THE STATE OF JHARKHAND & ORS. versus M/S AJANTA BOTTLERS & BLENDERS PVT. LTD.

Citation: [2019] 8 S.C.R. 1071 · Decided: 02-07-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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THE STATE OF JHARKHAND & ORS.
v.
M/S AJANTA BOTTLERS & BLENDERS PVT. LTD.
(Civil Appeal No. 5138 of 2019)
JULY 02, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Jharkhand Excise Act, 1915 – s.90 – Revenue Board
notification dated 06.11.2012 – r.106 (Tha) – Levy of import fee on
rectified spirit – The Board of Revenue in exercise of power conferred
u/s.90 of the Act inserted the Rule 106 (Tha) and levied fee on the
import of rectified spirit by notification dated 06.11.2012 – Writ
Petition – High Court held that the State had no legislative
competence to levy tax/fee on the import of rectified spirit, as it is a
non-potable liquor i.e. alcohol not fit for human consumption –
Appellant-State contended that import fee was not on rectified spirit
in its raw form as such, but on pure alcoholic liter ‘LPL’ in the form
of potable liquor –  On appeal, held: On perusal of the impugned
provision as a whole, it follows that the substance of the provision
is to levy charges on the product Indian Made Foreign Liquor (IMFL)
produced or manufactured by use of imported rectified spirit – In
that sense, the levy is not on the input (imported rectified spirit) of
the final product as such but is on the manufactured or produced
product being potable alcohol palatable to human consumption –
For the purposes of computing the levy, the yardstick of Rs.6 LPL
on the total quantity of imported rectified spirit utilized for production
of IMFL is reckoned – Thus, the impost is not on the imported
rectified spirit as such but only on the produced foreign liquor before
it is bottled for sale in the wholesale or retail market, as the case
may be – It is a case of legislation in respect of potable alcohol, the
State is competent to legislate in that regard and levy charges-be it
for regulating the same or impost for parting with its rights regarding
manufacture, storage, export, sale and possession thereof.
Jharkhand Excise Act, 1915 – s.90 – Revenue Board
notification dated 06.11.2012 – r.106 (Tha) – Nature of tax or excise
duty – The Board of Revenue u/s.90 of the Act chose to levy fee on
   [2019] 8 S.C.R. 1071
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SUPREME COURT REPORTS
[2019] 8 S.C.R.
the import of rectified spirit by notification dated 06.11.2012 –
Appellant-State contended that the levy of charges or impost is
neither in the nature of a tax nor excise duty – Held: There is merit
in the contention of  appellant-State that the impost is neither in the
nature of a tax nor excise duty but it is towards the charges by
whatever name, for regulating the production of potable liquor to
preserve public health and morality including for parting with its
rights or privileges regarding manufacture, supply or sale of potable
liquor or intoxicating liquor and to regulate the use of imported
rectified spirit for production and sale of potable liquor – In such a
case, the State need bear no quid pro quo to the services rendered to
the licencee for production of foreign liquor (IMFA).
Allowing the appeal, the Court
HELD : 1. The Rule 106 (Tha) noted in the notification
dated 06.11.2012, makes it amply clear that the levy or impost
fructifies only upon completion of distillation process (in two
stages-first from rectified spirit to Extra Neutral Alcohol (ENA)
and then from ENA to Indian Made Foreign Liquor (IMFL)) and
in particular converting into a final product “IMFL”. The
collection of impost is, however, deferred until the bottling of
that product. In other words, the levy is not at the stage of import
of rectified spirit within the State; nor at the stage of initial
distillation thereof to ENA and not until the product IMFL is
ready for bottling as such. Thus, the levy under the impugned
rule ripens or fructifies only after the original raw material
(imported rectified spirit) has undergone distillation process at
two different stages and transmute and mutate into an intoxicant
or potable alcohol palatable to human consumption, but its
(impost) collection is effected just before bottling it in that form
(potable liquor). Indeed, the levy predicated in this rule is on the
total quantity of imported rectified spirit utilised for mutating it
in the form of IMFL, a new produce. The last part of the rule
stipulates the quantum of charges to be levied on such utilized
imported rectified spirit for production of the foreign liquor. For
that limited purpose, the quantity of imported rectified spirit
utilized in the production of potable liquor, is recko

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