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2007 DIGILAW 277 (PAT)

Nagendra Prasad v. State Of Bihar

2007-02-07

AFTAB ALAM, REKHA KUMARI

body2007
Judgment 1. Heard Mr. Satyabir Bharti, counsel for the petitioner and Mr. Advocate General representing the State. 2. The petitioner seeks to challenge the order passed by the Board of Revenue, confirming the order of the Excise Commissioner rejecting his petition for refund of deposit for transportation of rectified spirit, unfit for human consumption for manufacture of country liquor on the plea that the entire quantity of rectified spirit was wasted in course of transportation and no country liquor could be manufactured from that consignment. 3. The facts of the case are brief and simple. The petitioner was given the exclusive privilege for manufacture and sale of country liquor in Shahabad zone of the State for the period 2002-05. Rectified spirit (unfit for human consumption) is the main raw material for manufacture of country liquor and the petitioner purchased rectified spirit (unfit for human consumption) from distilleries. In terms of the relevant rules/terms of licence, for obtaining permit for transportation of the raw material (rectified spirit, unfit for human consumption) from the distillery to its manufactory in Shahabad, the petitioner was required to deposit the amount of excise duty on the country liquor that would be produced from that consignment of raw material. On 29.10.2003 the petitioner obtained permit for transportation of 19,860 L.P. litres of rectified spirit from narkatiaganj Distillery after depositing Rs. 6,95,100.00 as excise duty on the same amount of country liquor to be produced from the consignment @ Rs. 35.00 per L.R litre. According to the petitioner the tanker transporting the consignment met with an accident near Bettiah in the night of 29.10.2003. The accident was reported to Bettiah Mufassil RS. on 30.10.2003 where it was registered as Sanha No. 613, dated 30.10.2003. The loss of rectified spirit due to the accident was also reported to the Superintendent of Excise, Bettiah on the same day. 4. It is the definite case of the petitioner that the entire consignment of 19,860.00 L.P. litres of rectified spirit was destroyed and wasted in that accident. The consignment never reached the petitioners manufactory in Shahabad and no country liquor could be produced from that consignment. On that plea he made an application for refund of Rs. 6,95,100/-earlier deposited by him before the Excise Commissioner. The petitioners application was registered as Case No. 80/2003. The Excise Commissioner rejected the petitioners claim for refund by order, dated 20.10.2004 (Annexure 7). On that plea he made an application for refund of Rs. 6,95,100/-earlier deposited by him before the Excise Commissioner. The petitioners application was registered as Case No. 80/2003. The Excise Commissioner rejected the petitioners claim for refund by order, dated 20.10.2004 (Annexure 7). The petitioner took the matter to the Board of Revenue where the matter was registered as Dist. Buxar No. 284 of 2004. The Board of Revenue too rejected the petitioners claim by order, dated 6.4.2005. 5. From the order of the Board of Revenue it appears that the petitioners claim for refund was rejected mainly on the ground that there was no provision allowing for refund of a deposit made by the settlee either in the Excise Act or the Rules framed thereunder or the terms and conditions of the licence. In fact, on hearing the parties on the previous date (2.2.2005) the Board of Revenue adjourned the proceedings to enable the petitioner to bring to its notice any provision under the Excise Act or the Rules framed thereunder or the terms and conditions of the licence that would justify his claim for refund of the deposit. On behalf of the petitioner reliance was placed on Rule 33(2) of the Excise Rules. But the Board of Revenue found it in-applicable to the facts of the present case because Rule 33 dealt with the transportation of rectified spirit under a bond and not against any deposit. 6. In our view, the Board of Revenue proceeded in the matter on an erroneous premise. The basic question is not whether there was any provision for refund of deposit under the Excise Act or the Rules framed thereunder or in the terms and conditions of the licence but whether the State can levy and collect excise duty on rectified spirit, unfit for human consumption. If it is held that the State Govt. is authorised to levy and collect excise duty on rectified spirit, unfit for human consumption, then there would be no question of any refund of the deposit made by the petitioner. But on the other hand if it is found and held that the State Govt, is not authorised to levy and collect excise duty on rectified spirit, then it would follow that the deposit was in reality excise duty collected in advance on country liquor that would be produced from the rectified spirit. But on the other hand if it is found and held that the State Govt, is not authorised to levy and collect excise duty on rectified spirit, then it would follow that the deposit was in reality excise duty collected in advance on country liquor that would be produced from the rectified spirit. For practical reasons the collection of excise duty in advance on country liquor to be produced from a certain consignment of rectified spirit may be justified and upheld because in a majority of cases rectified spirit actually gets converted into country liquor. But there may be one case in a thousand or even in a hundred thousand where for some unforseen reason a particular consignment of rectified spirit does not actually gets converted into country liquor. In that case any collection by the State Govt. cannot be held authorised and permissible because in reality no country liquor was made. 7. When the issue was posed in this form, the Advocate General fairly accepted that it is no longer res Integra and it is decided against the State in Mc Dowell Company Ltd. vs. The State of Bihar & Others, 2006(4) P.L.J.R. 269 . The Advocate General accepted that in that decision on a consideration of the earlier Supreme Court decisions another Bench of this court held that the State Govt. had no power or authority to levy or collect excise duty on rectified spirit, unfit for human consumption. In light of the legal position it follows that the amount charged by the State Govt, for issuance of permit for transportation of rectified spirit for manufacture of country liquor is in reality excise duty collected in advance on country liquor that would be produced from that consignment of rectified spirit. In order that the collection should become legal and authorised the rectified spirit must be used for production of country liquor and if for some unforeseen reason that does not happen, the collection would become unauthorised and the depositor would have the right to claim its refund. 8. Whether or not a particular consignment was in fact destroyed and wasted is a pure question of fact. 8. Whether or not a particular consignment was in fact destroyed and wasted is a pure question of fact. In this case the petitioner prima facie shows that the consignment of rectified spirit was destroyed as a result of the accident, in support of the averment he relies upon the Sanha entry made at the Bettiah Mufassil P.S., the report made to the Excise Superintendent, Bettiah and a photograph showing a lorry tanker turned turtle on the ground. But it may still be open to the excise authorities to controvert the statements made on behalf of the petitioner and to show that that particular consignment of rectified spirit was not destroyed either fully or in part. 9. As this aspect of the matter was not examined by the Board of Revenue, we consider it proper to remit the case to it. The Board shall give an opportunity to the excise authorities to controvert the petitioners statements that the entire consignment of 19,860 LP. litres of rectified spirit was destroyed in the accident that took place in the night of 29.10.2003 and decide the issue of fact in light of the materials produced by the parties. 10. A final decision on the question of refund claimed by the petitioner in light of this order is expected to be passed within two months from the date of receipt/production of a copy of this order before the Board of Revenue. 11. The two impugned orders are set aside and this writ petition is allowed subject to the aforesaid direction. There will be no order as to costs.