1. The facts leading to this writ petition are as follows : -The petitioner is a former F. L. 1 licencee named 'Kamadhenu Wines' in Arakonam town of North Arcot District, during the period from 2nd September, 1971 to 31st August, 1974. During the course of audit of the accounts of the petitioner by the audit party of the Accountant-General, Madras, suppression of sales to the tune of Rs. 1,45,653.70 was pointed out. This was on the basis of the inspection of the shop on 21st February, 1973 during which certain discrepancies of shortages and excesses in the stock were noticed. At that time, some anamath accounts containing certain unauthorised receipts of stocks and sales and the accounts relating to cash transactions were also seized. After a detailed verification of the anamath accounts seized from the petitioner, it was noticed by the Commercial Tax department that the sale of liquor from 3rd May, 1972 to 20th February, 1973, amounting to Rs 1 45,753.70 was suppressed Purchases had not been brought to regular accounts and not brought to stock books. These facts were admitted by the petitioner before the Assistant Commercial Tax Officer (Intelligence) III, Vellore. on 26th March, 1973 The Commercial Tax department took penal action for the Sales suppressed. Final orders were passed by the Deputy Commercial Tax Officer, Arkonam. The petitioner did not raise any objection. They assessed sales tax for the suppressed turnover of sales. In so far as the petitioner had not paid excise duty for the suppressed sales of liquor which took place between 3rd May, 1972 and 20th February, 1973, to the tune of Rs. 1,45,653.70, excise duty was calculated and that came to Rs. 21,588. The gallonage fee thereto worked out to Rs. 6,554.41. This the petitioner was called upon to pay by a memo, issued by the District Collector, North Arcot District, at Vellore, dated 17th November, 1974. The petitioner in his reply contended that the amount of suppressed sale was Rs. 1,01,759-34, and not as claimed and that the sales related to items like cool drinks other than liquor and, therefore, he was not liable to pay any excise duty or gallonage fee. While scrutinising the anamath accounts and stock registers etc, of the licencee received from the Deputy Inspector General (Excise), Madras, it was noticed that the Deputy Commercial Tax Officer, Arkonam, instead of adding a sum of Rs. 39,903-96 to the amount of suppressed sales erred in deducting the same it was also noticed that anamath sales to the tune of Rs. 2,672.65 was omitted to be taken into account. On this basis, the suppressed sales of liquor worked out to Rs 1,88,230 31, and the gallonage fee on this amount at an average rate of 4.5 per cent came to Rs. 8.470.36. Besides treating a sum of Rs 39,903.96 as sales proceeds on second sales it was deducted from the total sum of Rs. 1 88,2.30-31. The net sum of Rs. 1,48,326.36 was held to be the suppressed turnover of the fisrt sale. Therefore, excise duty at 21.1 per cent. was levied on an average. As a result, the petitioner was held liable to pay a sum of Rs. 39,762 32 both towards excise duty and gallonage fee by the proceeding of the Collector, dated 3rd February, 1975. Aggrieved by this order, the petitioner took up the matter in appeal to the Board of Revenue. That appeal was dismissed by the Board's proceedings B. P Rt No. 1129(Z) dated 25th November, 1975. The properties of the petitioner were sought to be sold under the Revenue Recovery Act and the sale was posted to 30th January, 1976. It is at this stage, the petitioner has come forward with the petition for a writ of certiorari to quash the proceedings of the Board above referred to confirming the order of the District Collector, dated 3rd February, 1975.
2. Mr. K. Parasaran, the learned Counsel for the petitioner urges the following points for my consideration : (1) Having regard to Section 18-A of the prohibition Act read with rules 3 and 9 of the rules made under that Act and Section 12 or Section 20 of the Excise Act, there is no power to levy excise duty, more so, in view of the decision of the Supreme Court in Kalyani Stores v. State of Orissa : 1SCR865 Equally Section 33 of the Excise Act does not enable the authorities to levy gallonage fee. No doubt, Rule 30(3) of the Liquor (Licence and Permit) Rules provided for the levy of galloage fee, but when the Prohibition Act is under suspension, the rules made thereunder cannot be enforced. Therefore, even that rule does not permit such levy. (3) On the facts, in this case, the suppression is attributed to the period 3rd May, 1972 to 20th February, 1973. In the counter-affidavit filed in W. P No. 3259 of 1974, etc., (batch) the State took the Stand that Indian made Foreign Liquor was released from one of the distilleries of this State only on 25th August, 1973. Therefore, even on facts there is no possibility of levying countervailing duty. (4) Lastly, it is submitted that inasmuch as this Court has held in Citadel Fine Pharmaceutical Pte. Ltd. v. District Revenue Officer (1973) 86 L.W. 805 that there is no power to reopen the assessment if it had escaped assessment of excise duty and gallonage fee, such a levy is illegal.
3. The learned Advocate-General states as regards the countervailing duty that it is true that the State admitted in the counter-affidavit filed in W.P. No 3259 of 1974, etc., batch that the Indian-made Foreign Liquor was released on 25th July, 1973, Therefore, there is no scope for levying countervailing duty for the period in question, namely, 3rd May, 1972 to 20th February, 1973. As regards the gallonage fee, the learned Advocate-General fairly submits that Section 33 of the Excise Act does not authorise the levy; but, however. Rule 30(3) of the Liquor (Licence and Permit) Rules could not be enforced in the absence of a specific section relating to levy either under the Prohibition Act or the Excise Act. In view of the above, the learned Advocate General states that it is not necessary to decide about the power to levy excise of countervailing duty and the vires thereof. In view of the stand taken by the State I do not think that it is necessary for me to decide the authority to levy excise duty or countervailing duty in this case. Suffice to state that no countervailing duty can be levied because there was no manufacture of Indian-made Foreign Liquor in this State of Tamil Nadu during the period in question, namely, between 3rd May, 1972 and 20th February, 1973, in view of the admitted fact as found in the counter-affidavit in W.P. No. 3759 of 1974 etc. (batch) that the Indian-made Foreign Liquor was released only on 25th August, 1973.
4. As regards the gallonage fee, Section 33 of the Tamil Nadu Excise Act merely speaks of recovery of duties. It does not authorise the levy. The only rule which authorises the levy is Rule 30(3) of the Tamil Nadu Liquor (Licence and Permit) Rules, 1960 made under GO. Ms No 2462 Horns, dated 18th August, 1960. That reads as follows:.(3) Gallonage fee at the rates prescribed under Rule 23-XI in Chapter IV of these rules shall be levied quarterly and collected from the holder of a licence in this form (F. L. 1) on the quantity of liquor sold by him in each quarter, to holders of personal permits (excluding privileged personages other than Honorary Consuls) and to holders of licences in forms F. L. 2, F. L. 3, F. L.4(a), F. L 5. F. L. 6, F. M. 2, F. M. 3 and F. M. 4 and on the quantity of sacramental wine or liquor sold to holders of authorities in forms F. Auth. I, F. Auth. II and F. Auth. III and F. Auth. IV.
For this purpose, the licensee of F.L. 1. shall submit a quarterly return in form F. Ac. 1(d) to the Commissioner 01 or before the 5th day of the month immediately following each quarter, showing the quantity of liquor or sacramental wine sold during the preceding quarter. The return shall be sent through the Commercial Tax Officer concerned, who shall submit through the Collector, to the Board after necessary check. The licence-holder shall pay into a Government treasury in the district, the amount of the gallonage fee levied within 14 days of receipt of the demand therefor, from the Board....
This rule is no doubt continued under Section 83 of the Tamil Nadu Excise Act, 1971 Nevertheless, in so far as neither the Prohibition Act nor the Excise Act 1971, enables the levy the rule cannot perforce enable such a levy. For all these reasons, the writ petition will stand allowed. However, there. will be no order as to costs.