The above appeals have been filed by the appellant before the Honorable Supreme Court pursuing to the order passed by the Honorable High Court of Madras dismissing the appeal filed by the appellant in excise tax revision matter.
The appellant is the manufacturer of the Indian Made Foreign Liquor (IMFL), the manufacturer was manufacturing the liquor/spirits pursuing to the license provided to it by the Tamil Nadu Indian Made Foreign Spirits (Manufacturer) Rules, 1981. In the state of Tamil Nadu, the production/manufacturing, supply, transport and sale is governed by the Tamil Nadu Prohibition Act, 1937. By the explanation provided by section 17-C of the Act Tamil Nadu State Marketing Corporation Ltd., a company wholly owned by the State Government had the privilege for sale of IMFL for the whole of that state. As due to various amendments in the Act vis section 18-B of the Act, Rule 22 of the Manufacturer rule, and Rule 15 of the Wholesale Rule were made retrospectively available from 23rd May 1981 it was contended by the appellant in their writ petition. The appellant said that there was no liability to pay sales tax on excise as there was no collection of any such amount by the appellant adding to this contention the appellant also said that there was no statutory or contractual authority under which appellant could have collected such amount. The amount mentioned in the matter was said that it does not form the part of sales or of any consideration to the appellant.
The learned counsel appearing for the appellants submitted that as per the rule 22 of the manufacture rules, the manufacturer of the IMFL was not supposed to pay excise duty on the liquor manufactured by them, the imposition of the excise duty to be paid was on the other party, who was involved in removing the Indian Made Foreign Liquor from the manufacturing unit, i.e. TASMAC also the manufacturer of the liquor by the same rule was no liable to recover the amount of excise duty from the party. The amount calculated on the excise duty was not entered in the turnover amount of the manufacturer, and so no tax liability accrued pursuing to such duty. The learned counsel appearing for the appellant filed an interpretation with citing the judgment made in this behalf by the court. The learned counsel mentioned the assistance from the explanation provided in 1A under section 2® of the Sales Tax Act and said an equitable estoppel has arisen against the respondent state which prevented the state authority to recover the sales tax from the manufacturer on the element of the excise duty.
- Whether the appellant is liable for the tax amount as per the contention made by the respondent?
- What is the validity of the rules that are made effective retrospectively from 23/05/1981?
The Honourable Supreme Court after hearing the learned counsels representing both the parties in the matter above and considering the facts and the precedents submitted established by the Honourable Judges to support the prayers and pleadings of the parties in the matter above states its observation herein that observation mentioned that the citation mentioned by the learned counsel can be maintained and will be considered in a way that has been interpreted, it says that the judgment provided by this court in the matter of excise duty states the collection of tax generated as excise is directly related to the manufacturing activity, but for the reason of the convenience the collection of the excise can be deferred to any later stage where the authority finds it convenient. As due to expansive business activity in the country to dissect various tax heads and coordinate working between them in the paramount interest and keeping the interest of the business sector any such expediency or reason of convenience will be preferred over mere clerical deference.
The Andhra Pradesh rules clearly state that any tax under the head of the excise will be directly detracted from the manufacturing or production activity and will exclusively the duty of the manufacturer or producer to pay such amount or liability. Though pursuing to any contract or agreement entered by the parties that specify the payment of the excise duty by any third person will be a mere meeting of the obligation, and nothing more will be extracted from such payment. The Honorable Court further explaining the term states that the excise duty will not be applicable to any person who is acting according to any agreement for the transportation or logistic help for IMFL, even if it does pay such liability that will be according to agreement mutually entered to which rule 22 does not say anything. Further rule 22 just states the direction of collecting such amount and nothing more. A manufacturer is liable to pay such tax from the sales price received to it from the purchaser, so the excise as calculated by the act has to be deposited by the manufacturer in the treasury. The court explaining the correct view of section 2(r) states that any amount received by the manufacturer will not be included in turnover.
The court is of the opinion that there cannot exist any contention wherein the arguments should be presumed by the court in accordance of the law there will always be a space for interpretation as it decides the matter there can be clear that sales tax authority has failed to admit the argument relating to the estoppels also there can be no reason found that the court will rely on the isolated meaning of Rule 22 and while such rule made its entry into arguments there cannot exist any presumption to it. Further, the court deciding the matter rightly find it impossible set aside any order and dismiss the appeal without any cost to such appeal. Any other appeals relevant to the matter above stands dismissed accordingly.