M/S. GUPTA MODERN BREWERIES versus STATE OF JAMMU & KASHMIR & ORS.

Citation: [2007] 5 S.C.R. 343 · Decided: 19-04-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

MIS. GUPTA MODERN BREWERIES 
A 
v. 
STATE OF JAMMU & KASHMIR & ORS. 
APRIL 19, 2007 
[H.K. SEMA AND V.S. SIRPURKAR, JJ.] 
B 
Taxation: 
Jammu and Kashmir Distillery Rules, 1946-Rule 17-Stipulating that 
expenditure on salary of excise department posted at the appellant's distillery C 
to be recovered from the appellant-Reasonableness of-Held: Unreasonable 
and arbitrary-Excise department rendering services to ensure that the 
denaturing of spirit is done properly by manufacturer and also for specifically 
seeing that the denatured spirit does not go out of hands, either of distillery 
owner or retail seller-As there is no correlation between expenditure incurred D 
by government and fees sought to be charged under Rule 17, Provision 
thereof is tax and not fee-Since Rule 17 does not have statutory backing, 
imposition thereunder is impermissible-Jammu and Kashmir Excise Act, 
1901-s.25. 
Tax and fee-Distinction between-Discussed 
Constitution of India, 1950: Art.265-Tax-lmposition of-Held, can 
be only by way of legislation and not by way of bye laws and rules. 
E 
On 5.9.1973, an order was passed by the Excise Commissioner under 
Rule 17 of the Jammu and Kashmir Distillery Rules, 1946 that charges on F 
account of salary of Excise Department staff were to be recovered from 
management at 50% of total expenses. The Excise Commissioner made a 
demand for payment of salaries of Excise personnel posted at appellant's 
distillery. The appellant unsuccessfully filed writ petition before High Court. 
In appeal to this Court, appellant contended Rule 17 does not have the G 
statutory backing; that the Rule is in excess of the rule making power in 
Section 25 of the Jammu and Kashmir Excise Act, 1901 and suffers from 
excessive delegation; that Rule seeks to get breweries to pay for the salaries 
and costs of the government officials involved in revenue collection and it is 
343 
H 
344 
SUPREME COURT REPORTS 
[2007] 5 S.C.R. 
A manifestly unjust and arbitrary; that Rule imposes a tax not a fee without the 
' 
authority of law and, therefore, contrary to Article 265 of the Constitution; 
and lastly that the Rule is unreasonable and arbitrary and hence contrary to 
Article 14 of the Constitution. 
Allowing the appeal, the Court 
B 
HELD: 1. It is now well settled principle of law that the regulatory powers 
are generally to be widely construed. However, empowering the State 
lo-
Government to impose taxes, fees or duties and such demands must be 
authorized by the Statute and must contain sufficient guidelines. 
c 
(Para 22) [350-H) 
2. Under the Constitutional scheme, taxes are distinct from fees. Excise 
is a form of tax. It is self-evident from various constitutional provisions: (i) 
The concept of a Money Bill in Articles 110(2) and 199(2) clearly postulate 
that taxes should be voted on by Parliament. (ii) The taxes and excise in the 
D Union List are to be found in List I, Entries 82-92B; and (iii) The taxes in the 
Stafe List are to be found in List II, Entries 42-63 (iv) Excise is specifically 
dealt with in List I, Entry 84 and List II, Entry 51(v) List II, Entry 51 specifically 
~ 
deals with excise on alcohol (vi) Fees are specifically dealt with in both these 
lists (List I, Entry 96 and List II, Entry 66) and are a distinct concept that has 
to be voted by Parliament. Thus, taxes, excise and fees must be voted by 
E Parliament. Tax under Article 265 can only be imposed by way of legislation 
and it is impermissible to be imposed by way of bye-laws or rules. 
[Paras 33 and 34) [354-G-H; 355-A-C, DJ 
Government of Andhra Pradesh v. Mis Anabeshahi Wine and Distilleries 
Pvt. Ltd., [1988) 2 SCC 25, held inapplicable. 
F 
Mis Gujchem Distillers India Ltd. v. State of Gujarat, [1992) 2 SCC 399, 
distinguished. 
Corporation of Calcutta v. Liberty Cinema, [1965) 2 SCR 477, relied 
on. 
G 
Khoday Distilleries Ltd. v. State of Karnataka, (1995) 1 SCC 574; 
Khoday Distillers Ltd. v. State of Karnataka, (1996] 10 SCC 304; A.N. 
I> 
Parasuraman v. State of Tamil Nadu, [1989) 4 SCC 683; Kunj Behari Lal 
Butai/ v. State of H.P., [2000] 3 SCC 40; Devi Das Gopal Krishnan v. State of 
Punjab, [1967] 3 SCR 557; Indian Mica Micanite Industries v. The State of 
H Bihar, [1971) 2 SCC 236; Commissioner of Central Excise v. Chhata Sugar 
•. ..J 
~-
,, 
GUPTA MODERN BREWERIES v. STATE OF JAMMU & KASHMIR 
345 
Co. Ltd (2004) 3 SCC 466 and Mis Lilasons Breweries (Pvt.) Ltd. v. State of A 
Madhya Pradesh, (19921 3 SCC 293, referred to. 
3.1

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