LexMOHAN BREWERIES AND DISTILLERIES'LTD. ETC. ETC. versus COMMERCIAL TAX OFFICER, MADRAS AND ORS.
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MOHAN BREWERIES AND DISTILLERIES'LTD. ETC. ETC. A v. COMMERCIAL TAX OFFICER, MADRAS AND ORS. ·SEPTEMBER 9, 1997 [S.P. BHARUCHA, K.T. THOMAS AND V.N. KHARE, JJ.] B • Safes Tax Tamil Nadu General Sales Tax Act 1959ffami/ Nadu Indian Made Foreign Spir-its (Mamlfacture) Rules, 1981 : Section 2(r)/Rule 22. C . Manufacturer-Indian Made Foreign liquor-Liability to pay excise duty-Held, -primary obligation to pay excise duty on the manufacturer- Rule 22 only provides for convenient method of collection-Excise duty not physically entering manufacturer's till is not the decisilte test for determining D whether it would constitute manufacture's turnover. Tbe appellants manufacture Indian Made Foreign Liquor (lMFL) on the strength of licenses issued to them under the provisions of the Tamil Nadu Indian Made Foreign Spirits (Manufacture) Rules 1981. The Tamil Nadu State Muketing Corporation Ltd. (TASMAC) had the exclusive privilege of E supplying by wholesale IMFL for the whole of the State. The Corporation paid the excise duty d~redly. The element of the excise duty did not enter into the turnover of the appellant. In the writ ,petitions filed in the High Court the.contention ~f the appellant was that the liability to pay excise duty lay not upon them but upon F the Tamil Nadu St3te Marketin~ Corporation. The said petition was dismissed. Hence the present appeals. In appeal before this Court the contention of the appellant was that under Rule ll of the Tamil Nadu Indian Made Foreign Spirits (Manufacture) Rules, 1981, tbe. manufacturer of the IMFL was not liable for payment of G excise duty but it was upon the party who removed the 1MFL from f!te factory. It was further submitted that Rule 22 itself was a represenbtion·to tbe manufacturer and that an equitable estoppel arose against the respondent State preventing it from receiving sales tax from the manufacturer. Dismissing the appeal, this Court' H 7 A B 8 SUPREME COURT REPORTS (1997] SUPP. 4 S.C.R. HELD : 1.1. The liability to pay excise duty on the IMFL Is that of the manufacturer thereof. Excise duty is levied upon goods manufactured or produced. Its incidence falls, therefore, on the manufacturer or producer of the goods. The collection of excise duty may be deferred to such later stage as is administratively or otherwise, most convenient (14-B; 13-E] Union of India and Ors .• v. Bombay Tyre International Ltd. and Ors., 119841 J sec 467, relied on. 1.2. Rule 22 of the Tamil Nadu Indian Made Foreign Spirits (Manufacture) Rules 1981 only provides a mode for collecting the excise duty, C a mode which is obviously convenient for it requires the party removing the IMFL from the factory of its production to pay in advance the excise duty thereon. That party might be the manufacturer. That IMFL should be supplied in the State by wholesale only through T ASMAC cannot be a reason for holding that the primary obligation to pay excise duty is that ofT ASMAC or that the manufacturer is absolved of the obligation to pay excise duty. I 1 4-B-D] D 2. When the excise duty is collected from a party removing the IMFL from the factory of its production. other than the manufacturer, the payment of excise duty that party makes is in discharge of the obligation of the manufacturer. That-party does not, as it would ordinarily do, pay the excise duty cmnponent along with the sale price of the IMFL It purchases from the E manufacturer; it pays the sale; price to the manufacture and It pays the excise duty into the Treasury for and on behalf of the manufacturer. In effect, therefore, the element of excise duty does enter the turnover of the manufacturer just as much as it would ordinarily do. (14-H; lS~A-BJ 3. The definition of "turnover" in section 2(r) of the Tamll Nadu General F Sales Tax Act, 1959 referring as it does to the aggregate amount for which goods are sold whether for cash or other valuable consideration is wide en ou~:h to cover such excise duty. That the excise duty does not physically enter the manufacturer's till is not the decisive test for determining whether or not it would be a part oftbe manufacturer's turnover. [15-B-C) G Me Dowell and Co. Ltd. v. The Commercial Tax~Officer, [1985) 3 SCR 791, relied on. 4. The argument based on Explanation (1-A) of section 2(r) of the Tamil Nadu sales Tax Act cannot be entertained because the amount of excise duty H was not charged by the appellants by way of tax se
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