the levy under Section 18(A)<\/a> which was inserted in
\n1964 must fall under Entry 8 of List II. The State is enabled to part with
\nits privilege of manufacturing or supplying liquor in wholesale or of
\nselling in retail. Since the levy is relatable to Entry 8 of List II it
\ncannot be construed as a levy of excise duty on manufacture in terms of
\nEntry 51 of List II of the Seventh Schedule of the Constitution of India.
\nHe, therefore, submitted that the levy under Section 17<\/a> or 18(A) of the
\nAbkari Act is not levy of excise duty stricto sensu though it is loosely so
\ndescribed in the Abkari Act.\n<\/p>\n
He submitted that there is a line of decisions which holds that ordinarily
\nexcise duty is the liability of the manufacturer unless the law provides
\notherwise. These decisions were, however, rendered in the context of excise
\nduty properly so-called. The character of a levy is not to be determined
\nmerely by the words used in a statute but in a wider sense i.e. the nature
\nof the levy. Relying upon the decisions of this Court in Southern
\nPharmaceuticals and Chemicals v. State of Kerala<\/a>, AIR (1981) SC 1863 and
\nSynthetic and Chemicals Ltd. and Ors. v. State of U.P. and Ors<\/a>., [1990] 1
\nSCC 109 and of the Kerala High Court in Moni Simon v. State of Kerala,
\n(1984) KLT 1060, he submitted that these cases disclose an approach which
\nwas different while dealing with a duty under Section 17 of the Abkari Act,
\nthan while dealing with the levy of excise duty stricto sensu. The levy
\nunder Section 17<\/a> not being strictly speaking in the nature of duty of
\nexcise, the liability of the Corporation has not to be determined on any
\npreconceived notion of levy of excise duty i.e. the liability must fall on
\nthe manufacturer, but on the language of Section 17<\/a> which makes it clear
\nthat it does not fall under Entry 51 of List II. At best the levy is
\nrelatable to Entry 8 of List II. There can be no excise duty on sale or
\nsupply as contemplated by Section 17<\/a>. Therefore, the liability to pay the
\nduty was on the KSBC and not on the manufacturer. He also referred to the
\nNotifications issued by the State which went on to show that the levy was
\nnot in the nature of excise duty. An essential element of excise duty is
\nuniformity of incidence which cannot vary from Notification to
\nNotification. The Scheme of the Act<\/a> itself supports the inference that
\nthough it is imposed under the Abkari Act, yet it is not a duty of excise
\non manufacture, but a consideration for parting with State’s privilege,
\nreferable to Entry 8 of List II.\n<\/p>\n
Before the High Court the same submission was advanced on behalf of the
\nRespondents which is noticed in paragraphs 44 and 46 of the judgment, but
\nno finding has been recorded by the High Court on this aspect of the
\nmatter.\n<\/p>\n
Alternatively, and assuming without conceding, that the duty imposed is
\nexcise duty, Mr. Nariman submitted that the observations in Mohan Breweries
\n(supra) that the incidence of excise duty falls on the manufacturer or
\nproducer of the goods is not a rule of universal application, as it must
\ndepend upon the words the statute employs. He relied upon decisions of this
\nCourt in support of his submission that the incidence of excise duty may
\nfall on a person other than the manufacturer, if the statute so provides.
\nIn the present case, he submitted that upto the time the Abkari Act was
\namended in 2003, it gave an option to the Government to levy excise duty on
\nliquor either on the manufacturer who was licensed under Section 14<\/a> or on
\nthe issue of the liquor from the warehouse of the licensed warehouse
\nkeeper. According to him, the licensed warehouse keeper referred to in
\nSection 14(f)<\/a> means the KSBC. According to him the KSBC being the sole and
\nexclusive warehouse keeper under the Government order of February 1, 1984
\nread with Rule 11 of the (Storage in Bond) Rules, it was the KSBC on which
\nthe duty to pay the duty was imposed. Under Rule 11(1) of the aforesaid
\nRules the foreign liquor stored in the Bonded Warehouse could be removed
\nonly to the premises licensed under the FL9 licence, and the FL9 licence
\ncould be issued only in favour of the KSBC. Since the primary obligation to
\npay excise duty under the Abkari Act is that of the licensee of the foreign
\nliquor bonded warehouse and the License in Form FL9 could be issued only to
\nthe KSBC, the liability was squarely on the aforesaid Corporation. Rule
\n3(1)(b) of the (Storage in Bond) Rules, 1961 imposes the primary obligation
\nto pay the duty under the Abkari Act on the licensee of a foreign liquor
\nbonded warehouse. Only the KSBC held the licence in Form FL9 as also BW1 ,
\nand also executed an agreement in Form A agreeing to pay the prescribed
\nduty. The aforesaid Rules constitute the direction contemplated by Section
\n17 of the Abkari Act. The liability to pay the duty is clearly cast on the
\nKSBC.\n<\/p>\n
He submitted that a close examination of Section 17<\/a> of the Act would reveal
\nthat the duty imposed under it is not necessarily leviable on the
\nmanufacturer. There are so many other categories. Sections 17<\/a> and 18<\/a> also
\ngive to the Government an option as to how the duty is to be imposed and on
\nwhom, whether on the distillers\/manufacturers or warehouse owners. He
\nrelied upon the provisions of the Abkari Act and the relevant Rules and
\nsubmitted that the Government has chosen to impose the liability on the
\nKSBC and not on the manufacturer. The Government had the power to do so.
\nThe licence issued to the KSBC obliged it to pay all excise duties which
\nwas a condition of the licence and, therefore, the payment of excise duty
\nby the KSBC was not on behalf of anyone else but in terms of its own
\nlicence.\n<\/p>\n
He further submitted that if payment of excise duty made by the Corporation
\nis treated as made on behalf of the manufacturer on the hypothesis that the
\nexcise duty liability is that of the manufacturer, it must follow that the
\npayment of turnover tax by the Corporation must be similarly treated as
\nhaving been made on behalf of the manufacturer. He submitted that if the
\nturnover tax on excise duty is paid by the Corporation on its own behalf,
\nthen it cannot be treated as part of the turnover of the manufacturer.
\nHowever, if the excise duty is to be treated as paid on behalf of the
\nmanufacturer, then it must follow that the turnover tax on that duty must
\nalso be treated as having been paid on behalf of the manufacturer.
\nTherefore, there could be no additional liability on the manufacturer to
\npay turnover tax since the same had already been paid by the Corporation.\n<\/p>\n
Mr. Ashok Desai, Senior Advocate appearing on behalf of some of the
\nrespondents supplemented the arguments advanced by Shri Nariman and
\nsubmitted that having regard to the scheme of the Abkari Act and the Rules,
\nthe exigibility to the duty of excise was on KSBC which has the sole
\nmarketing and monopolistic rights as from 1st April, 1984. In fact that is
\nhow the authorities also understood the law till the judgment in Mohan
\nBreweries (supra) case. According to him under the legal frame work the
\nduty of excise can be paid only by the Corporation and not by the
\ndistillers. He also referred to the various provisions of the Act and the
\nrelevant Rules in support of his arguments. He also submitted that on a
\nstrict construction of the taxing statute there can be no levy of turnover
\ntax at all on the manufacturers. Reading Sections 5(1) and 5(2C) of Kerala
\nGeneral Sales Tax Act with the Schedule to the said Act he submitted that
\nthe manufacturer was not liable to pay turnover tax by including in his
\nturnover the amount of excise duty payable by KSBC. Relying upon the
\njudgment of this Court in State of Punjab and Anr v. M\/s. Devans Modern
\nBreweries and Anr<\/a>., (2003) JT (10) 485, he also submitted that all the
\nrights relating to liquor are vested in the State and the State may part
\nwith the privilege for a consideration. The levy of duty by the State of
\nKerala in the instant case was really the consideration for which the State
\nparted with its privilege in favour of the aforesaid Corporation.\n<\/p>\n
We shall first take up for consideration the submission urged on behalf of
\nthe State of Kerala that the levy of duty in the insant case is really a
\nlevy of duty of excise under Section 17 of the Abkari Act. The scheme under
\nthe Rules, after KSBC was constituted, provided for collection of the said
\nexcise duty from the aforesaid Corporation as a matter of administrative
\nconvenience. Liability, therefore, remained that of the
\ndistillers\/manufacturers and only the stage of collection of the said
\nexcise duty was deferred. On the other hand counsel for the respondents
\nsubmitted that the levy of duty in the instant case, though under Section
\n17 of the Abkari Act was not levy of duty of excise, though loosely so
\ncalled. It was in effect the consideration for parting with exclusive
\nprivilege of the State of Kerala in favour of KSBC for wholesale trade in
\nthe business of liquor permissible under Section 18A of the Abkari Act and,
\ntherefore, payable only by the KSBC.\n<\/p>\n
Mr. Nariman contended that even if the submission advanced by Mr. T.L.V.
\nIyer. that the collection of the duty of excise may be deferred to a later
\nstage for the sake of convenience, may not be disputed, yet it must first
\nbe shown that the duty levied is in reality a duty of excise. The mere fact
\nthat it has been described as a duty of excise is not conclusive unless it
\nis also shown that the duty is on manufacture. There is force in his
\ncontention because the mere fact that a duty is described as a duty of
\nexcise in a statute may not be conclusive, particularly when there is a
\ncompeting entry under which such a duty may be levied. It is, therefore,
\nalways a question for the Court to consider under which entry the tax
\nfalls. In Synthetics and Chemicals Ltd. and Ors. v. State of U.P. and Ors<\/a>
\n., [1990] 1 SCC 109 this Court has taken judicial notice of the fact that
\nin many statutes excise duty and price of privilege were regarded as one
\nand the same. This Court in paragraph 87 of the report observed :-\n<\/p>\n
“87. On an analysis of the various Abkari Acts and Excise Act<\/a>, it appears
\nthat various provinces\/States reserve to themselves in their respective
\nStates the right to transfer exclusive or other privileges only in respect
\nof manufacture and sale of alcohol and not in respect of possession and
\nuse. Not all but some of the States have provided such reservation in their
\nfavour. The price charged as a consideration for the grant of exclusive and
\nother privileges was generally regarded as an excise duty. In other words,
\nexcise duty and price for privileges were regarded as one and the same
\nthing. So-called privilege was reserved by the State mostly in respect of
\ncountry liquor and not foreign liquor which included denatured spirit.”\n<\/p>\n
Learned counsel for the parties have referred to several decisions of this
\nCourt on the question as to what is the nature of a duty of excise. It may
\nbe useful to refer to some of the decisions.\n<\/p>\n
In Re : Central Provinces and Berar Sales of Motor Spirit and Lubricants
\nTaxation Act, (1938) AIR 1939 FC 1 after considering the meaning usually
\ngiven to the term `duty of excise’ this Federal Court concluded :-\n<\/p>\n
“But its primary and fundamental meaning in English is still that of a tax
\non articles produced or manufactured in the taxing country and intended for
\nhome consumption. I am satisfied that that is also its primary and
\nfundamental meaning in India ; and no one has suggested that it has any
\nother meaning in Entry (45)………”\n<\/p>\n
“The expression `duties of excise’, taken by itself, conveys no suggestion
\nwith regard to the time or place of their collection. Only the context in
\nwhich the expression is used can tell us whether any reference to the time
\nor manner of collection is to be implied. It is not denied that laws are to
\nbe found which impose duties of excise at stages subsequent to manufacture
\nor production; but, so far as I am aware, in none of the cases in which any
\nquestion with regard to such a law has arisen was it necessary to consider
\nthe existence of a competing legislative power, such as appears in entry
\n(48).”\n<\/p>\n
Here again it was emphasized that the Courts are entitled to look at the
\nreal substance of the Act imposing the duty, and what it does and not
\nmerely what it says in order to ascertain the true nature of the tax.\n<\/p>\n
In The Province of Madras v. Messrs. Boddu Paidanna and sons : AIR (1942)
\nFC 33 the Federal Court observed as under :-\n<\/p>\n
“There is in theory nothing to prevent the Central Legislature from
\nimposing a duty of excise on a commodity as soon as it comes into
\nexistence, no matter what happens to it afterwords, whether it be sold,
\nconsumed, destroyed or given away. A taxing authority will not ordinarily
\nimpose such a duty, because it is much more convenient administratively to
\ncollect the duty (as in the case of most of the Excise Act<\/a>s) when the
\ncommodity leaves the factory for the first time, and also because the duty
\nis intended to be an indirect duty which the manufacturer or producer is to
\npass on to the ultimate consumer, which he could not do if the commodity
\nhad, for example, been destroyed in the factory itself. It is the fact of
\nmanufacture which attracts the duty, even though it may be collected
\nlater.”\n<\/p>\n
 In Governor-General in Council v. Province of Madras, AIR (1945) PC 98 the
\n Privy Council noticed the earlier decisions of the Federal Court and
\n rejected the contention before it that the power to impose a duty of
\n excise, which is given to the Federal Legislature alone by Entry No. 45 of
\n the Federal List, entitles that Legislature and no other to impose a tax
\n on first sales of goods manufactured or produced in India. Their Lordships
\n observed<\/p>\n
“To their Lordships this contention does not appear well-founded. The term
\n“duty of excise” is a somewhat flexible one : it may, no doubt, cover a tax
\non first and perhaps on other sales ; it may in a proper context have an
\neven wider meaning. An exhaustive discussion of this subject, from which
\ntheir Lordships have obtained valuable assistance, is to be found in the
\njudgment of the Federal Court in 1939 F.C.R. 18. Consistently with this
\ndecision, their Lordships are of opinion that a duty of excise is primarily
\na duty levied upon a manufacturer or producer in respect of the commodity
\nmanufactured or produced. It is a tax upon goods not upon sales or the
\nproceeds of sale of goods. Here again their Lordships find themselves in
\ncomplete accord with the reasoning and conclusions of the Federal Court in
\nthe Boddu Paidanna case. The two taxes, the one levied upon a manufacturer
\nin respect of his goods, the other upon a vendor in respect of his sales,
\nmay, as is there pointed out, in one sense overlap. But in law there is no
\noverlapping. The taxes are separate and distinct imposts. If in fact they
\noverlap, that may be because the taxing authority, imposing a duty of
\nexcise, finds it convenient to impose that duty at the moment when the
\nexciseable article leaves the factory or workshop for the first time upon
\nthe occasion of its sale. But that method of collecting the tax is an
\naccident of administration : it is not of the essence of the duty of excise
\nwhich is attracted by the manufacture itself.”\n<\/p>\n
In R.C. Jall v. Union of India<\/a>, [1962] Sppl 3 SCR 436 this Court noticed
\nthe earlier three decisions referred above and laid down the principle as
\nfollows :-\n<\/p>\n
“With great respect, we accept the principles laid down by the said three
\ndecisions in the matter of levy of an excise duty and the machinery for
\ncollection thereof. Excise duty is primarily a duty on the production or
\nmanufacture of goods produced or manufactured within the country. It is an
\nindirect duty which the manufacturer or producer passes on to the ultimate
\nconsumer, that is, its ultimate incidence will always be on consumer.
\nTherefore, subject always to the legislative competence of the taxing
\nauthority, the said tax can be levied at a convenient stage so long as the
\ncharacter of the impost, that is, it is a duty on the manufacture or
\nproduction, is not lost. The method of collection does not affect the
\nessence of the duty, but only relates to the machinery of collection for
\nadministrative convenience. Whether in a particular case the tax ceases to
\nbe in essence an excise duty, and the rational connection between the duty
\nand the person on whom it is imposed ceased to exist, is to be decided on a
\nfair construction of the provisions of a particular Act.”\n<\/p>\n
The next decision of this Court which may be noticed is the decision of the
\nFull Court in Re : The bill to amend Section 20 of the Sea Customs Act,
\n1878 and Section 3<\/a> of the Central Excises and Salt Act<\/a>, 1944 [1963] 3 SCR
\n787 in which the law was stated in the following words :-\n<\/p>\n
“This will show that the taxable event in the case of duties of excise is
\nthe manufacture of goods and the duty is not directly on the goods but on
\nthe manufacture thereof. We may in this connection contrast sales tax which
\nis also imposed with reference to goods sold, where the taxable event is
\nthe act of sale. Therefore, though both excise duty and sales-tax are
\nlevied with reference to goods, the two are very different imposts ; in one
\ncase the impositions is on the act of manufacture or production while in
\nthe other it is on the act of sale. In neither case therefore can it be
\nsaid that the excise duty or sale tax is a tax directly on the goods for in
\nthat event they will really become the same tax. It would thus appear that
\nduties of excise partake of the nature of indirect taxes as known to
\nstandard works on economics and are to be distinguished from direct taxes
\nlike taxes on property and income.”\n<\/p>\n
The principle was stated in some what similar terms in M\/s. Guruswamy and
\nCo. etc. v. State of Mysore and Ors., [1967] 1 SCR 548 which is as follows
\n:-\n<\/p>\n
“These cases establish that in order to be an excise duty (a) the levy must
\nbe upon `goods’ and (b) the taxable event must be the manufacture or
\nproduction of goods. Further the levy need not be imposed at the stage of
\nproduction or manufacture but may be imposed later.”\n<\/p>\n
The same principles have been reiterated in M\/s. Mcdowell & Co. Ltd. v.
\nC.T.O., [1977] 1 SCC 441 ; M\/s. Mcdowell & Co. Ltd. v. C.T.O., [1985] 3 SCC
\n230 ; Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer<\/a>, [1997]
\n7 SCC 542 and State of Kerala v. Madras Rubbery Factory Ltd<\/a>., [1998] 1 SCC\n<\/p>\n
616.<\/p>\n
We shall deal with the submissions urged on the basis of the decisions of
\nthis Court in Mohan Breweries (supra) and Madras Rubber Factory, (supra)
\nlater.\n<\/p>\n
In the light of these principles we now proceed to examine the question as
\nto whether the imposition of duty in the instant case under Section 17 of
\nthe Abkari Act was really a `duty of excise’.\n<\/p>\n
As we have noticed earlier the duty on liquor is imposed under Section 17
\nof the Abkari Act. There is no doubt that it is described as a `duty of
\nexcise’. The Government has a discretion to levy or not to levy such duty
\non all liquor and intoxicating drugs in cases covered by clauses (a) to (g)
\nof Section 17<\/a>. Clauses (d) and (e) which relate to liquor manufactured
\nunder any licence granted under Section 12<\/a> or manufactured at any
\ndistillery, brewery, winery or other manufactory established under Section
\n14<\/a>, no doubt relate to imposition of duty of excise properly so called
\nbecause the duty levied on liquor manufactured under a licence granted
\nunder Section 12<\/a> or 14 is duty on manufacture and will squarely falls
\nwithin the meaning of the term `duty of excise’. However, clauses (b), (c),\n<\/p>\n
(f) and (g) contemplate events which are not related to manufacture, such
\nas liquor permitted to be exported or permitted to be transported under
\nclauses (b) and (c) or liquor issued from a distillery under clause (f) or
\nsold in any part of the State under clause (g). If the duty of excise is
\nlevied under Section 17<\/a> read with clauses (b), (c), (f) and (g) it may not
\nbe possible to contend that what is levied is a duty of excise since the
\ntaxing event envisaged under the aforesaid clauses do not relate to
\nmanufacture. Learned counsel for the respondents, in particular, emphasized
\nclause (f) of Section 17<\/a> because it is their contention that in the instant
\ncase the levy of duty is under clause (f) of Section 17<\/a> since the State
\nintended to recover duty from KSBC on the issue of liquor from its
\nwarehouses in course of its monopoly wholesale trade. It was further
\nemphasized that Section 18A<\/a> which related to grant of exclusive or other
\nprivilege of manufacturing or supply by wholesale etc. enabled the State to
\ngrant such privilege on the basis of annual rental by way of consideration
\nfor the grant of such privilege and the rental could be collected to the
\nexclusion of or in addition to the duty or tax leviable under Sections 17<\/a>
\nand 18<\/a>.\n<\/p>\n
So viewed there can be no doubt that the levy of duty under Section 17<\/a> need
\nnot necessarily be a duty of excise stricto sensu. In each case the Court
\nhas to consider whether, having regard to the nature of levy, it is a duty
\nof excise or other impost.\n<\/p>\n
We have earlier noticed that under Rule 11 of the Foreign Liquor (Storage
\nin Bond) Rules, 1961, foreign liquor stored in the bonded warehouse can be
\nremoved only to the premises licensed under FL 9 licence held by a bonded
\nwarehouse licensee and such removal shall be under cover of a pass granted
\nin that behalf and on payment of excise duty due. The same Rules provide
\nthat any person desiring to store in bond foreign liquor shall make an
\napplication for licence in that behalf to the Commissioner of Excise
\ncontaining the particulars mentioned therein. It also obliges the applicant
\nto execute an agreement in Form A undertaking to abide by the provisions of
\nthe Act, the Rules and orders made thereunder and the conditions of the
\nlicence and also agrees to pay the prescribed duty therefor. Rule 14 of the
\nRules provides for the issuance of a licence in Form BW1 to KSBC for the
\npurpose of storage in bond and supply of foreign liquor in wholesale to FL9
\nlicensee under the Foreign Liquor Rules, 1953. Rule 13(9) of the Foreign
\nLiquor Rules mandates that licence in Form FL9 shall be issued by the
\nExcise Commissioner only to KSBC possessing licence in Form BW1 under the
\nForeign Liquor (Storage in Bond) Rules, 1961.\n<\/p>\n
These Rules leave no manner of doubt that they create a complete monopoly
\nin favour of KSBC insofar as wholesale trade in IMFL is concerned. The
\nmanufacturer must sell all their produce to KSBC which alone is entitled to
\nthe issuance of licence in Form FL9 and which is also issued a licence in
\nForm BW1. The Corporation has also executed an agreement in Form A which
\nobliges it to pay duties payable on the liquor. In view of these Rules, it
\nwas submitted that in effect the State of Kerala has parted with its
\nprivilege of wholesale business in IMFL in favour of KSBC for a
\nconsideration. The licence issued in favour of KSBC obliges it to pay the
\nduty and it does so not on behalf of anyone else but in terms of its own
\nlicence.\n<\/p>\n
Learned counsel for the parties have also drawn our attention to the
\nNotifications issued by the Government from time to time under Section 17<\/a>
\nof the Act. The relevant portion of the Notificatiosn reads thus :-\n<\/p>\n
“SRO 60\/61<\/p>\n
The Government of Kerala hereby direct that the duty under the said Section
\nshall be levied on the following kind of liquors manufactured in the area
\nwhere the said Act is in force or manufactured elsewhere in India and
\nimported into the said area by land or under bond by sea, at the rates
\nmentioned against each kind of liquor.”\n<\/p>\n
It was argued that the Notifications suggest that such duties are levied
\neither on goods manufactured in the area or imported into the area. It was
\nalso submitted that an essential characteristic of `duty of excise’ is a
\nuniformity of incidence. It cannot vary from notification to notification.\n<\/p>\n
From a perusal of Notification No. SOR 60\/61 issued on 18th March, 1961 it
\nappears that different rates of duties have been prescribed for different
\nkinds of liquor. So far as Indian Made Foreign Spirits, except that
\nconsumed by defence services personnel, the rate of duty prescribed was Rs.
\n12\/- per proof litre. For the Indian Made Foreign Spirits for defence
\nservices the rate was Rs. 3 per proof litre. This was subsequently
\nsubstituted by Notification dated 23rd April, 1964 whereunder for the
\nIndian Made Foreign Spirits when exported by distillers to Goa and not re-
\nimported into the State, the rate of duty was 45 np. per proof litre
\nsubject to the enumerated conditions being satisfied. In other cases it was
\nRs. 14\/- per proof litre. However, in the case of Indian Made Foreign
\nSpirits for defence services personnel supplied through Canteen Stores
\nDepartment etc. the duty is Rs.3\/- per proof litre. Similarly under
\nNotification No. 330 of 1996 the rate of duty on Indian Made Foreign Liquor
\nwhen exported by distillers and not re-imported into the State was Rs. 5\/-
\nper proof litre subject to the conditions being satisfied. In other cases
\nthe rate of excise duty levied was an amount equivalent to 100 % of its
\nvalue. It is, therefore, apparent that under the same Notification
\npurported to be issued under Sections 6, 7, 17 and 18 of the Abkari Act
\nduties were levied on liquors manufactured in the State or exported outside
\nthe State or manufactured elsewhere in India and imported into the State by
\nland or sea under bond. The duty levied on import of liquor would be
\nimpermissible under Entry 51 of List II. Apparently, therefore, the duty is
\nreferable to Entry 8 of List II. It was rightly submitted that if the duty
\nimposed was in the nature of excise duty on manufacture, different rates
\ncould not have been prescribed depending upon whether it is sold in the
\nmarket or consumed by the defence services personnel.\n<\/p>\n
It should also be noticed that having regard to the language of the
\nNotifications it cannot be said that duty is levied on manufacturer because
\nNotifications suggest that such duty would be levied either on the goods
\nmanufactured in the area or imported in the area. As earlier observed, the
\nduty levied on import of liquor is referable only to Entry 8 of List II and
\nnot Entry 51 thereof.\n<\/p>\n
We may also notice that the stand of KSBC before the High Court and before
\nthis Court has been that supplies were effected to it by the
\nmanufacturers\/distillers in accordance with the relevant Rules without
\ncharging excise duty when the supplies were effected. In accordance with
\nthe provisions of the Abkari Act and Rule 11 of the Foreign Liquor (Storage
\nin Bond) Rules, 1961, goods purchased by the Corporation during the
\nrelevant period were without payment of excise duty and the excise duty
\nthereon was payable at the time of removal of goods from the bonded
\nwarehouse to FL9 premises. The Corporation remitted turnover tax on the
\ntotal value of turnover of the Corporation for each year at the rate of
\nturnover tax prevalent during the relevant year. The turnover of the
\nCorporation was computed so as to include the value of the goods at which
\nthe supplies were received by the Corporation, excise duty paid by the
\nCorporation, profit margin of the Corporation and sales tax paid by the
\nCorporation. It is thus admitted by the Corporation that under Rule 11 of
\nthe (Storage in Bond) Rules the duty was payable when the goods moved out
\nfrom its bonded warehouse to FL9 premises. This also supports the
\nsubmission of the respondents that the duty was levied at the stage of
\nmovement of the goods from the bonded warehouse of the Corporation to the
\nFL9 premises and, therefore, the levy of duty in terms of Rule 11 must
\nnecessarily be traced to Section 17(f)<\/a> which levied duty on liquor “issued
\nfrom a distillery, brewery, winery or other manufactory or warehouse
\nlicensed or established under Section 12<\/a> or Section 14<\/a>“. Even the parties
\nunderstood that it was for the KSBC to pay the duty in terms of licence.
\nNotifications have been issued under Section 17<\/a> and not specifically under
\nany of the sub-clauses thereof. It would, therefore, not be correct to
\ncontend that the duty was levied on manufacture only.\n<\/p>\n
In this connection we may usefully refer to the decision of this Court in
\nState of Punjab and Anr. v. M\/s. Devans Modern Brewaries Ltd. and Anr<\/a>.,
\n(supra). In that case the State of Kerala was also a party. The State had
\nimposed tax on import of potable liquor manufactured in other States. The
\nstand of the State was that it was within the province of the State to
\nimpose restriction on import of potable liquor by imposing import duty. The
\naforesaid duty had not been imposed by the State in exercise of its
\nstatutory power conferred upon it in terms of Entry 51 List II of the
\nSeventh Schedule to the Constitution but regulatory power as envisaged in
\nEntry 8 thereof. The contention raised on behalf of the respondents was
\nthat the requirements of Articles 301 & 304 of the Constitution of India
\nwere to be complied with in view of the fact that the duty of import must
\nconform to the provisions of Entry 51 of List II. The submission of the
\nrespondents was rejected and those advanced on behalf of the State of
\nKerala were accepted. This Court observed that the word `fee’ is not used
\nin the strict sense to attract the doctrine of quid pro quo. This was the
\nprice or consideration which the State Government had charged for parting
\nwith its privilege and granting the same to the vendors. Therefore, the
\namount charged was neither a fee nor a tax but was in the nature of price
\nof a privilege which the purchaser had to pay in any trading and business
\nin noxious article\/goods. This Court held that the permissive privilege to
\ndeal in liquor is not a `right’ at all. The levy charged for parting with
\nits privilege is neither a tax nor a fee. It is simply a levy for the act
\nof granting permission or for the exercise of power to part with that
\nprivilege. This Court referred to numerous decisions of this Court which
\nhave clearly held that the State has a right to exercise all forms of
\ncontrol in relation to all aspects regarding potable alcohol and the State
\nLegislature has exclusive competence to frame laws in that regard. The
\nState has exclusive right in relation to potable liquor and there was no
\nfundamental right to do trade or business in intoxicants. The State in its
\nregulatory power has the right to prohibit absolutely every form or
\nactivity in relation to intoxicants – its manufacture, storage, export,
\nimport , sale and possession and all these rights are vested in the State
\nand indeed without such vesting there can be no effective regulation of
\nvarious forms of activities in relation to intoxicants. In Devans Modern,
\ncase (supra) this Court held :-\n<\/p>\n
“The Kerala State Beverages Corporation has licence only for wholesale and
\nretail and retail of liquor which will not authorize them to import liquor
\nand that the only licence issued to import liquor into the State is the
\npermit issued on payment of the import fee and, therefore, it is seen that
\nthe levy of import fee is authorized by sections 6 and 24 of the Abkari
\nAct, 1077. It is not excise duty or countervailing duty referable to Entry
\n51 of List II. It is a collection failing under Entry 8 of List II. It is
\nthe price paid to the State for parting with its exclusive privilege of
\ndealing in liquor which includes every fact of it including its import. In
\nmy view, the State has the right to prohibit every form of activity in
\nrelation to intoxicant including its import.”\n<\/p>\n
It, therefore, held that the levy was permissible and authorized under
\nSections 6, 7, 17 and 18 of the Abkari Act. This decision supports the view
\nthat the levy of so called excise duty under the Abkari Act may be
\nreferable to Entry 8 of List II and not Entry 51 thereof.\n<\/p>\n
In the passing we may observe that the majority decision has also referred
\nto the judgment of the Kerala High Court in the first batch of appeals
\nbefore us, and two passages from the impugned decision have been quoted
\nwith approval in paragraph 335 of the report, which reads as under:-\n<\/p>\n
“The manufacture and sale of liquor are the exclusive privilege of the
\nState and the State, by the process of licensing, is parting with the said
\nprivilege and what is charged by the State is only the privilege price
\nthrough the process of licensing and it is not excise duty.”\n<\/p>\n
“The concept of excise duty on production and manufacture as understood in
\nthe Central Excise Act<\/a> cannot be equated in the case of excise duty under
\nthe Abkari Act since the manufacture and the sale of liquor are the
\nexclusive privilege of the State and the State, by the process of licensing
\nis parting with the said privilege and what is charged by the State is only
\nthe privilege price through the process of licensing the price and it is
\nnot excise duty.”\n<\/p>\n
We have carefully perused the impugned judgment but we find that the
\npassages quoted therein were not the findings of the High Court but the
\nsubmissions advanced on behalf of the petitioners (respondents herein)
\nwhich are to be found in paragraphs 15 and 44 of the impugned judgment. In
\nfact as we have noticed earlier in this judgment, the High Court in the
\nfirst batch of writ petitions proceeded on the basis that the duty levied
\nwas a duty of excise but the liability did not fall on the
\nmanufacturers\/distillers and was payable only by the KSBC after sale of the
\nliquor by the manufacturers.\n<\/p>\n
So far as the judgment in Mohan Breweries, (supra) is concerned it may be
\nnoticed that the question which has been raised in this batch of appeals
\nwas not raised therein, and the Court proceeded on the basis that the levy
\nwas in the nature of duty of excise as is ordinarily understood. In Madras
\nRubber Factory, case (supra) the charging section imposing the rubber cess
\nwas quite clear. Sub-section (1) provided for the levy and collection as a
\ncess a duty of excise on all rubber produced in India at such rate not
\nexceeding one anna per pound of rubber so produced as the Central
\nGovernment may, by the same or a like notification, from time to time fix.
\nSub-section (2) provided that the said duty of excise shall be payable by
\nthe owner of the estate on which the rubber is produced, and shall be paid
\nby him to the Board within one month from the date on which he received a
\nnotice of payment therefore from the Board. In view of the clear language
\nof the charging section which saddled the owner of the estate on which the
\nrubber is produced with the liability to pay the said duty of excise, this
\nCourt held that the liability to pay the said amount of cess got attached
\nto the rubber so produced and, therefore, if the rules did not provide for
\nthe excise duty to be paid by the producer then who ever purchased the said
\nrubber would be purchasing goods to which the liability of payment of duty
\nwas attached. We do not find such a provision in the Kerala Abkari Act.\n<\/p>\n
From the above discussions the following conclusions emerge:-\n<\/p>\n
1.\tSection 17 of the Kerala Abkari Act deals with imposition of duty
\nnot necessarily connected with manufacture of liquor and, therefore, the
\nduty levied must in each case be examined before coming to a conclusion as
\nto whether it is in reality a duty of excise.\n<\/p>\n
2.\tThe use of the words “duty of excise” in Section 17<\/a> of the Act is
\nnot conclusive and it is for the Courts to examine in each case as to
\nwhether it is in fact a “duty of excise”.\n<\/p>\n
3.\tIn order that a duty may be characterized as “duty of excise” it
\nmust be shown that it is a duty on manufacture of goods. If it is unrelated
\nto the manufacture of goods, it may be any other impost permitted by law,
\nbut would not qualify as a duty of excise.\n<\/p>\n
4.\tSection 18A<\/a> of the Act permits the State of Kerala to grant
\nexclusive or other privilege of manufacture etc. on payment of rentals
\nwhich includes the privilege of supplying liquor by wholesale or by retail.
\nThe annual rental payable under Section 18A<\/a> may be collected to the
\nexclusion of or in addition to duty or tax leviable under Sections 17<\/a> and
\n18<\/a> of the Act.\n<\/p>\n
5.\tThat the State of Kerala by amendment of the Act and the relevant
\nRules created a monopoly in favour of the Kerala State Beverages
\nCorporation. Licences in Form FL9 and BW1 have been given exclusively to
\nthe aforesaid Corporation which has also executed an agreement in Form A
\nundertaking to pay the duty. A monopoly has been created in favour of the
\naforesaid Corporation in the wholesale trade of IMFL. In view of Rule 11 of
\nthe (Storage in Bond) Rules duty is payable on the movement of IMFL from
\nthe bonded warehouse of the Beverages Corporation to the FL9 licensed
\npremises. It is payable when IMFL is issued from the bonded warehouse of
\nthe Corporation.\n<\/p>\n
6.\tThe levy of duty on IMFL issued from a bonded warehouse licensed or
\nestablished under Section 12<\/a> or Section 14<\/a> of the Act is referable to the
\nduty levied under Section 17(f) of the Kerala Abkari Act.\n<\/p>\n
7.\tThe Notifications issued by the Government relate both to goods
\nmanufactured in the area or imported into the area .\n<\/p>\n
8.\tThe duty levied is on goods and not on manufacture.\n<\/p>\n
Taking all these factors into account and having regard to the Scheme of
\nmonopoly introduced by the State of Kerala in the year 1984 we must hold
\nthat the levy of duty is not a levy in the nature of `duty of excise’ but
\nis the privilege price payable by KSBC in consideration of the State
\nparting with its exclusive privilege of wholesale trade in IMFL in favour
\nof the aforesaid Corporation.\n<\/p>\n
It was alternatively submitted on behalf of the State that even if it is
\nheld that what is levied is privilege price it will still form part of the
\nsale price of the liquor sold by the distillers to the Beverages
\nCorporation and hence part of the taxable turnover for the purpose of levy
\nof turnover tax. The respondents on the other hand contend that by its very
\nnature the privilege price must be paid by the beneficiary and is not
\ncapable of being transferred to the manufacturers\/distillers from whom the
\nIMFL is purchased for wholesale trade.\n<\/p>\n
We are of the view that if the privilege price is a part of the
\nconsideration payable by the Corporation to the manufacturers for supply of
\nIMFL to the Corporation it will certainly be a component of the sale price
\nof the liquor sold by the manufacturers to the Beverages Corporation. If it
\nis not so, then the respondents are right in contending that having regard
\nto its very nature, privilege price is a price which the beneficiary, in
\nwhose favour the State parts with its privilege, must pay. In this case
\nsince the State has parted with its exclusive privilege of wholesale trade
\nin IMFL and that right has been conferred exclusively on the Beverages
\nCorporation, it is the Beverages Corporation which must pay the privilege
\nprice in addition to the annual rental payable by it.\n<\/p>\n
In view of our above finding, it is not necessary to consider the
\nalternative submission of Mr. Nariman that even if the levy is found to be
\na duty of excise, its incidence did not fall on the manufacturer or the
\nproducer.\n<\/p>\n
In view of our finding that the duty imposed is not a duty of excise but
\nrepresents the privilege price charged by the Government from KSBC as a
\nconsideration for parting with its exclusive privilege to sell liquor by
\nwholesale in the State of Kerala, the respondents are not liable to include
\nthat duty paid by the Beverages Corporation in their turnover. However, the
\nposition changed radically with effect from January 5, 1999. The High Court
\nnoticed this fact in paragraph 67 of the judgment, namely – that with
\neffect from January 5, 1999 in view of the amendment to Foreign Liquor
\nRules, the KSBC could not purchase IMFL from the manufacturers\/distillers
\nwithout payment of duty. In view of the amendment, the KSBC had to pay duty
\nbefore it could lift the stock of IMFL from the manufacturers’ warehouse to
\nits own licensed premises. Thus the KSBC paid to the manufacturers the duty
\npayable in respect of IMFL and consequently the amount of duty paid formed
\npart of the consideration for which the property in goods passed to the
\nKSBC. We have earlier noticed the amendments made to the Foreign Liquor
\nRules which leave no room for doubt that with effect from January 5, 1999
\nthe manufacturers\/ distillers (respondents herein) were bound to include in
\ntheir turnover the amount paid to them by the KSBC by way of duty levied
\nunder the Abkari Act together with the price of the liquor purchased from
\nthem. The learned Judges noticed this fact but granted relief in broad
\nterms as prayed for by the respondents. In our view the High Court fell
\ninto an error in doing so. It ought to have held that in any event with
\neffect from January 5, 1999 the respondents – manufacturers\/distillers were
\nbound to include in their turnover the amount of duty paid to them by the
\nKSBC since that formed part of the consideration for sale of IMFL to the
\nsaid Corporation. We, therefore, hold that from January 5, 1999, the date
\nwith effect from which the KSBC started paying duty to the
\nmanufacturers\/distillers before lifting the stock of IMFL to its own
\nlicensed premises, the amount of duty paid formed part of the consideration
\npaid by the Corporation to the manufacturers and consequently it formed
\npart of the turnover of the manufacturers.\n<\/p>\n
Mr. Ashok Desai, Senior Advocate appearing on behalf of some of the
\nrespondents strenuously urged before us that in view of the provisions of
\nSection 5(1)<\/a> and Section 5(2C) of the Kerala General Sales Tax Act, there
\nwas no liability on the manufacturer of liquor to pay turnover tax on the
\nsale of IMFL. We find no merit in this submission.\n<\/p>\n
The levy of tax under the Kerala General Sales Tax Act, 1963 is by virtue
\nof Section 5<\/a>. Section 5(1)<\/a> deals with levy of Sales Tax, whilst Section
\n5(2C)(i)<\/a> deals with turnover tax. The relevant portion of this Section
\nreads as follows :-\n<\/p>\n
“5. Levy of tax on sale or purchase of goods :- (1) Every dealer (other
\nthan a casual trader or agent of a non-resident dealer) whose total
\nturnover for a year is not less than `two lakh rupees and every casual
\ntrader or agent of a non-resident dealer, whatever be his total turnover
\nfor the year, shall pay tax on his taxable turnover for that year,-\n<\/p>\n
(i) in the case of goods specified in the First or Second Schedule, at the
\nrates and only at the points specified against such goods in the said
\nSchedules.”\n<\/p>\n
“5(2C)(i) Notwithstanding anything contained in this Act or the Rules made
\nthereunder every dealer shall pay turnover tax on the turnover of goods as
\nspecified hereunder, namely :-\n<\/p>\n
\t.....\t                          .....\n\t.....\n\n<\/pre>\n
(b)\tby any dealer in Foreign Liquor (Indian made) or Foreign Liquor
\n(Foreign made) as specified in entries against serial numbers 53 and 54 of
\nthe First Schedule at the rate of five percent on the turnover at all
\npoints.”\n<\/p>\n
Thus under Section 5(1)(i)<\/a> tax is payable (a) on goods specified in the
\nFirst and Second Schedule, (b) at the rates and (c) at the points specified
\nagainst such goods in the said Schedules. However, under Section 5(2C)<\/a>
\nwhich is the charging Section “Notwithstanding anything contained in this
\nAct or the Rules” “every dealer shall pay turnover tax.” Thus, no dealer is
\nexempted from paying turnover tax. The turnover tax is to be paid “as
\nspecified hereunder”, and not at rates and at points specified in the First
\nSchedule. The rate is specified in (2C)(i)(b) at 5% on the turnover at all
\npoints. Thus under Section 5(2C)(i)<\/a> every dealer has to pay at the rate of
\n5% at all points. The opening part of Section 5(2C)(i)(b)<\/a>, i.e., the words
\n“by any dealer in Foreign Liquor (Indian made) or Foreign Liquor (Foreign
\nmade) as specified in entries against serial numbers 53 and 54 of the First
\nSchedule”, do not detract from this portion. Here also the tax is to be
\npaid by “any dealer”, “as specified in entries against serial numbers 53
\nand 54 of the First Schedule” go with the words “in Foreign Liquor (Indian
\nmade) or Foreign Liquor (Foreign made)”. It is the Foreign Liquor which is
\nspecified in entries 53 and 54. The words “By any dealer” only go with “in
\nForeign Liquor (Indian made) or Foreign Liquor (Foreign made)”. In other
\nwords, it is the goods, which are specified in entries 53 and 54 of the
\nFirst Schedule. This becomes very clear if one looks at the First Schedule.
\nThe First Schedule deals with “goods in respect of which a single point of
\ntax is leviable under sub-section (1) or sub-section (2) of Section 5<\/a>“. The
\nfour columns in the First Schedule set out (1) the Serial Number, (2)
\nDescription of goods, (3) Point of levy and (4) Rate of Tax – %. In the
\nFirst Schedule there is no column for dealer. The reference to a dealer is
\nonly in column (3) which will indicate the point of time at which a dealer
\nwill pay tax. If under the charging Section the point of time is not to be
\nas per the First Schedule, then one will not consider column (3) at all.
\nThis is clear as the only items are “goods”, “point of levy” and “Rate of
\nTax – %”. With this in mind if one now look at Section 5(1)(i)<\/a> it becomes
\nclear that thereunder the Sales Tax is payable on the “goods”, “at the
\npoints” and “at the rates” specified in the Schedules. Whilst considering
\npoint and rate at which levy is to be made under Section 5(1)(i)<\/a> the levy
\nand rate will be as per the First Schedule but under Section 5(2C)(i)(b)<\/a>
\nthe levy is at all points and at 5% of the turnover. It is only if one has
\nto see at what point and at what rate the levy is to be made that one will
\ntake columns (3) and (4) of the First Schedule into consideration. As
\nagainst this under Section 5(2C)(i)<\/a> the turnover tax is on “Foreign Liquor”
\nspecified in entries 53 and 54, i.e., in column (2) of entries 53 and 54.
\nThe turnover tax is at the fixed rate of 5% on the turnover at all points.
\nThus, in Section 5(2C)(i)<\/a> there is no reference to columns (3) and (4) of
\nthe First Schedule. This is clear from the fact that under Section 5(2C)<\/a>,
\nwhich is the charging Section, turnover tax is payable by “all dealers”.
\nThe term “dealer” is defined in Section 2(viii)<\/a> and admittedly covers the
\nRespondents. If the interpretation sought to be placed by the Respondents
\nis accepted then there would be a conflict between Section 5(2C)(i)<\/a> which
\nprescribed rate of 5% on the turnover at all points and columns (3) and (4)
\nof the First Schedule under which tax is only at point of first sale in the
\nState and at rate of 75%. It must, therefore, follows that the words “goods
\nas specified” in Section 5(2C)(i)<\/a>, has reference only to the description of
\ngoods under Entry 53 of Schedule I, namely “Foreign Liquor (Indian made)”.
\nIn the case of inconsistency, Section 5(2C)(i)<\/a> must prevail over the
\nSchedule in view of the non obstante clause.\n<\/p>\n
If submission on behalf of the Respondents is accepted and it is held that
\nthe words “as specified in entries against serial numbers 53 and 54 of the
\nFirst Schedule” go with the words “by any dealer”, even then under column
\n(3) of Entries 53 and 54 of the First Schedule the relevant words are “by a
\ndealer who is liable to pay tax under Section 5<\/a>“. Admittedly, the
\nRespondents are dealers who are liable to pay tax under Section 5<\/a>. They
\nonly get exempt from paying tax under Section 5(1)(b)<\/a> because the sales tax
\nis to be paid “at the rates” and “only at points specified against the
\ngoods in the First Schedule”. Under column (3) of the First Schedule in
\nentries 53 and 54 the points of levy are (a) for the Kerala State Beverages
\nCorporation the point of levy is at time of sale, (b) by a dealer, who is
\nliable to tax under Section 5<\/a>, the levy is at point of first sale. However,
\nif the first sale is to Kerala State Beverages Corporation then at that
\npoint there is no levy under Section 5(1)(b)<\/a> because the charging Section
\nprovide that the levy is to be as per the Schedule. Section 5(2C)(i)<\/a> does
\nnot lay down that tax is to be paid at the point and at the rate specified
\nagainst the goods in the Schedule. Under Section 5(2C)(i)<\/a> the tax is at the
\nrate of 5% on the turnover at all points.\n<\/p>\n
Thus the Respondent would in any event be liable to pay turnover tax on
\ntheir turnover. Further, in the 1st judgment there is no discussion on this
\naspect at all. In the 2nd judgment the decision is against the Respondents
\non this aspect against which they have filed no Appeal. We entirely concur
\nwith the view of the High Court in the second batch of writ petitions on
\nthis aspect of the matter.\n<\/p>\n
The High Court, however, held that the amendment of Section 5(2C) of the
\nKerala General Sales Tax Act by adding an explanation which was brought
\ninto effect retrospectively from July 1, 1987, did not remove the
\nconstitutional invalidity in the statute because in view of the finding
\nrecorded by the High Court that the manufacturers were not liable to pay
\nexcise duty, an amendment to the Sales Tax Act<\/a> could serve no purpose
\nunless lacuna was removed by appropriate amendment to the Abkari Act. We
\nfind ourselves in complete agreement with the view of the High Court
\nbecause if the Act imposing the levy did not impose upon the manufacturers
\nthe liability to pay excise duty, by an amendment of the Sales Tax Act<\/a> the
\nsame could not be included in their turnover.\n<\/p>\n
In the result Civil Appeal Nos.2249-2257 of 2000 are partly allowed and it
\nis declared that the respondents – manufacturers\/ distillers are liable to
\npay turnover tax. It is declared that the respondents – manufacturers are
\nliable to include in their turnover the amount of duty paid to them by KSBC
\nand included in the consideration for sale of IMFL to the aforesaid
\nCorporation with effect from January 5, 1999 and pay the turnover tax
\naccordingly.\n<\/p>\n
Civil Appeal Nos. 95 of 2003; 102 of 2003 ; 622 of 2003 ; Appeal arising
\nout of SLP (c) No. 1032 of 2003 ; Civil Appeal Nos. 5099 of 2003 ; 5100 of
\n2003 ; 5101 of 2003 ; 5102 of 2003 ; 5103 of 2003 ; 6515 of 2003 ; 6516 of
\n2003 ; 7952 of 2003 and 7954 of 2003 are dismissed.\n<\/p>\n
No order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005 Author: B Singh Bench: Hegde, N. Santosh (J), Variava, S.N. (J), Singh, Bisheshwar P. (J), Sema, Hotoi Khetoho (J), Sinha, S.B. (J) CASE NO.: Appeal (civil) 2249-2257 of 2000 PETITIONER: State of Kerala and Ors. RESPONDENT: Maharashtra […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-253756","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nState Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"2005-05-05T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-04-12T03:45:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"95 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005\",\"datePublished\":\"2005-05-05T18:30:00+00:00\",\"dateModified\":\"2018-04-12T03:45:01+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\"},\"wordCount\":18949,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#organization\"},\"articleSection\":[\"Supreme Court of India\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\",\"url\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\",\"name\":\"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#website\"},\"datePublished\":\"2005-05-05T18:30:00+00:00\",\"dateModified\":\"2018-04-12T03:45:01+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.legalindia.com\/judgments\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#website\",\"url\":\"https:\/\/www.legalindia.com\/judgments\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\/\/www.legalindia.com\/judgments\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg\",\"contentUrl\":\"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/LegalindiaCom\/\",\"https:\/\/x.com\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\/\/www.legalindia.com\",\"https:\/\/x.com\/legaliadmin\"],\"url\":\"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","og_locale":"en_US","og_type":"article","og_title":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"2005-05-05T18:30:00+00:00","article_modified_time":"2018-04-12T03:45:01+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"95 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005","datePublished":"2005-05-05T18:30:00+00:00","dateModified":"2018-04-12T03:45:01+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005"},"wordCount":18949,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Supreme Court of India"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","url":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005","name":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. ... on 6 May, 2005 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"2005-05-05T18:30:00+00:00","dateModified":"2018-04-12T03:45:01+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/state-of-kerala-and-ors-vs-maharashtra-distilleries-ltd-on-6-may-2005#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"State Of Kerala And Ors vs Maharashtra Distilleries Ltd. … on 6 May, 2005"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/253756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=253756"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/253756\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=253756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=253756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=253756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}