LILASONS BREWERIES LTD. Vs. STATE OF M. P.

JUDGEMENT

(1.) The Petitioners in the instant writ petitions have prayed for the relief that they are not liable to make payment of entry tax. Prayer has also been made to quash communication dated June 13, 2007 issued by the Commissioner of Excise, Gwalior, for collection of entry tax from the Petitioners. The Petitioners are also challenging the demand of entry tax from them. The prayer has also been made to collect it from the retailers not from the Petitioners.

(2.) Facts are being referred to from W. P. No. 8670 of 2007. The Petitioners are involved in bottling and supplying beer and Indian-made foreign liquor to State Government warehouses. They are holding licences under the Madhya Pradesh Excise Act to manufacture and supply beer and Indian-made foreign liquor. NOC has to be issued for transporting the foreign liquor to the warehouses by the officer in-charge posted at the factory. The sales are made by the warehouse in-charge to the authorised retailers who are also licence holders for retail selling of the said Indian-made foreign-liquor and beer. Various licences are issued for production of different kinds of foreign liquors. Sale is made by the Government to the retailers. Two per cent entry tax has to be paid by Government warehouse and can be recovered from retailer and to be deposited to State Treasury. Section 3B has been inserted in the Madhya Pradesh Entry Tax Act, 1976 by way of Madhya Pradesh Entry Tax (Amendment) Act No. 9 of 2007. It is effective from April 1, 2007. Section 3B provides that the Government may, by notification, specify the manner and appoint the competent authority, to collect entry tax in respect of Indian-made foreign liquor and beer on such terms and conditions as may be specified therein. The Petitioners submit that there has been no notification specifying the manner and the appointment of competent authority to collect entry tax in respect of Indian-made foreign liquor and beer. The Commissioner of Commercial Tax, Indore, vide letter dated June 2, 2007 has intimated Respondent No. 2 that the liability of entry tax at two per cent is on the bonded warehouse and therefore, the bonded warehouse should pay the entry tax to the Government. Pursuant to the said communication, Respondent No. 2 has asked Respondent No. 3 to collect the entry tax from the Petitioners. They have been asked to pay entry tax from April 1, 2007 to June 15, 2007. They were also informed that on failure to deposit the entry tax, price of liquor supplied by the Petitioners would not be paid to them. The Petitioners submit that in the absence of notification it is not open to the State Government to realise the entry tax. There was no justification in the law to levy entry tax. In any case it has to be collected from the retailers not from the Petitioners. Entry tax cannot be collected from the manufacturers. The Petitioners are not liable to pay either excise duty or transportation cost, hence petition has been preferred.

(3.) In the return filed by the Respondents it is contended that warehouse does not purchase the liquor nor sells it. Manufacturer directly sells the liquor to the liquor contractor under the supervision of the Department. Sale and purchase cannot be treated as business and trade by the State Government. Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (hereinafter referred to as, "the Entry Tax Act") has been enacted under entry 52, List II of the Seventh Schedule to the Constitution of India. Entry of goods into a local area has been defined under Section 2(aa) and 2(b) of the Entry Tax Act. The validity of the Entry Tax Act has been upheld by this Court. From charging Section 3 of the Entry Tax Act, it is apparent that the Petitioners are liable to pay entry tax. There is no fundamental right to trade in liquor. Under Section 62 of the Excise Act, State Government can frame the rules for carrying out the various purposes of the Act. The Madhya Pradesh Foreign Liquor Rules, 1996, makes it clear that the State Government neither purchases nor sells the liquor, hence liability to pay the tax is that of the Petitioners. Liquor is only kept in the warehouses under the supervision. There is no purchase by the Department of the liquor from the Petitioners. Department charges eight per cent as supervision charges which is now called, transportation fee as per Clause 13.2 of Notification (R2) dated January 15, 2008. The entry tax is payable by the person who causes entry of liquor into the local area. The Petitioners cause entry of liquor into the local area, hence they are liable to make the payment of entry tax as the entry of goods is caused into the local area by the Petitioner for consumption, use or sale. However for the subsequent years, the entry tax has been exempted on foreign liquor. No case for interference is made out in the writ petitions.