The Delhi High Court recently observed that the possession of liquor as purchaser by the same manufacturer under different company names is with intention to evade excise duty.
The Excise Commissioner after inquiry came to the conclusion that the manufacturer and the seller of the liquor in the present case was only one and the entire attempt on the part of the Petitioner, Punjab Expo Breweries Pvt Ltd, is only to avoid payment of excise duty by hiding behind the cloak of different legal entities.
The Excise Commissioner opined that the leftover stock of the companies, i.e., M/s Tilak Nagar Industries Private Limited and M/s Patiala Distilleries and Manufacturers Private Limited belongs to one entity and, therefore, the Petitioner was liable to pay the excise duty.
The Counsel for the Petitioner contended that the Petitioner was not the owner of the stocks and that the Petitioner had a bonded warehouse and was only keeping the stock in the bonded warehouse and, therefore, is not liable to pay any excise duty.
The Counsel for the Respondent contended as per Rule 56 of the Delhi Excise Rules when the permission was granted to the Petitioner to transfer the stocks of ‘Courier Napoleon Brandy’ on 26.04.2013, the Petitioner was liable to pay excise duty on such stock and the permission which had been granted to the Petitioner was in the capacity of a purchaser.
A perusal of Rule 56 of the Delhi Excise Rules, 2010 states that if any person held a license and has in his possession on expiry or determination of licence any intoxicant, he has to submit a list of such intoxicants to the Deputy Commissioner within 15 days from the expiry of the license indicating therein the sale value of each brand and the Deputy Commissioner can either permit him in not exceeding 15 days for disposal of such stocks to existing licensees.
The Rule also notes that if duty has not been paid on such stocks and the purchaser does not hold a licence permitting him to possess them in bonds, the duty on such stocks at the rates in force on the date of sale shall be recovered from the purchaser before the possession is taken.
A Single Bench of Justice Subramonium Prasad observed that “The Director of M/s Tilak Nagar Industries Private Limited and the Petitioner herein are one and the same person. The modus operandi of the Petitioner was to sell liquor belonging to one group under different names and avail benefit of the excise duty under the garb of stock transfer.”
The Court further noted that the purpose of Rule 56 is removal of unsold stock by erstwhile licensees to persons having valid license on payment of duty. The purpose of destruction of stock is only for ensuring that unsold liquor should not be left in bonded warehouse. The conclusion by the authorities below that the liquor that has been sold by the Petitioner by different companies which have been incorporated over the years and the Petitioner was both the manufacturer and seller cannot be found fault with. It was also noted that the Petitioner was in possession of the stock as a purchaser and, therefore, is liable to pay the excise duty.
“The entire modus operandi was only to avoid payment of excise duty. The attempt by the Petitioner is only to show that stock belonged to other company and did not belong to the Petitioner and the same cannot be accepted” the Bench concluded.
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