K. C. Agrawal, Actg. C.J. - (1.) -For the excise year 1988-89, the petitioner M/s P. V. K. Distillery Limited, which is a public limited company and held licence in Form PD 2, was selected by the Excise Commissioner on the basis of tenders submitted in Form CL 23, for supplying spirit to bonded warehouses and wholesale depots. The petitioner had a distillery at Nandganj, district Ghazipur. It has bonded warehouses in Varanasi. The petitioner used to bring country spirit from Nandganj to bonded warehouses m Varanasi.
(2.) ON the basis of a notification issued in exercise of the powers conferred by Clause (b) of sub-section (2) of Section 172, published in the official gazette dated 7th May, 1986, which came into effect from 8th May, 1986, octroi on goods and animals brought within the octroi limits of the Nagar Mahapalika, Varanasi, for consumption, use or sale therein, was to be levied at the rates shown in the Schedule, subject to the exemption given therein. Entry 19 of the Schedule, with which we are concerned in the present case, under Class I-Articles of food and drink for man and animals, reads as under : "Wines, Liquors and alcohol, Indian or foreign preparation, i. e. all kinds of wine prepared like foreign mannered described in U. P. Excise Act and Rules whether fermented or distilled. Rs. 200.00 per quintal." Another entry on which arguments were addressed to us is Entry 29, which reads : ''Mythelated spirit and denatured spirit. Rs. 6.00 per qtl." The contention of the petitioner was that Entry 19 of the Schedule did not apply for levying and realising octroi on the country spirit which used to be brought by it from Ghazipur, obtained under the contract system from the Excise Commissioner, to its bonded warehouses at Varanasi for making it country liquor.
(3.) WE may, briefly, refer to the relevant entries in the Constitution. Entry 8 of List II of the Seventh Schedule reads ; "Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors." Entry 51 of List II of the Seventh Schedule confers power of imposition of excise duty. Entry 51 reads in its material particulars as under : "51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India :- (a) alcoholic liquors for human consumption." Entry 52, with which we are mainly concerned, in this case, is : "Taxes on the entry of goods into a local area for consumption, use or sale therein." Essential features of tax, which is known as octroi, are : (a) entry of goods into a local area, and (b) goods must enter for the purpose of consumption, use or sale therein. ;