LILASONS BREWERIES (PVT.) LTD. versus STATE OF MADHYA PRADESH AND ORS.

Citation: [1992] 2 S.C.R. 595 · Decided: 21-04-1992 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Appeal(s) allowed

cites 3 · see the full citation network in Lexace

Judgment (excerpt)

-
LILASONS BREWERIES (PVT.) LTD. 
v. 
STATE OF MADHYA PRADESH AND ORS. 
APRIL 21, 1992 
[MADAN MOHAN PUNCHHI AND G.N. RAY, JJ.) 
Madhya Pradesh Excise Act, 1915: Sections 13,18,25,27,28 and 
62(2)(h). 
A 
B 
Madhya Pradesh Brewery Rules, 1970: Rule 22-Nature of levy under C 
c;nd validity of-Brewerie~Appointment of Excise Officers as Incharge of 
breweries-Provision for pay of such Officers-Rule providing that their pay 
should be met by State but when the charges exceed five per cent of the duty 
leviable the excess shall be realised from the brewer-Rule 22 held ultra vires 
and beyond the Rule making power of State-Levy under Rule 22 ht;ld as 
additional exCise duty not actually due and not authorised by Section 25. 
D 
Rule 22 of the Madhya Pradesh Brewery Rules, 1970 empowers the 
Excise Commissioner to appoint an officer-in-charge of the brewery and 
fo appoint such other officers of the excise department as he may deem fit 
tO be incharge of the brewery with the object of exercising a control over E 
the breweries. It further provides that the pay of all such officers shall be 
met by the Government but in case the annual charges and pay of such 
officers exceed 5% of the duty leviable on the issue made from the brewery 
to the districts within the State then the excess shall be realised from the 
brewer. 
F 
Demands raised under the said Rule on the appellant-brewery were 
challenged by it and a Division Bench of the Madhya Pradesh High Court 
upheld the same holding that (i) the demand under Rule 22 was in the 
nature of a condition of licence for brewery; and (ii) Section 62(2)(h) read 
with Section 28 of the Madhya Pradesh Excise Act, 1915 was wide enough G 
to enable the State Government to make the impugned rule as a condition 
of the licence. 
In appeal to this Court, it was contended on behalf of the appellant-
brewery that the excise duty leviable under the Act was a tax imposed by 
the State Legislature in exercise of its plenary powers and there cannot be H 
595 
----
596 
SUPREME COURT REPORTS 
(1992] 2 S.C.R. 
A 
a further demand, which is in the nature of an additional duty, by means 
of a rule. 
B 
c 
On behalf of the, State it was contended that the demand under Rule 
22 was nothing but a further fee or additional· consideration, apart from 
Licence fee, which was neither a further duty nor a further tax and the 
demand was referable to sections 27 and 28 of the Excise Act. 
Allowing the appeal and setting aside the judgment of the High 
Court, this Court, 
HELD : 1. Rule 22 of the Madhya Pradesh Brewery Rules, 1970 to 
the extent-it permits raising a demand, which in sum and substance is 
additional excise duty, without its being actually due is ultra vires the Act 
and beyond the rule making power of the State. [604 E] 
2. The excise duty collected goes to the coffers of the State. The pay 
D 
of officers have to come out from coffers of the State. Under Rule 22 five 
per cent of the duty leviable is assessed to meet the pay of such officers, 
which the Government, but for the Rule, is oth~rwise supposed to meet. 
This part of the rule is purely internal between the Government and its 
officers. The licensee is least concerned as to how t~e excise duty leviable · 
E 
would be appropriated. It is only in the case of a shortfall when the excess 
is sought to be realised from the brewer that he gets affected. The excess · 
is obviously the. sum which falls short of the duty leviable. It cannot for a 
moment be suggested that when there is a shortfall, the demand is as if of 
an "additional fee or consideration" and not additional excise duty. It is 
obvious from the language of Rule 22 that in the event of the excise duty 
F 
leviable falling short of the expected five per cent to meet· the pays of the 
officers cannot be met therefrom, the State has all the same to pay. The 
measure under Rule 22 goes to recoup the State of the charges by demand· 
ing a sum equal to the duty leviable to that extent without liftingiexciseable 
articles. On this understanding arrived at the demand cannot be sustained 
G and is quashed. [603 C-H~ 604-E] 
3. Though under Section 28 of the Excise Act licences are issued on 
the prescribed forms and on payment of such fee as prescribed and 
licences containing such particulars as the State Government may direct 
etc. this power even though wide is yet confined within its frame and can 
H in no event assume the power to impose or levy a tax or excise duty by 
• 
-
LILA

Excerpt shown. Read the full judgment & AI analysis in Lexace.