SHRI GULZARI LAL BHARGAVA Vs. CHIEF COMMISSIONER DELHI

JUDGEMENT

(1.) CIVIL Writ No. 112-D of 1958 and Sales Tax Reference No. 2-D of 1958 deal with the same controversy and would, therefore, be disposed of by one order. The main arguments have, as a matter of fact, been addressed only in C.W. No. 112-D of 1958. The facts necessary for appreciating the controversy, which has given rise to these proceedings may briefly be stated.

(2.) PETITIONER No. 1 Shri Gulzari Lal Bhargava, Proprietor, Gulzar Honey Stores, claims to be carrying on a business in denatured spirit, honey and ammonia etc. in Delhi for the last several years, having been registered as a dealer in Ward No. 3, Delhi, under the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi (hereinafter described as the Delhi Act). Petitioner No. 2, Shri Fateh Chand Verma, Proprietor of Shri Chandra Pharmacy, Tis Hazari, Delhi, claims to be carrying on, inter alia, business in denatured spirit, both wholesale and retail in Delhi also for the past several years. He is also registered as a dealer in Ward No. 5, Delhi, under the Delhi Act. Both the petitioners are licence-holders under the Punjab Excise Act, 1914, as extended to Delhi (hereinafter described as the Excise Act), petitioner No. 1 paying a licence fee of Rs. 25 per annum and petitioner No. 2 Rs. 100 per annum. Petitioner No. 2 purchases in wholesale denatured spirit from distilleries in U.P. etc., and sells the same to dealers in denatured spirit in Delhi and elsewhere including petitioner No. 1. The wholesale purchase price of such spirit for distilleries is about Rs. 1-1-0 per imperial gallon. An excise permit fee at the rate of Rs. 3 per imperial gallon is, according to the averment in the writ petition, being charged under the authority of the Chief Commissioner, Delhi (respondent No. 1 in this Court) either under rule 5.25-A(2)(a) of Delhi Liquor Licence Rules or under rule 7(2)-D of Delhi Liquor Permit and Pass Rules. Petitioner No. 1 as purchaser of denatured spirit for sale in retail is charged Rs. 4-5-0 per imperial gallon by petitioner No. 2. Petitioner No. 1 submitted his quarterly return of his turnover of sales, inclusive of denatured spirit, to the Sales Tax Officer, Ward No. 3, Delhi, under the Delhi Act for the year 1954-55 value claimed exemption of sales tax on sales of denatured spirit of the value of Rs. 22,555-0-3, but this claim was disallowed on 16th July, 1955, by the Sales Tax Officer, Ward No. 3, Delhi. An appeal against this order was disallowed by the Assistant Commissioner, Sales Tax, on 24th October, 1956. A petition for revision was similarly dismissed by the Commissioner of Sales Tax on 17th April, 1957. A further revision preferred with the Chief Commissioner was also dismissed on 24th October, 1956. According to the petitioners' case in the writ petition, it is pleaded that it was pointed out to the Chief Commissioner as well as to the subordinate officers that the fee of Rs. 3 per imperial gallon charged as stated above is either a duty or a tax and accordingly the said sales of denatured spirit were exempt from payment of sales tax under item No. 40 of Schedule II annexed to the Delhi Act. The claim of exemption, however, was refused. Challenging these orders refusing exemption, the petitioners have in paragraph No. 10 of the writ petition pleaded that the charge of Rs. 3 per imperial gallon levied, as mentioned above, is a tax or a duty and it has no nexus with any special service rendered by the authority concerned. Services rendered in this behalf and indeed charged in the shape of licence fee are charged at the rate of Rs. 25 per annum from petitioner No. 1 and at the rate of Rs. 100 per annum from petitioner No. 2. The so-called "permit fee" or "vend fee" has no reasonable connection with the services rendered in this behalf. The charge of Rs. 3 per imperial gallon on denatured spirit, according to the writ petition is in substance a "duty" which is not prescribed or permissible under any law for the time being in force. The relief claimed in the prayer clause in the writ petition is in the following terms :

(3.) IT may at the outset be pointed out that during the arguments in this Court, the learned counsel for the petitioners has expressly dropped the relief in the form of claim to the return of Rs. 3 per imperial gallon realised as a result of the levy by the Chief Commissioner. His main contention has been that the levy of Rs. 3 per imperial gallon was a tax or a duty and, therefore, under section 6 of the Delhi Act, denatured spirit is exempt from tax under this Act. It is desirable at this stage to read section 6 :