LexT.J. BABY AND ORS. ETC. versus STATE OF KERALA AND ORS.
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A B c T.J. BABY AND ORS. ETC. v. STATE OF KERALA AND ORS. AUGUST 10, 2000 [B.N. KIRPAL, S.N. PHUKAN AND RUMA PAL, JJ.] Excise Laws : Kera/a Abkari Act-Sections 17( a) to ( g) and 18 (I), (2) (3 )-Existing F.L. land F.L.3 licences of stockists, retailer and owners of bars and restaurants were extended.from 1995-96 to 1996-97-Rate of excise duty on Indian made foreign liquor was also increased by amendment in Act-Differential duty claimed.from F.L I and F.L.3 licences.for stocks held on 1.4.96 and not from the manufacturing stockists holding F.L 9 licence who had already paid duty- Single Judge allowed writ petition challenging differential duty-Reversed by D Division Bench-On appeal held, duty of excise is levied on mamifacture though its collection may be postponed-luxury tax may be imposed on manu- faclure or issuance of liquor only under Section 17 ( g) for sale in any part of State-Owners of F.L.J and F.L.3 licences were under no obligation to pay E F increased excise duty. Section 18( 3) (proviso )-Existing stock holders, importers, manufactur- ers and ware house owners are alone obliged to pay difference of increased excise duty or luxury tax-Realisation of increase in excise duty not permissible from licencees who were under no obligation to pay original excise duty. Appellants holding F.L.l licence under the Kerala Abkari Act are stockists and retailers of Indian made foreign liquor and those holding F.L.3 licence are owners of bars and restaurants. Their licences for the year 1995-96 were extended till 1996-97 but the rate of excise duty on Indian made foreign liquor was increased from Rs. 20 to Rs. 200 per proof litre, by an amendment in the Act. The differential duty was sought to be G realised from them in respect of the stock held on 1.4.1996. Inspite of the fact that appellants had purchased duty paid liquor from the State owned manufacturing and marketing corporation, holding F.L. 9 licence. Single Judge of the High Court allowed the writ petitions challenging the differ- ential duty. However, the Division Bench held the imposition valid under H the proviso to Section 18(3). Hence these appeals. 404 - T.J. BABY v. STATE 405 Appellants contended that Section 18(3) can have no application to F.L. 1 and F.L.3 licenses who are not liable to pay excise duty under Section 17 of the Act. Respondents contended that proviso to Section 18(3) clearly indi- cates that all licensees including F.L. 1 and F.L. 3 would lie liable to pay the differential duty and that duty of excise and luxury tax, which could be levied under Section 17 (a) to (g) of the Act. Allowing the appeals, the Court HELD: 1. When Section 17 and Section 18 of the Kerala Abkari Act are read together keeping in mind that duty of excise is levied on the manufacture, though its collection may be postponed, it becomes clear that when Section 17 talks of levy of luxury tax it cannot be in relation to Section 18(a) to (0. No luxury tax is contemplated by Section 18(2) to be imposed on manufacture or issuance of liquor referred to in Section 17(d), A B c (e) and (f). Similarly Section 18(2) does not contemplate levy of luxury tax D with reference to Section 17(a), (b) and (c) as the method for levying excise duty is provided under Section 18(1). This leaves out section 17(g) refer- ring to sale of intoxicating drugs or liquor in any part of the State, which alone is relatable to the levy of luxury tax. [412-F-H] 2. The proviso to Section 18(3) obliges the existing stock-holders who are licensees to pay the difference of duty of excise or luxury tax in case there is an increase in respect thereof. The importers, manufacturers and warehouse owners would be concerned with the levy of excise duty whereas luxury tax would be payable by the licensees relatable to Section l 7(g) like the appellants. The proviso means that those licensees who are liable to pay excise duty can be called upon to pay the increase thereof while those licen- sees who are liable to pay luxury tax can likewise be required to pay the increase in the luxury tax. Section l 7(a) to (f) which deals with the imposi- tion of excise duty refers to licensees under Sections 6, 7, 11, 12 and 14. Appellants are licensees under Section 15 of the Act. It is not in dispute that excise duty is not levied or realised in the first instance from the F.L. 1 or F.L. 3 licensees. Excise duty of liquor which is manufactured within the S
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