JUDGEMENT Sudhir Kumar Katriar and Kishore K.Mandal JJ. 1. We are called upon to answer the reference in terms of Section 48 of the Bihar Finance Act 1981 (hereinafter referred to as the Act). By order dated 5.2.2001, passed in the present case, we had called for reference on three questions stated in the order and reproduced in paragraph-3 hereinbelow. 2. The petitioner is a manufacturer and dealer of India-made Foreign Liquor (IMFL), and has its manufacturing unit at Mirganj in the district of Gopalganj. After taking lease of the unit from S.K.G. Sugar Mills, the petitioner filed returns for the years 1981-1982, which did not include the amount of excise duty paid or payable by the petitioner in the capacity of the manufacturer, or its purchaser, or any further onward purchaser. By order dated 22.8.2008, the learned assessing authority discarded the books of accounts as unreliable which, inter alia, did not disclose the amount of excise duty on its products and proceeded for best judgment assessment. The gross turn-over was enhanced, was accordingly determined, and sales tax was levied thereupon. Aggrieved by the order, the petitioner appealed which were numbered as Appeal Case No. ST. GG-17/88-89 and CST 1/88-89. Both dealt with the period 1981-82. The former deals with the assessment under the Act, and the latter under the Central Sales Tax Act 1956. Both the appeals were disposed of by a common judgment dated 12.8.94, passed by the learned Joint Commissioner of Commercial Taxes (Appeals), Tirhut Division, Muzaffarpur, whereby the order of the learned assessing authority was upheld leading to the two revision applications. Revision Case No. MZ 694/94 has arisen with respect to the Bihar Act, and Revision Case No. MZ 695/94 (CST 1/88-89) is with respect to the Central Act. Both the cases were disposed of by a common order dated 9.9.97, passed by the Commercial Tax Tribunal, Bihar, Patna, whereby the revision applications were dismissed. The Tribunal has held that the books of accounts maintained by the petitioner did not disclose the amount of excise duty paid or payable on the products of the petitioner. The authorities below had further reasons to discard the books of accounts leading to best judgment assessment and payment of taxes. The Tribunal has held that the books of accounts maintained by the petitioner did not disclose the amount of excise duty paid or payable on the products of the petitioner. The authorities below had further reasons to discard the books of accounts leading to best judgment assessment and payment of taxes. The learned Tribunal has further held that the amount of excise duty leviable on the products of the petitioner is liable to be included in the sale price and consequently in the petitioners gross turn-over also, and is, therefore, exigiable to sales tax. 3. Aggrieved by this order of the Tribunal, the petitioner preferred the present Tax Cases with the prayer to direct the learned Tribunal to refer the questions for the opinion of this Court. By order dated 5.12.2001, the learned Tribunal was called upon to refer the following questions for the opinion of the Court: (i) Whether the Tribunal is right in holding that excise duty payable is includible in petitioners turnover even though the sales were effected on bond to bond basis and in respect of which no excise duty was in fact paid either by petitioner or by its purchaser; (ii) Whether no excise duty was liable to be paid and having been paid in respect of inter State sale in the State of Bihar since no such excise duty was payable under the Bihar Excise Act in respect of the excisable articles exported from Bihar, the amount of excise duty was paid in other State by the purchasing dealer under the provisions or said State Excise Act, cannot be included in the taxable turnover or inter State sale. (iii) Whether in the facts and circumstances of the case, the rejection of the audited books of accounts and the consequent enhancement of the G.T.O. is illegal and invalid. We are, therefore, called upon to express our opinion on the aforesaid three questions. The basic facts will be drawn from TC No. 13/2000, except by specific references to TC No. 14/2000. 4. Mr. K.N. Jain appears for the petitioner, and has taken us through the scheme of the Act, as well as the Bihar Excise Act, and submits that the judgment of the Supreme Court in McDowell & Co. The basic facts will be drawn from TC No. 13/2000, except by specific references to TC No. 14/2000. 4. Mr. K.N. Jain appears for the petitioner, and has taken us through the scheme of the Act, as well as the Bihar Excise Act, and submits that the judgment of the Supreme Court in McDowell & Co. Ltd. v. Commercial Tax Officer AIR 1986 SC 640 : 1986 Tax L.R. 2174 : 59 STC 277 (hereinafter referred to as the second McDowell) was rendered in the background of a different factual matrix and, therefore, the propositions enunciated therein are inapplicable to the facts and circumstances of the present case. He submits that, in the peculiar facts and circumstances of this case, the decision of the Supreme Court in McDowell & Co. v. Commercial Tax Officer (hereinafter referred to as the first McDowell) is applicable to the facts and circumstances of the present case. He next submits that the learned Tribunal has failed to notice the basic factual position in the present case that the parties had entered into an agreement for sale of goods wherein neither the petitioner nor the purchaser was required to pay the excise duty. The goods were lifted from the warehouse on the basis of bonds and may have been paid by anybody beyond the petitioners purchaser. In other words, in his submission, neither the petitioner received excise duty, nor its purchaser deposited the same in the treasury for and on behalf of the petitioner. He relies on the judgment of the Supreme Court in George Oakes (Pvt.) Ltd. v. State of Madras. He further submitted that, if the petitioner were made liable to pay sales tax on the component of excise duty, then the authorities under the Act would be rewriting its commercial agreement inter-parties completely eroding the freedom of the parties to enter into agreements. There is no law controlling prices of goods in question, the parties were free to negotiate and determine the price of goods sold. Such price was fixed by the agreement inter-parties which alone forms the sale price and the consequent gross turn-over. There is no law controlling prices of goods in question, the parties were free to negotiate and determine the price of goods sold. Such price was fixed by the agreement inter-parties which alone forms the sale price and the consequent gross turn-over. He lastly submits that the transactions in question related to a period when the first McDowell was ruling the field the petitioner was not required to maintain the books of accounts reflecting the duties of excise paid or payable, and discarding the same on this ground and one more ground is bad in law. In his submission, therefore, there was no basis to proceed with best judgment assessment. He also submits that there should be no confusion between the Act and the Excise Act. The taxing events under both the enactments are fundamentally different. Learned Counsel for the petitioner wrapped up his submission by stating that the questions may be answered in favour of the petitioner. 5. Learned Additional Advocate General III submitted that excise duty is an established concept of law forming part of the sale price and can be displaced only by specific terms of the statute. The position in law has now been put beyond all controversy by the Constitution Bench judgment of the Supreme Court in second McDowell. He next submits that once it is found that excise duty is includible in the sale price and consequently in the gross turn-over, then this component is also liable to sales tax. Therefore, the petitioner was liable/duty bound to maintain the books of accounts accordingly. Failure to do so can validly lead to the conclusion that the same are unworthy of reliance leading to best judgment assessment. He lastly submitted that the kind of agreement that the petitioner talks of militates against the propositions of the law enunciated in second McDowell. In his submission, the Supreme Court applied the proposition of law in the case of Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer. 6. Before we discuss the two decisions of the Supreme Court, we would notice the basic provisions of law which have a bearing on the present matter. Section 2(t) of the Act defines sale and, inter alia, means any transfer of property in goods for cash or deferred payment or other valuable consideration. 6. Before we discuss the two decisions of the Supreme Court, we would notice the basic provisions of law which have a bearing on the present matter. Section 2(t) of the Act defines sale and, inter alia, means any transfer of property in goods for cash or deferred payment or other valuable consideration. Section 2(u) defines sale price and means the amount payable to a dealer as valuable consideration in respect of the sale or supply of goods. Section 2(j) defines gross turnover and means for the purposes of levy of sales tax, in respect of sale of goods, aggregate of sale prices received and receivable by a dealer. Section 48(2) of the Act provides that if, for reasons to be recorded in writing, the Tribunal refuses to make such reference, the applicant may apply to the High Court against such refusal. Section 48(3) of the Act provides that, if the High Court is not satisfied that such refusal was justified, it may require the Tribunal to state a case and refer it to the High Court and on receipt of such requisition the Tribunal shall state and refer the case accordingly. Section 48(5) empowers the High Court to hear the case, answer the same and send to the Tribunal a copy of such judgment to amend its order in conformity with such judgment. 7. Section 27 of the Bihar Excise Act 1915 (hereinafter referred to as the Act) vests the State Government with the power, inter alia, to impose excise duty on the manufacturer. Section 27(d) provides that any excisable article (other than tari) manufactured under any licence granted in respect of Clause (a) of Section 13, shall be liable to excise duty. Section 28 provides for ways of levying such duty, and Sub-section (e) is particularly relevant in the present context which is reproduced hereinbelow for the facility of quick reference: 28. Ways of levying such duty. - ... .. ... (e) on spirit or beer manufactured in any distillery or brewery licensed, established, authorized or continued under this Act. 8. It would be worthy while to notice the factual background of, and the propositions of law enunciated, in the first McDowell, the relevant portions of which are reproduced hereinbelow: 21. Ways of levying such duty. - ... .. ... (e) on spirit or beer manufactured in any distillery or brewery licensed, established, authorized or continued under this Act. 8. It would be worthy while to notice the factual background of, and the propositions of law enunciated, in the first McDowell, the relevant portions of which are reproduced hereinbelow: 21. Manufacture, sale - wholesale and retail - as also storage and transport of liquor are regulated by the Andhra Pradesh Excise Act, 1968 (Excise Act for short) and the Andhra Pradesh Distillery Rules, the Andhra Pradesh Indian Liquor (Storage in Bond) Rules and the Andhra Pradesh Foreign Liquor and Indian Liquor Rules, all made under the Excise Act. Excise Duty as defined in Section 2(10) of the Excise Act is leviable on the manufacture of liquor and the manufacturer cannot remove the same from the distillery unless the duty imposed under the Excise Act has been paid. Buyers of Indian Liquor from the appellants distillery passes for release of liquor after making payment of excise duty and present the same at the distillery whereupon the bill of sale or invoice is prepared by the distillery showing the price of liquor but excluding the excise duty. The appellants books of account also did not contain any reference to excise duty paid by the purchaser. The appellant paid sales tax payable by it under the Andhra Pradesh General Sales Tax Act, 1957, (Sales Tax Act for short), on the basis of its turnover which excluded excise duty. The Company was assessed to sales tax on the basis of its returns but later the Commercial Tax Officer was of the view that the Company had failed to include the excise duty paid on the liquor sold by it to wholesalers. The taxing authority accordingly called upon the Company to show cause why assessments made may not be reopened. The appellant moved the High Court for quashing of such notice and having failed, carried the matter in appeal to this Court. A Division Bench of this Court in McDowell & Co. Ltd. v. Commercial Tax Officer, VII Circle, Hyderabad, examined the provisions of the Excise Act and the Rules made thereunder as also the provisions of the Sales Tax Act. A Division Bench of this Court in McDowell & Co. Ltd. v. Commercial Tax Officer, VII Circle, Hyderabad, examined the provisions of the Excise Act and the Rules made thereunder as also the provisions of the Sales Tax Act. This Court took the view: We hold that intending purchasers of the Indian liquor who seek to obtain distillery passes are also legally responsible for payment of the excise duty which is collected from them by the authorities of the excise department. This Court then proceeded to determine whether excise duty paid directly to the Excise authorities or deposited directly in the State Exchequer in respect of Indian liquor by the buyers before removing the same from the distillery could be said to form part of the taxable turnover of the appellant distillery. Precedents were referred to and the Court came to the conclusion that excise duty did not go into the common till of the appellant and did not become a part of the circulating capital. Therefore, the sales tax authorities were not competent to include in the turnover of the appellant the excise duty which was not charged by it but was paid directly to the excise authorities by the buyers of the liquor. The appellant, therefore, succeeded before this Court and the notices issued by the Sales Tax authorities were quashed. 22. The judgment of this Court was delivered on October 25, 1976. Rules 76 and 79 of the Distillery Rules were amended with effect from August 4, 1981. Rule 76(a) now provides: "No spirit or liquor manufactured or stored shall be removed unless the excise duty specified in Rule 6 has been paid by a holder of D2 license before such removal" It is not disputed that appellant is the holder of a D2 license under the law. Rule 76(a) now provides: "No spirit or liquor manufactured or stored shall be removed unless the excise duty specified in Rule 6 has been paid by a holder of D2 license before such removal" It is not disputed that appellant is the holder of a D2 license under the law. Amended Rule 79(1) provides: 79(1) On payment of the excise duty by the holder of D2 license a distillery pass for the removal of spirit fit for human consumption may be granted in favour of any of the following persons only, namely: (a) a person holding a license in the Andhra Pradesh or in other states for sale of spirit by wholesale or retain and when the spirit is to be transported or exported beyond the limits of the district in which the distillery is situated to a person holding a permit signed by the Excise Superintendent of the District of destination or an officer of that district authorized in this behalf. (b) A person holding a permit signed by the Officer or any other States referred to in Clause (a) above for the export of such spirit from the Andhra Pradesh into that State. (c) A person holding a permit signed by an Officer duly authorized in that behalf for export of such spirit to an Union Territory. (d) A person holding a permit from the Excise Superintendent of any district in the Andhra Pradesh or from an officer referred to in Clause (a) above of any other State to transport or export rectified spirits or wine, to such district or State. 23. On the basis of the amended provisions, the respondent Officer issued a notice to the appellant proposing to include a sum of Rs. 4,49,09,552.40 representing the excise duty paid directly by buyers of appellants liquor in the appellants turnover for a part of the year 1982-83. Thereupon, the appellant again moved the High Court for quashing of the notice. Reliance was placed on the earlier decision of this Court. The High Court very appropriately felt bound by the decision of this Court and considered the effect of the amended Rules and held that the primary liability to pay excise duty was indisputably of the holder of the D2 license. Reliance was placed on the earlier decision of this Court. The High Court very appropriately felt bound by the decision of this Court and considered the effect of the amended Rules and held that the primary liability to pay excise duty was indisputably of the holder of the D2 license. It further found that the turnover related to liquor; excise duty which was payable by the appellant but had by amicable arrangement been paid by the buyer was actually a part of the turnover of the appellant and was, therefore, liable to be so included for determining liability for sales tax. On these findings the High Court dismissed the writ petition. When leave was granted by a Division Bench of this Court to appeal against the judgment of the High Court, the correctness of the decision in appellants case, was doubted and the matter was referred to a larger Bench. This is how this appeal came to be heard by us. 9. It was not in dispute that in first McDowell excise duty or countervailing duty paid directly to the excise authorities by the purchasers of Indian liquors before removal thereof from the distilleries or the bonded warehouse on the strength of the distillery and warehouse passes was not included in the bills of sale as the consideration of the sales. The Supreme Court, therefore, proceeded to lay down that any sums charged by the dealer had to be understood in its ordinary popular sense. So construing the phrase, it meant "what is demanded and collected or received by the dealer". The excise duty or the countervailing duty had not been charged or received by the dealers but has been charged by the excise authorities and deposited directly by the buyers of the liquor in the State exchequer. The Supreme Court, therefore, held that it was difficult to hold that excise duty or countervailing duty was charged by the appellants. It was further laid down in paragraph 16 of the first McDowell that, the excise and countervailing duties did not go into the common tills of the appellants and did not become a part of their circulating capital. The Supreme Court, therefore, held that it was difficult to hold that excise duty or countervailing duty was charged by the appellants. It was further laid down in paragraph 16 of the first McDowell that, the excise and countervailing duties did not go into the common tills of the appellants and did not become a part of their circulating capital. The Sales Tax authorities were not competent to include in the turnovers of the appellants the excise duty and the countervailing duty which was not charged by them but was charged by and paid directly to the excise authorities by the buyers of the liquors. 10. In the wake of the first McDowell, the Andhra Pradesh Government brought about amendment in the Distillery Rules which provides as follows: No spirit or liquor manufactured or stored shall be removed unless the excise duty specified in Rule 6 has been paid by a holder of D2 license before such removal." It was not disputed that the appellant is the holder of a D2 license under the law, being the manufacturer. After examining a large number of authorities on the point, the Supreme Court held as follows in paragraph - 30 of the judgment in second McDowell: 30. On an examination of the provisions of the Excise Act, the Rules framed thereunder and the pronouncements referred to above, we are of the view that the conclusion of this Court of the Report that intending purchasers of the Indian liquors who seek to obtain distillery passes are also legally responsible for payment of the excise duty is too broadly stated. The "duty" was primarily a burden which the manufacturer had to bear and even if the purchasers paid the same under the Distillery Rules, the provisions were merely enabling and did not give rise to any legal responsibility or obligation for meeting the burden. We do not propose, however, to examine this aspect any further for the change in Rule 76 of the Distillery Rules has clearly affirmed the position that liability for payment of excise duty is of the manufacturer. Provisions of Rules 80, 81, 82, 83 and 84 do not militate against the conclusion that the payment of excise duty is a liability exclusively of the manufacturer. Provisions of Rules 80, 81, 82, 83 and 84 do not militate against the conclusion that the payment of excise duty is a liability exclusively of the manufacturer. In these rules detailed provisions have been made regarding obtaining of distillery pass, correct calculation and full payment of excise duty, the manner of depositing such duty and ultimately issue of the spirit under the pass from the distillery. These rules, therefore, do not detract from the position that payment of excise duty is the primary and exclusive obligation of the manufacturer and if payment be made under a contract or arrangement by any other person it would amount to meeting of the obligation of the manufacturer and nothing more. It was also observed that the position is not different when under a prior agreement, the legal liability of the manufacturer-dealer for payment of excise duty is satisfied by the purchaser by direct payment to the excise authorities or to the State exchequer. The Supreme Court further observed that excise duty though paid by the purchaser to meet the liability of the appellant, is a part of the consideration for the sale and is includible in the turnover of the appellant. The purchaser has paid the tax because the law asks him to pay it on behalf of the manufacturer. In other words, the Supreme Court, disagreeing with the first McDowell has laid down that excise duty forms part of the sale price and consequently the gross turnover under every circumstance, even in a situation where the manufacturers, passes on the excise duty to the purchaser or onwards to deposit it for and on his behalf in the treasury. It also covers those kinds of cases where the parties by agreement inter-parties agree that the excise duty shall be paid by anybody for the purchaser, and this position on principle is good even in the absence of specific statutory provisions. 11. As to the second issue, the Supreme Court held as follows in paragraph - 48 of the second McDowells case: 40. According to Mr. Sorabji, the excise duty had never come into the hands of the appellant and the Company had no occasion or opportunity to turn it over in its hands, and, therefore, the same could never be considered as a part of its turnover. According to Mr. Sorabji, the excise duty had never come into the hands of the appellant and the Company had no occasion or opportunity to turn it over in its hands, and, therefore, the same could never be considered as a part of its turnover. The observations made by this Court were in a very different setting and what was being considered was whether the additional tax levied under the Madras Act formed a part of the turnover. If we accept the observations of Hidayatullah, J. as laying down the test for general application, it would be very prejudicial to the Revenue as between the seller and the buyer, by special arrangement, a part of what ordinarily would constitute consideration proper could even be kept out and the turnover could be reduced and tax liability avoided. We are of the view that the conclusion reached in the appellants case in on the second aspect of the matter, namely, when the excise duty does not go into the common till of the assessee and it does not become a part of the circulating capital, it does not constitute turnover, is not the decisive test for determining whether such duty would constitute turnover. In other words, the excise duty will form part of the sale price and shall be exigible to sales tax even though the excise duty never reaches the coffer of the manufacturer, never forms part of his till, and he did not have the opportunity to circulate it in his business. This is obviously for the reason, inter alia, that such a situation has been brought about by a voluntary agreement of the parties. In other words, the excise duty would form part of the sale price even if payment of the same is deferred on account of the facility of bonds. It is, inter alia, for the reason that the excise duty is leviable on the event of manufacture and has to be included in the sale price. 12. We are, therefore, of the view that excise duty is an impost on the manufacturer and has by virtue of the established principles as well as the provisions of law, to be included in the sale price. 12. We are, therefore, of the view that excise duty is an impost on the manufacturer and has by virtue of the established principles as well as the provisions of law, to be included in the sale price. This proposition of law would apply even in a situation where the manufacturer never receives the amount of excise duty from its purchaser, or the purchaser never deposits the same in the Government treasury on behalf of the manufacturer. It would also cover cases where the goods were lifted on deferred payment on the facility of bonds. This principle of law is so firmly entrenched that it holds good even without reference to the statutory provisions of law. It has further to be held that even in a situation where the excise duty does not go into the common till of the assessee and does not become part of the circulating capital, is not the decisive test for determining whether such duty would constitute turn-over. 13. In so far as the question of reliability or otherwise of the books of accounts are concerned, the learned Tribunal found that the petitioner did not disclose the amount of excise duty in its books of accounts. The petitioner has refused to co-operate in compilation of the facts and figures for quantification of the amount of excise duty during the period in question, and naturally and rightly leading the Authority to discard the books of accounts. The learned Tribunal has further found that the figures mentioned in the books in some cases also do not tally with the figures mentioned in the road permits. We, therefore, entirely agree with the learned Tribunal that these factors were sufficient to disbelieve the books of accounts as a result of which the Authority under the Act was left with no option but to proceed with the best judgment assessment. The learned Additional Advocate General is right in his submission that these are basically issues of facts and do not raise any question of law. 14. The learned Additional Advocate General is right in his submission that these are basically issues of facts and do not raise any question of law. 14. We, therefore, proceed to answer the three questions as follows: (i) The learned Tribunal is right in holding that excise duty payable on the goods manufactured by the petitioner is includible in the petitioners turnover for the purpose of determination of the liability of sales tax on the goods, even though the sale was effected on bond to bond basis as a result of which no excise duty was in fact paid either by the petitioner or by its purchaser. (ii) In so far as the second question is concerned, the same does not seem to arise in view of the findings of facts recorded by the learned Tribunal. It has held that the entire sale within the State of Bihar were on bond to bond basis. It has further been found that no proof was placed with regard to the inter-State sales that the same were on bond to bond basis. Therefore, we are of the view that excise is a component of sale price and liable to sales tax with respect to inter-State sale. We may add that the first two questions are entirely covered by the second McDowell. (iii) In so far as the third question is concerned, the answer automatically flows from the aforesaid answers. In view of the position that excise duty shall also form part of the sale price, and the petitioner had not disclosed the same in its books of accounts, the same were rightly discarded by the learned Tribunal leading to best assessment judgment. Indeed it is not a question of law, and Stricto Sensu does not arise for consideration. The issues are accordingly answered. 15 In view of the foregoing discussion, we are of the view that the Tribunal was justified in holding that excise duty was includible in the sales price and, therefore, in the gross turn-over as well, and accordingly liable to payment of sales tax. The reference is answered against the assessee, and in favour of the revenue. In the facts and circumstances of the case, there shall be no order as to costs. 16. Let a copy of this judgment be forwarded to the learned Tribunal.