High Court of Judicature at Allahabad
Case Law Search
U.P.Cooperative Sugar Factories Federation v. State of U.P. And others. - INCOME TAX REFERENCE No. 228 of 1996  RD-AH 1820 (3 August 2005)
CIVIL MISC. WRIT PETITION NO.228 OF 1996
U.P.Cooperative Sugar Factories Federation
Limited, Anoopshahr Distillery Unit. ....Petitioner
State of U.P. And others. ....Respondents
Hon'ble Rajes Kumar, J.
( By Hon'ble Rajes Kumar, J.)
By means of the present writ petition, petitioner seeks the following relief :
"(i) issue a writ, order or direction in the nature of certiorari quashing the impugned orders dated 22.8.1995 and 23.1.1996 passed by the respondents no.3 and 4 respectively (Annexure '6' and '8' to the writ petition) as well as the order passed by the respondent no.2 upon the petitioner's representation dated 18.11.1995;
(ii) issue a writ, order or direction in the nature of mandamus directing the respondents to return the amount of Rs.4,95,523.00 which has been collected from the petitioner's Advance Account with the Excise authorities and not to realise any further amount from the petitioner:
(iii) issue any other writ, order or direction, which this Hon'ble Court may deem fit and proper and to which the petitioner may be found entitled to in the circumstances of the case;
(iv) award costs of this petition to the petitioner."
Brief stated facts giving rise to the present writ petition are as follows:
Petitioner is a registered Cooperative Society, engaged in the activity of supervising various Cooperative Sugar Mills situated within the State of U.P. Petitioner is also running few distilleries, one of such distillery is situated in Anoopshahr, district Bulandshahr. Petitioner was producing rectified spirit in the said distillery, which was sold/utilised under the strict supervision and control of the Excise department. Petitioner was a licence holder in Form P.D.2 for the manufacture of industrial Alcohol including rectified spirit. Petitioner has been exporting industrial alcohol including rectified spirit to different State as well as State of U.P. Under release orders issued by the office of Excise Commissioner, U.P., Allahabad. In pursuance of the order of M/s Rajasthan State Ganga Nagar Sugar Mills Limited (respondent no.5). Petitioner supplied 14,000 bulk litre (13090 A.L.) of rectified spirit and an Indemnity Bond was executed by the said party on 09.07.1993. In the indemnity bond it was clearly provided that the petitioner shall be indemnified at all times against all damages including the loss of excise duty which the Government may suffer on the sale of rectified spirit. Rectified spirit was despatched to the respondent no.5 on 02.06.1994 under excise pass no.114 dated 02.06.1994 in tanker no.HNG-2872. It is claimed that the said tanker carrying 14,000 bulk litre rectified spirit met with an accident between village Raura and Jatwai on 02.06.1994 as it collided with a truck and the rectified spirit which was being carried was burnt. First information report to this effect was lodged, which is annexure no.2 to the writ petition. Information with regard to the said accident was also given to the excise authorities as well as police authorities including fire control officer. Excise Inspector of the concerned region submitted his report on 03.06.1994 to the District Excise Officer certifying therein that tanker no.HNG-8272 carrying 14,000 bulk litre of rectified spirit met with an accident as it collided with a truck and the tanker caught fire, as a result of which tanker got severely damaged and burnt and the entire quantity of rectified spirit was also destroyed. Copy of the report dated .3.06.1994 is annexure no.3 to the writ petition. Fire Control authorities gave their report on 10.06.1994 certifying the said accident. The Deputy Excise Commissioner, Meerut Region, Meerut thereafter, on 22.08.1995directed the District Excise Officer, Bulandshahar to collect excise duty upon 14,000 bulk litre of rectified spirit from the petitioner as the same had not reached to its destination. Aggrieved by the said order dated 22.08.1995 petitioner filed representation dated 11.11.1995 on 18.11.1995 before Excise Commissioner, U.P. Allahabad. It is stated that excise authorities has deducted a sum of Rs.4,95,523/- from the petitioner advance account with the excise authority in pursuance of the order dated 22.08.1995 and the petitioner has been asked to deposit the remaining amount of Rs.93,527/-. It is alleged that the respondent no.4 vide letter/order dated 23.01.1996 informed the petitioner that its representation dated 18.11.1995 has already rejected and directed the petitioner to deposit the balance amount of Rs.93,527/-. Being aggrieved, present writ petition has been filed. Counter and rejoinder affidavits have been exchanged. Thus writ petition is being disposed of at this stage with the consent of the parties in accordance to the Rules.
Heard Sri A.K.Mishra, learned counsel for the petitioner and Ms.Madhu Tandon, learned Standing Counsel appearing for the revenue.
Learned counsel for the petitioner submitted that the rectified spirit was not fit for human consumption. He submitted that the rectified spirit, which was exported by the petitioner under excise gate pass no.114 dated 02.06.1994 was not liquor for human consumption and hence, State is not competent to levy excise duty under Entry-51 of List-II of 7th Schedule of the Constitution. In support of his contention he relied upon the decision of the Apex Court in the case of State of U.P. and others Vs. Modi Distilleries and others, reported in (1995) 5 SCC, 753 and latest decision of this Court in Civil Misc. Writ Petition No.906 of 1995 M/s Upper Ganges Sugar and Industries Ltd. Vs. State of U.P. and others, decided on 11.04.2005. Learned Standing Counsel submitted that accident took place due to the negligence of the driver and petitioner is bound to pay the duty on the rectified spirit, which was destroyed in collusion in an accident. She submitted that a sum of Rs.4,95,523/- has been rightly adjusted and recovery of balance amount of Rs.93,527/- has rightly been demanded.
We have given our anxious considerations to the submissions made by learned counsel for the parties and perused the averments made in the affidavit, supplementary affidavit, writ petition, its annexures and counter and rejoinder affidavits. Facts of the case are not in dispute, namely that the rectified spirit was despatched by the petitioner to the respondent no.5 under excise gate pass no.114 dated 02.06.1994 in tanker no.HNG-2872 which met with an accident on 02.06.1994 between village Raura and Jatwai, as a result of which tanker was caught fire and entire quantity of rectified spirit was burnt and destroyed. Under similar circumstances, question came up for consideration before Division Bench of this Court in Civil Misc. Writ Petition No.906 of 1995 M/s Upper Ganges Sugar and Industries Ltd. Vs. State of U.P. and others. Division Bench of this Court on consideration of various decision of the Apex Court held that the State is not competent to levy and demand the excise duty on rectified spirit, which is not liquor and not fit for human consumption. Division bench further held that the duty is sought to be released on the transit loss of rectified spirit under Rule 633 of the Excise Manual, which provides for demand of an amount equal to excise duty on the quantity of spirit exported for being realised is in the nature of excise duty on rectified spirit. Division Bench held as follows:
"It may be mentioned here that the duty is sought to be realised on transit loss of rectified spirit under Rule 633 of the Excise Manual which provides for demand of an amount equal to excise duty on the quantity of spirit exported for being realsied. Thus, what is sought to be realsied is the amount of excise duty on transit loss of rectified spirit. The nature of the amount for the loss remains the excise duty which State of U.P. has no legislative competence to realise. Further, the demand can also nto be justified as compensation/penalty as held by the Aepx Court in the case of Industrial Corporation (P) Ltd. (supra).
In the case of M/s Devans Modern Breweries Ltd. (supra) Hon'ble S.B.Sinha, J. which is a minority judgment, has mentioned that the decision in Bihar Distillery (supra) was not e3xpressly overruled. In fac,t in paragraph 154 of the report, eh has referred to the Vam second case wherein it has been mentioned that the decision in Bihar Distillery has not been expressly overruled.
In the case of Shree Ayurved Byhawan (P) ltrd. (supra) the Apex Court has applied the test alid down in the case of Bihar Distillery (supra) and has held that when Ayurvedic preparation is diverted to human consumption, the State has power to regular and control such use.
It is no doubt true that the decision of the Apex Court in the case of Bihar Distillery (supras) given by two learned Judges have not been expressly overruled by the Apex Court in the cae of Deccan Sugar and Abkari Co. Ltd. (supra) which is a decision by three learned Judges, yet the decision in the case of Modi Distilleries and Deccan Sugar and Abkari Co. Ltd. (supra), which are Bench decision of three learned Judges, specifically dealt with the point in issue.
It may be mentioned here that the principle of English law that size of the Bench did not matter has not been accepted in this country as held by the Apex Court in the cae of A.R.Antulay v. R.S.Nayak, 1988 (2) SCC 602. It is also well settled that where there is a divergent opinion expressed by the Apex Court in Bench decisions comprising of two learned Judges and three learned Judges, the opinion on the law laid down by the Bench decision of three Judges is to be followed in preference to the Bench decision of the two learned Judges.
We are of the opinion that the law laid down in the aforesaid two cases more specifically in Deccan Sugar and Abkari Co. Ltd. (supra) wherein it has been held that no duty on wastage of rectified spirit can be levied by the State government, is a law declared by the Apex Court an dis binding upon us under4 Article 141 of the Constitution.
Thud we find ourselves unable to accept the plea of the learned Additional Advocate General that the State is competent to levy duty on loss in transit on rectified spirit."
Respectfully following the aforesaid Division Bench decision of this Court we are of the view that the demand raised by the respondent no.3 vide letter/order dated 22.08.1995 was not justified and accordingly, adjustment of Rs.4,95,523/- was also not justified.
In the result, writ petition is allowed and letter/order dated 22.08.1995 issued by the respondent no.3 and letter dated 23.02.1996 issued by the respondent no.4 are quashed. Respondents are directed to refund a sum of Rs.4,95,532/- which has been adjusted towards the demand against letter dated 22.08.1995 from the petitioner's advance account. There shall be no order as to costs.
Double Click on any word for its dictionary meaning or to get reference material on it.