CALCUTTA WINE ASSOCIATION Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE question for decision in this application Under Section 8 of the West Bengal Taxation Tribunal Act, 1987, which is in the nature of one under Article 226 of the Constitution of India is : whether turnover tax is payable by retailers who deal in Indian -made foreign liquors (IMFL) under the Bengal Finance (Sales Tax) Act, 1941 (the 1941 Act) and Rules framed thereunder in respect of sales effected on or after April 11, 1994.

(2.) APPLICANT No. 1 is a non -trading company registered under the Companies Act, 1913. Its object is to promote and protect trade, commerce and manufacture of wine and liquors. Some of its members hold licences for selling foreign liquors. Applicant No. 2 is the honorary secretary of applicant No. 1 and is himself a retail dealer of foreign liquors, carrying on business under the name of "Shiva's Wine & Provisions" at shop No. F -31 at Dakshinapan C.I.T. Market Complex at 2, Gariahat Road (South), Calcutta -700 068, and is an Indian citizen. The question raised in the application is said to be the grievance of members of applicant No. 1 who are engaged in retail trade in foreign liquors.

(3.) THE case of the respondents in their affidavit -in -opposition is that the application is not maintainable as the applicants are not aggrieved by any order passed or action taken. Moreover, applicant No. 1 is not competent to make this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987. (It may be mentioned at this very stage that these points were not agitated at the time of final hearing). IMFL were omitted from Schedule I of the 1941 Act with effect from April 15, 1993 and as a result, sales thereof became taxable at the rate of 11 per cent with effect from April 15, 1993 under Section 5(l)(d). During the period from April 15, 1993 to April 10, 1994 sales of such IMFL were taxable at the last point of sale in West Bengal at the rate of 11 per cent and those sales which were made to registered dealers during that period were deductible from gross turnover of selling dealer on production of declaration form for availing of exemption from tax. Hence, the dealers were requested to get themselves registered so that sales to them did not attract tax. Sales of IMFL became taxable in the hands of dealers (wholesalers or retailers) who did not make sales to registered dealers. Those registered dealers who purchased foreign liquors against declaration forms for resales were not burdened with sales tax. under Section 5(2)(a)(vf) and (vg), with effect from April 11, 1994 IMFL were subjected to single point levy of sales tax. The State Legislature is competent to decide how and in what manner it will raise revenue from sales tax and to determine which particular transaction should be exempted. Turnover tax has been withdrawn with effect from May 1, 1995. Prior to that date, turnover tax was levied and collected in accordance with Section 6B. There has been no hostile discrimination against retail dealers of foreign liquors. Tax on turnover was levied and collected under the 1941 Act from the dealers who were liable to pay such tax. No classification was made between wholesalers and retailers. During the period from April 11, 1994 to April 30, 1995 sales of IMFL were deductible from gross turnover of a dealer under clauses (vf) and (vg) of Section 5(2)(a), when the selling dealer fulfilled the conditions laid down therein. Respondents have denied (hat the liability of payment of tax was shifted from retail dealers. Levy and collection of turnover tax continued till April 30, 1995 under the 1941 Act and as such all dealers, whether wholesaler or retailer, had to pay turnover tax if they were liable to pay the same according to Section 6B. Validity of levy of turnover tax does not depend upon the fact whether a selling dealer is able to collect the tax. Realisation of the tax depends upon the agreement between the selling dealer and his customers. If a selling dealer prefers not to collect turnover tax from his customers on and from April 11, 1994 despite the withdrawal of the embargo, he may choose to pay such tax from his own fund. The allegation that levy and collection of turnover tax from dealers with effect from April 11, 1994 is arbitrary, discriminatory or violative of articles 14 and 19(l)(g) has been denied. Turnover tax was in force even before April 11, 1994 and no new burden has been created for any dealer in respect of the same. A retail dealer is not entitled to deduct from his gross turnover the sales of IMFL effected on and from April 11, 1994. The respondents contend that selling dealers referred to in clauses (vf) and (vg) of Section 5(2)(a) are entitled to such deduction. As there was no embargo on retail dealers or any dealer to realise turnover tax from customers, levy and collection of turnover tax is neither unreasonable, or arbitrary, nor discriminatory, or violative of articles 14 and 19(l)(g).