SOMRAS DISTILLERS Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The only issue involved in the writ petition is whether in the facts and circumstances of the case the petitioner is entitled to the exemption under entry A-15 of notification dated 20.2.1997 issued under Section 41 of the Bombay Sales Tax Act, 1959. Few facts giving rise to the petition are stated thus:-

(2.) Shri Dharmadhikari, the learned senior counsel appearing on behalf of the petitioner, submitted that in terms of the notification, exemption was granted subject to two conditions-that the dealer proves that the excise duty levied under the Bombay Prohibition Act, 1949 on the country liquor had been paid to the Government of Maharashtra and the bottle or, as the case may be, the package bears a label with the statement "For Sale in Maharashtra State Only". According to the learned senior counsel, the sale of country liquor was exempted from sales tax on payment of excise duty in full and if the dealer did not sell the country liquor outside the State of Maharashtra. It is submitted that admittedly the first condition of payment of full excise duty was complied by the petitioner and though the petitioner had not incorporated the statement on the label of the liquor bottle or package, admittedly the petitioner had not sold the country liquor out of the State of Maharashtra. The learned senior counsel submitted that the manufacture and sale of country liquor is controlled by the provisions of the Maharashtra Country Liquor Rules and the sale of country liquor outside the State of Maharashtra is prohibited and is also not possible. According to the learned senior counsel, the provisions of the Maharashtra Country Liquor Rules, specially Rules 3, 6(42) 7, 8, 10, 31 and Forms CL-1, 2 and 3 which mention the conditions of licence clearly point out that the sale of country liquor outside the State of Maharashtra is prohibited. It is submitted on behalf of the petitioner that the second condition in the notification dated 20.2.1997 was merely a restatement of law in the Maharashtra Country Liquor Rules and non-compliance of the condition could not have resulted into denial of the benefit of exemption under the notification dated 20.2.1997.

(3.) It is submitted on behalf of the petitioner that excise duty was restructured in the years 1997-98 and sales tax was included in the same. In this background, according to the learned senior counsel, the State decided to grant exemption of sales tax during the three relevant years 1997-98, 1998-99 and 1999-2000. The learned senior counsel referred to the affidavit in reply filed by the Deputy Commissioner of Sales Tax, the budget speech and the note of Finance Ministry that sales tax was not liable to be imposed w.e.f. 8.1.1997 as the restructured scheme of excise duty was to be made effective from that date. In the said set of facts, according to the learned senior counsel, the object of the notification dated 20.2.1997 was fulfilled on the compliance of the first condition in regard to the payment of excise duty and the second condition of printing the statement on the label of the package or bottle was tangential. The learned counsel referred to the circulars issued by the Excise Department on 19.10.2001, 3.9.2002 and 10.9.2003 clarifying that since country liquor could not have been exported under the Rules, it was not necessary to print the words "For Sale in Maharashtra State Only" on the labels. Relying on the said circulars, it is canvassed on behalf of the petitioner that even the officers of the State understood condition No. 2 of the notification to be directory and not mandatory. In any case, according to the learned senior counsel, there was a substantial compliance of the conditions in the notification dated 20.2.1997 inasmuch as the petitioner had paid the excise duty in full and had not sold the country liquor outside the State of Maharashtra.