HARYANA BREWERIES LTD Vs. GOVERNMENT OF HARYANA

JUDGEMENT

(1.) THIS is a petition to quash the orders Annexure P-1, P-2 and P-7 passed respectively by the Excise and Taxation Commissioner, Haryana and the Financial Commissioner-cum-Secretary to the Government, Haryana, Excise and Taxation Department requiring the petitioner to deposit the amount specified in these orders.

(2.) IN order to examine the legality of the impugned orders, it is necessary to take into account some facts which are borne out from the record of the case. Petitioner-Haryana Breweries Limited is carrying on the business of manufacturing/brewing of Beer in its Brewery at Murthal (Sonepat) since 1971. Till 1994, it was a public sector undertaking owned by the Government of Haryana. In the year 1994 the Government of Haryana sold 51 percent of the total share holdings to M/s Shaw Wallace and Company and retained only 21 per cent of the shares. Petitioner is licensed under Section 21 of the Punjab Excise Act, 1914 (hereafter referred to as 'the Act' ). It is said that between the year 1974 and 1988 the Government of Haryana earned excise revenue amounting to Rs. 5. 8 Crores (approximately) on the manufacture of Beer by the petitioner. In the year 1978 three notices, one dated 1. 11. 1978 and two dated 1. 12. 1978 were issued to the petitioner under Rule 35 (1) of the Punjab Brewery Rules, 1956 (for short '1956 Rules') as they are applicable to Haryana read with clause 5 of the Punjab Excise Fiscal Orders, 1932 (for short the 'fiscal Orders') calling upon the petitioner to show cause why excise duty be not levied on the alleged excess wastage during the brewing of Beer in the years 1974-75 to 1976-77. Vide order dated 26. 3. 1984 the Excise and Taxation Commissioner confirmed the demand raised through three show cause notices. Notices were again issued for the years 1977 to 1980-81 and by order dated 24. 5. 1984 the Excise and Taxation Commissioner confirmed the demands. Similar notices were issued to the petitioner on 23. 12. 1987 and 2. 8. 1988 directing the petitioner to pay Rs. 27. 93 lacs and 20. 54 Lacs respectively for the years 1986-87 and 1987-88. For the year 1988-89 notice dated 31. 7. 1989 was issued and the demand was confirmed vide order dated 10. 1. 1990. Petitioner filed separate appeals against orders dated 26. 3. 1984, 21. 5. 1984 and 23. 12. 1987 all of which were disposed of by a common order dated 22. 8. 1990. The Appellate Authority remanded all the three cases back to the Excise and Taxation Commissioner for re-calculation of the excise duty and for passing fresh orders. Therefore, respondent No. 2 issued ten notices dated 26. 11. 1990 to the petitioner in respect of years 1974-75 to 1985-86. Later on the Excise and Taxation Commissioner passed order dated 19. 5. 1991 confirming demand for excise duty in respect of alleged excise wastage of Beer. The. petitioner filed three appeals against the orders passed by the Excise and Taxation Commissioner. All these appeals have been dismissed by the Financial Commissioner by one order and the petitioner has been directed to pay excise duty on the wastage of Beer in excess of the permissible limits.

(3.) BEFORE dealing with the arguments of the learned counsel for the parties, we deem it proper to refer to the constitutional as a well as statutory provisions which have bearing on the issue raised in this petition. Article 245 and 246 (3) read with Entry 51 of List II-State List empowers the State Legislature to enact laws for imposition of duties of excise on alcoholic liquor for human consumption, opium, Indian hemp, other narcotic drugs and narcotics. Though the Punjab Excise, 1914 was enacted before the commencement of the Constitution, the provisions of that Act will be deemed to have continued in force by virtue of Article 372 of the Constitution of India. Section 3 of the '1914 Act' defines various terms and expressions including 'beer', 'excisable articles', 'excise duty', 'liquor', 'manufacture'. Section 31 empowers the State to impose excise duty or countervailing duty on any excisable article. Section 32 confers powers on the Financial Commissioner to prescribe the manner of levy of duty. The 'rules of 1956' have been framed by the State Government in exercise of its power under Section 58 of '1914 Act'. Rule 2 of these Rules contains definition of 'beer', 'brewery', 'fermenting vessel', 'hopback', 'mashtun', 'worts', Rule 35 lays down the manner of levy of duty on Beer. The Fiscal Orders contain provision for allowance of wastage.